A Lot Can Change in a Year
It was a little more than a year ago that we remember reading the following article in The Wall Street Journal and articles like it all over the place:
The gist of it was that COVID pushed older Americans out of the labor force in droves, and many of them weren’t coming back. This exodus from the labor force would have major societal implications as it would weigh on overall economic growth, decrease worker productivity, and push labor costs higher. As one economist in the article noted, “Historically, the likelihood of seeing workers who decided to retire come back into the labor force is quite low, so we do think that some of the drop in the participation rate with older workers is likely to remain permanent.”
What a difference a year makes. While inflation, which was supposed to be transitory, has ended up looking a lot more permanent, it appears as though the exodus of older Americans from the labor force, which was initially thought to be permanent, may end up being more transitory in nature. The Wall Street Journal highlighted this trend today:
While it may not be for the best reasons, many older Americans who left the labor force when COVID hit found that after accounting for inflation at multi-decade highs, their nest eggs will not be as supportive of their retirement plans as they originally thought, and that’s pushing them back into the labor force.
While the implication of workers leaving the labor force was for slower growth, lower productivity, and higher labor costs, an influx of workers should increase growth, increase productivity, and put downward pressure on labor costs. It’s all about supply and demand. The reason for workers returning back to the labor force may not be the most favorable for them, but amazingly, the exodus of older Americans from the labor force didn’t even last as long as the “farewell’ tours from the Eagles or The Who! Click here to try out Bespoke’s premium research service.