People who took their retirement during the pandemic won't be coming back. MoMo Productions/Getty
As the economy recovers after the pandemic, labor shortages persist for months.
Goldman Sachs estimates that 5 million people were out of work during the pandemic.
About 2.5 million people have retired and won't be coming back, leaving large labor gaps.
The reports of labor shortages are unlikely to end soon as a large number of workers of retirement age have left the workforce - and many of them may not return.
Jan Hatzius, a Goldman Sachs researcher, released a Friday note. It revealed that 3.4 Million people over 55 have left the workforce. This means they are not actively seeking work or aren’t working. About 1.5 million of these were early retirees and 1 million were regular retirements. These two types of retirements "likely won’t reverse", meaning that about half of the five million workers Goldman estimates have not yet returned to the workforce, roughly, may never return.
This is bad news for labor-strapped markets like Wendy's, which closes its dining rooms early. A California childcare company has shuttered because it cannot hire. Cleaning companies have been cancelling jobs as they lack the staff to fill them. It could be good news, however, for those job seekers who remained and were able to use shortages to demand higher wages and better conditions.
The pandemic brought an era in which older workers were more willing to give up.
The Federal Reserve Bank of Kansas City has found that if retirement had followed the trend between 2010 and 2020, 1.5 million more people would have retired during the pandemic. However, that number was actually higher than three million. The only reason for the predicted retirement numbers was the early retirees.
Goldman points out that retiring is "stickier" than any other reason someone might want to leave the workforce. We expect that early retirees' participation gap will be rebalanced relatively slowly by fewer retirements in the future.
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The Kansas Fed discovered that retirees are the ones driving increases in retirement. However, there are a few reasons why retirees may return to the workforce. Glassdoor's senior economist Daniel Zhao tweeted that the "return flow of labor is decreasing" but that the best scenario for the future is the end to the pandemic, which would be accompanied by a tight labor market. This will attract those retired people back.
Marty Walsh, Labor Secretary, said that the pandemic was unprecedented and that older workers should be aware of the potential health risks.
The 2.5 million retired people who are abstaining from working will be felt immediately. Another record-breaking number of workers quit their jobs has just been set. This is good news for workers who are continuing to move into new roles and push wages up, but it also means that labor shortages could last a while.
Business Insider has the original article.
