This is good for the economy as a whole, as a growing workforce enhances the economy’s growth prospects, and it can reduce employee shortages that have pushed up wages and added to price pressures. But for many, including those dependent on pensions or limited savings, rising prices are an unwanted development that is forcing them back into the job market.
“We are starting to see the migration of older people who were expected to live on fixed income in an environment of low interest rates and low inflation,” said Joseph Brusuelas, chief economist at RSM US LLP. “It hasn’t materialised; so they have to come back into the labor force to create conditions so they can retire.”
“Really what you are dealing with is an inflationary shock that has led to a change in behaviour,” he said.
According to the Labor Department, the share of people over the age of 55 either working or looking for a job – their labor-force participation rate – rose from 38.9% in March to 38.4% in October. More than 480,000 people in that age group entered the labor force during the past six months, according to the three-month moving average, which removes volatility. That was more than 180,000 who entered the labor force six months before the pandemic hit.
The job market for workers of all ages improved during the past six months, the three-month moving average for the total labor force increased by 2.5 million, with the national participation rate rising to 62.4% in March from 61.7 in October. % Was.
Analysts say several factors are driving more people of all ages to move out and look for jobs: COVID-19 vaccinations, school and day-care reopenings, more remote and flexible work opportunities, pandemic The end of the era of government support and increasing wages.
But he says another key factor is the recent jump in year-over-year inflation, to about 8% in February, up from 5% last summer, as measured by the Labor Department’s consumer-price index. Is. The department is set to release its CPI report for March on Tuesday.
Roughly 2.6 million Americans retired earlier than expected between February 2020 and October 2021, according to estimates by Miguel Faria-e-Castro, senior economist at the Federal Reserve Bank of St. Louis. According to jobs site Indeed, many people are now returning to work at rates not seen since March 2020.
A rise in prices is a strong motivator for older people to postpone retirement or reverse it, some of them say.
Lisa Purcell, 57, a former paralegal who has been retired for more than two decades for health reasons, and despite her concerns about catching Covid-19, said she is considering looking for a job due to rising inflation. Huh. She said she and her husband, 53, a retired energy-industry engineer, are on a very tight budget until they qualify for Social Security benefits.
“With everything moving up, with prices and stuff, we did our finances—we’re now a year and a half short,” said Ms Purcell, who lives in Golden until she starts receiving Social Security checks. On money to cover living expenses. Wally, Ariz. “We’ve already cut everything we can cut back. I do my own hair, I cut my own hair. It’s clear that one of us has to go back to work.”
According to a report from the Federal Reserve Bank of New York, households’ expectations about the near-future path of inflation rose in January to February, matching the most recent high seen in November. This means concern for many retirees and those nearing retirement, who are trying to map their income amid an uncertain near future.
“For retirees, it’s very difficult to know whether they’ve saved enough,” said Catherine Edwards, an economist at Rand Corp.
High inflation is also prompting some workers who have not yet retired to reevaluate their options.
Daniel Fitzpatrick, 64, a software account manager in Atlanta, said he is paying more attention to his spending because of rising inflation.
“Retirement is going to be a luxury for many people and the horizon they see is fading away,” said Mr. Fitzpatrick, who plans to retire at 70 and work part-time thereafter.