Pandemic Retirees Head Back to Work

The so-called Great Retirement is looking a little less great lately, as stalled house prices and the rising cost of living push some older workers back into the labor force, new research shows.

The disappearance of a few million people from the U.S. labor force has been a striking feature of the pandemic era, and economists attribute part of it to people retiring early, along with a drop in immigration and the effects of long Covid.

Miguel Faria e Castro, an economist at the Federal Reserve Bank of St. Louis, and colleague Samuel Jordan-Wood estimate that the number of “excess retirements” — or older Americans quitting work at rates above historical trends — crested at about 3 million in December.

For sure, some retired out of fear of catching Covid-19, which has killed some 1.1 million people in the U.S., most of them older Americans.

But soaring housing and stock prices, especially earlier in the pandemic, probably pushed others to make the leap, Faria e Castro suggested in a Fed research paper released in May.

Second Thoughts?

At least some of them now appear to have had second thoughts, according to Faria e Castro’s latest estimates, which are based on U.S. Census Bureau data. The number of excess retirees is down by around 600,000, or 20%, since the end of last year, the economist found.

A few factors might be causing the dip in numbers, Faria e Castro says. Some older Americans may have been enticed back to work by a strong labor market and wages that, while now cooling somewhat, are still up more than 4% over the past year.

Others may have felt nervous about housing values that have declined from their peaks, compounded by higher interest rates and inflation.