Much has been written about staffing shortages in almost every sector of our economy and the high rates of “quitting” by lower-wage workers. While research shows that many white women and women of color, especially mothers, are quitting because of a lack of workplace support for childcare and other family challenges such as eldercare, a new study by William M. Rodgers III and Lowell Ricketts of the Institute for Economic Equity at the Federal Reserve of Saint Louis focuses on the unusually high exit from the labor force of workers who are age sixty-five and older. The authors note that rate of retirement among those sixty-five and older “exceeds that predicted by the demographic shift of baby boomers” and is an important contributor to the widespread labor shortages in the United States. While I was not surprised about parents having to leave the workplace during the pandemic because of the demands of remote schooling and the lack of childcare, I was surprised by this information about “the great retirement.”
This study by the Institute for Economic Equity found the following:
- Retirements were much more common among older white women without college education.
- Male workers were less likely to be retired than their female counterparts.
- Black, Hispanic, and Native American workers were less likely to be retired than their white peers of similar ages.
- Workers who were married or widowed were more likely to be retired than their single peers who have never been married.
- Workers with at least some college education were less likely to be retired than their peers with a high school diploma or less education.
- As household income increases, the likelihood of retirement declines.
- Veterans were more likely to be retired versus nonveterans.
- Rates of anxiety were significantly lower among retirees relative to their similarly aged peers still in the labor force, which may reflect the fear of the virus for older workers.
Some of these findings seem contradictory and are not explained by the authors. For example, why are workers with less education and income more likely to retire than those with higher household incomes? It would seem that lower-wage workers would feel more pressure to stay in the workforce than would be true for households with higher incomes.
In another seemingly contradictory finding, the authors note that the tumult of the pandemic economy produced asset appreciation in investment and residential real estate with average net worth jumping 12 percent and 14.8 percent among households with a head of household aged fifty-five to sixty-nine and seventy and older, respectively. They speculate that this increase in assets may have motivated retirements among those workers with the means to do so, which makes sense but seems to contradict other findings.
Despite some contradictory finds, this study does identify an important trend to be aware of. The great labor shortage we are experiencing means that the loss of experienced talent through unusually high rates of retirement of older workers is a significant factor that employers might want to address. Creative solutions, such as part-time employment, might lure much-needed older workers back into the workforce.
Photo by Aris Sfakianakis on Unsplash