According to research from the New School’s Schwartz Center for Economic Policy Analysis, a growing number of people in the U.S. are “unretiring,” i.e., returning to the workforce after some period of formal retirement.
Their numbers are not yet enough to reverse the COVID-19 retirement spike in workers exiting the labor force, according to the report, “Status of Older Workers,” but the impact of unretirements on employers and the economy may be significant in the years to come. The analysis suggests rising wages, high inflation and lower asset prices are driving workers over the age of 55 back to the workforce.
According to the report, the unretirement rate reached its apex in May, when it came in at the highest level in over a decade. Nevertheless, the number of excess retirees in the U.S. above the pre-pandemic level has remained unchanged throughout 2022, at roughly 1.4 million.
“If the unretirement rate continues to climb and more retirees keep returning to work, this situation may change,” the report states. “It is too early to tell whether unretirement will return the U.S. retired population to the level we would expect given pre-pandemic trends.”
The number of workers entering retirement each year has leveled off at about 4%, while unretirements have reached 2% in 2022. The averages for unretirements between 2017 and 2019 were closer to 1% and 1.5%.
For older workers that remained in the labor force, there are also changes and challenges to note. On the one hand, the older cohort has benefitted from year-over-year wage growth averaging 3.9%. This compares to 2.4% before the pandemic, according to the research. While positive in its own right, the wage growth for older workers actually trails that of midcareer workers between the ages of 35 and 54. Also challenging is the fact that nominal wage growth has been outpaced by the rise in prices seen through the last year.
The result is a decline in older workers’ standard of living, the report warns.
As these dynamics play out, wage inequality has been somewhat reduced, according to the report.
“Older workers who occupy the lowest-wage jobs are experiencing the highest growth of any wage group, and older workers in the middle have seen roughly the same median wage growth in the past six months as they did just before the pandemic,” the report states. “The highest-wage group has seen slightly higher wage growth. Looking at older workers’ wage growth trends by demographic categories—gender, race, education—reveals only minor differences between groups.”
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