More Older Workers are “Unretiring” in the Return to Work

Here come the boomerangs.

The tight labor market, in combination with high inflation, is leading more people to leave retirement and reenter the workforce.

Plus, after a brief recession, housing prices and the value of financial assets soared from spring 2020 to late summer 2021. Plenty of graying boomers, whose savings were shaken by the Great Recession, took advantage.

• The share of adults ages 55+ who are retired rose from 48.1% in Q3 2019 to 50.3% in Q3 2021, according to Pew Research Center.
• The share of adults between ages 65-74 who are retired increased from 64% to 66.9% in the same time frame, per Pew.
• The St. Louis Federal Reserve estimated that this deluge of pandemic-era retirements meant 2.4m+ Americans retired earlier than expected. And not all of them were ready to take up gardening.

What a difference a few years makes.

After dipping during the pandemic, ‘unretirements’ are on the rise, due to a tight labor market, lessened pandemic concerns, and high inflation.

• As of March 2022, 3.2% of workers who were retired a year earlier are now employed.

It may sound strange that retired workers are taking jobs, but these moves are more common than you may expect.

• Before the pandemic, from 2017 to 2019 roughly 3% of retired workers on average ended up having a job a year later.
• The initial shock of the pandemic caused these moves back into work to drop, as the unretirement rate fell from 3.2% in February 2020 to 2.1% by June 2020.

A fall and rebound in unretirement flows has precedent. The rate of unretirement dropped during and after the Global Financial Crisis of 2007 – 2009 (although not as much as it did after the initial COVID-19 shock in spring 2020.)

Unretirements eventually picked up as employment increased and the labor market heated up. The similarities between that recovery and the current increase in the unretirement rate suggest the tightening labor market is a major force luring many retired workers back into a job.

If many retired workers are enticed by a hot labor market, this would mean these workers are better thought of as akin to workers who gave up their job search due to discouragement rather than our traditional idea of retirees. It is hard to rule out the influence of waning concerns about the pandemic and faster inflation, and they are surely factors. But it’s not clear that they are the main reasons.

The unretirement rate may have returned to its pre-pandemic level, yet there is the possibility that it could go even higher. Further increases in the rate would mean the pool of workers who want a job is higher than many have thought since the pandemic hit. Watching this trend in the months ahead will give us a better sense of how much tighter the labor market could get and how many people can be attracted back to work by higher wages.