"Early Retirement Surge Due to COVID-19 Worsens US Labor Shortage"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The early retirement boom triggered by the COVID-19 pandemic is reportedly exacerbating the labor shortage in the United States.

The Wall Street Journal (WSJ) reported this on the 31st of last month (local time), stating, "No one knows how many people will return to the labor market."

According to the Federal Reserve Bank of Dallas, the number of retirees from February last year to April this year is estimated to be 1.5 million more than what would have been expected if the 2019 pre-COVID-19 trend had continued.

As many of the U.S. Baby Boomer generation (born 1946?1964) age, the number of retirees is increasing, and the COVID-19 pandemic has intensified this trend.

Early retirement was particularly notable among those with lower education and income levels.

According to the Retirement Equity Lab at the Schwartz Center for Economic Policy Analysis (SCEPA), the retirement rate of 55?64-year-olds without a college degree rose by 0.8 percentage points between 2019 and this year.

However, the retirement rate of college graduates in the same age group fell by 0.6 percentage points during the same period.

According to Boston University's Retirement Research Center, the unemployment rate for those aged 62 and older in the bottom third income bracket rose sharply from 28% in the second quarter of 2019 to 38% in the fourth quarter of last year, an increase of about 10 percentage points.

Meanwhile, the unemployment rate for the top third income bracket rose only about 4 percentage points, from 18% to 22% during the same period.

While financially comfortable Baby Boomers have been retiring early thanks to recent stock market booms and rising home prices, WSJ pointed out that those with lower incomes have left the labor market despite not being in a position to do so.

According to a survey by the U.S. Federal Reserve (Fed), about half of American households had no retirement savings accounts as of 2019.

Whether those who retired early will re-enter economic activity when conditions improve is crucial, but the outlook is not very optimistic.

According to U.S. Department of Labor data, the labor force participation rate for those aged 25?54 recovered from 79.8% in April last year, during the height of the COVID-19 pandemic, to 81.6% in September this year; however, for those aged 55 and older, the rate was 38.6% in September, showing little change from April last year.

This content was produced with the assistance of AI translation services.