Early Retirement blamed for labor shortages

[REWahoo]

For much of the pandemic, economists agreed that child care challenges and worries about the virus were keeping people from returning to the labor market.

But recently, it has become clear that there is another dynamic at work here: early retirement.

IOW, "How you gonna keep them [-]down on the farm[/-] working at Walmart after they've [-]seen Paree[/-] had a taste of retirement."

Three key numbers that explain America's labor shortage

 

[daylatedollarshort]

I suspect the only thing that will scare at least some early retirees back into the workforce is a big stock market drop. Until then, I don't see the labor market expanding for a few years. The higher the market keeps going, the early retirements will likely continue.

 

[stepford]

I feel like a Haight Ashbury hippie in late '67 watching the busloads of kids stream in...

 

[Montecfo]

After the financial crisis, the post 55 cohort began participating in the workforce at a higher rate than before. THEN it was said they had to delay retirement. This masked lower than trend participation by the 16-24 group (going by memory).

I suspect that among the post 55 group participation now has returned to closer to pre-crisis levels.

It did not figure to last forever.

 

[EastWest Gal]

I feel like a Haight Ashbury hippie in late '67 watching the busloads of kids stream in...

Hey, I was actually on a few of those busloads-field trips to Golden Gate Park in elementary school!

 

[Closet_Gamer]

Will be interesting to see what an 18-24 month hard bear market would do to these participation rates.

I suspect there are a lot of partially planned FIREs out there.

And those folks who are out of the job market may find it really tough to get back in at anything like their previous earning levels or roles.

 

[JoeWras]

I feel like a Haight Ashbury hippie in late '67 watching the busloads of kids stream in...

This is possibly the funniest, yet true, statement I've read here in a long time. Especially since I'm one of the kids. ;-)

---

I hate to say it, but it is going to take a good, hard recession to shake everything out. There's a thread here bemoaning the current car buying situation, with many saying the process is forever changed. Nope. A recession will solve that issue too.

 

[JoeWras]

One more thing about this article. It talks about being forced out. Yep. I'm finding the whining from Megacorps about the labor shortage to be like nails on a chalkboard.

My MC and many others, especially in tech, did everything they could to dump us. So I find no sympathy to their little problem.

Now time for me to get off the bus and "turn on, tune in, and drop out".

 

[Vincenzo Corleone]

One more thing about this article. It talks about being forced out. Yep. I'm finding the whining from Megacorps about the labor shortage to be like nails on a chalkboard.

My MC and many others, especially in tech, did everything they could to dump us. So I find no sympathy to their little problem.

Now time for me to get off the bus and "turn on, tune in, and drop out".

+1000

 

[Car-Guy]

No reason to doubt the "story"... But it does make me wonder why high inflation rates doesn't seem to scare away "those that have chosen to ER" at this point in time.

But "one thing" I do think will happen, is that many will rethink ER when the inevitable (IMO) market drop(s) hit us.

 

[Time2]

The graphs show 55 years and older labor participation rate dropped from 40.3% to 39.4%. That needs more dissection. Not many 70 to 90 year olds in the labor force, and 62 to 70 is a more normal time to drop out of the labor market.
So, what was the percentage drop of 55 to, say 66 year olds dropped out of the labor force. And how many million is that.
I guess my real question is how many early retires are there?

I question that the number is all that large. Then again, Early Retirees is another number that can be broken down to those that actually saved up a large nest egg in anticipation of retirement and those that found a way to live on taxpayer money through the Covid crisis and then never went back to work or haven't yet, but found off the books type of income.

 

[jollystomper]

From reading the article, while they state early retirement is a key factor in the labor shortage, the tone of the article implies that this is not a welcome thing for those in early retirement... they emphasize the "being forced" into retiring early with no options, as opposed to finances making it more conducive to retire early. In other words, the employers are more to blame for early retirement contributing to the labor shortage.

 

[Montecfo]

Yes, the data the article relies on is not that granular. There are a lot of people that retire after age 55 that are not retiring "early". They may retire at 55 or later. No dissection of that. Just speculation that it is early retirees.

 

[MichaelB]

I question that the number is all that large. Then again, Early Retirees is another number that can be broken down to those that actually saved up a large nest egg in anticipation of retirement and those that found a way to live on taxpayer money through the Covid crisis and then never went back to work or haven't yet, but found off the books type of income.

That’s a very broad brush and I think probably doesn’t describe the circumstances of many.

A recent study by Goldman Sachs shows half of retirees retired earlier than planned, and the biggest reason for this early retirement was health. You can see the study here https://www.gsam.com/content/gsam/u...ns/2021/defined-contribution-survey-2021.html

 

[Another Reader]

Suspect the millions of people with Long Covid, a large percentage of whom are of working age, are a big factor in the labor shortage. I'm retired, but I know I could not work. I know many in their thirties that have disabling organ and brain damage and will probably never be able to work. Many of these people held early career professional positions - nurses, engineers, accountants and the like. Long term disability and Social Security are going to be heavily impacted. The actuaries of the various entities know, but the information has not been forthcoming.

 

[MRG]

I left Megacorp before they started RIFFing people in earnest. Had I stayed I'd been pushed out in 2019 with most of my peers. I believe that there is some truth to this article. But I agree with most a big downturn will likely push some folks back into the workplace.

 

[Magus]

Will be interesting to see what an 18-24 month hard bear market would do to these participation rates.

I suspect there are a lot of partially planned FIREs out there.

And those folks who are out of the job market may find it really tough to get back in at anything like their previous earning levels or roles.

Agreed on what a long bear market would do for labor force participation.

Re: earnings levels - Or it could be a lot easier - just depends on their pay scale before retirement (white collar definitely be harder, blue collar probably easier now since wages for bottom half are up so much in the last 2 years)

 

[Magus]

This is possibly the funniest, yet true, statement I've read here in a long time. Especially since I'm one of the kids. ;-)

---

I hate to say it, but it is going to take a good, hard recession to shake everything out. There's a thread here bemoaning the current car buying situation, with many saying the process is forever changed. Nope. A recession will solve that issue too.

It depends. An inflationary recession would not solve that issue, only a deflationary one. The US hasn't had really any inflationary recessions before except maybe during Carter era but they do happen, especially with a very accomodative monetary policy.

 

[W2R]

Suspect the millions of people with Long Covid, a large percentage of whom are of working age, are a big factor in the labor shortage. I'm retired, but I know I could not work. I know many in their thirties that have disabling organ and brain damage and will probably never be able to work. Many of these people held early career professional positions - nurses, engineers, accountants and the like. Long term disability and Social Security are going to be heavily impacted. The actuaries of the various entities know, but the information has not been forthcoming.

+1
I am doing pretty well these days, although I still have a few of the more common symptoms such as significant hair loss, weakness, tiredness, and occasional return of brain fog. This is all fine as a retiree, but I can't even begin to imagine trying to work like this - - I feel really bad for those with Long Covid that need to continue working.

I feel like a Haight Ashbury hippie in late '67 watching the busloads of kids stream in...

I didn't get to the Haight Ashbury until March of 1968. Always late!

 

[Dalmore]

I am happy to count myself and DW as part of the problem. I had already planned to RE in 2019 before the pandemic started, and DW was forced out when her job was eliminated to save money. I suspect there are a lot of Boomers that also retired, not necessarily RE, as they re-evaluate what is important. Opens up a lot of job positions for people to move up into.

 

[ExPatKiwi]

Corporate ageism exists. I’m planning on 2022 being the year I exit the workforce at age 58.

 

[disneysteve]

I suspect there are a lot of Boomers that also retired, not necessarily RE, as they re-evaluate what is important. Opens up a lot of job positions for people to move up into.

This. It isn't necessarily that people retired "early" but rather that they retired sooner than they had planned to. I know a number of people in the medical field who fit that description. Some are in their mid to late 60s, so not early retirement by any definition. These are people that are active and vibrant and really enjoyed what they did and planned to keep doing it for years to come. COVID changed all of that.


The healthcare system is in shambles and going to work became a chore as well as a huge personal risk. It was no longer enjoyable. They didn't need to be working. They did it because they liked it. Once they stopped liking it, there was no reason to keep at it. A bear market won't change anything because they're all well set. They weren't working for the money.


I've been planning to retire early but choosing to cut back when I did was definitely due to COVID. If my job today looked the same as it did 2 years ago, it's very possible I'd still be full time. With the mess it is now, even part time is feeling like it's too much to deal with. I'm going to give it a few months and if things don't improve, I'll drop to per diem by middle of 2022 sometime.

 

[CaptTom]

My MC and many others, especially in tech, did everything they could to dump us. So I find no sympathy to their little problem.

Same here. I'm not so sure they malevolently dumped people, but they made it clear that employees weren't valued. Cuts in benefits and pay, long hours, and a total lack of loyalty to their employees. This was during a time when the job market favored the employer, and they took full advantage of it. Don't like it? Leave!

They also treated employees like a commodity. Get rid of the long-serving, knowledgeable staff and hire the ambitious young kids who think they know it all and will work cheap. With the turnover in HR, nobody really knew what skills they were losing by doing that. This kid took a Java class in middle school - hire him as a Systems Programmer!

I'm hopeful (for the next generation) that this attitude is changing. I know organizations I'm involved with are bending over backward to recruit and retain good staff.

As an aside, I wonder how much of the "Great Resignation" is just demographics. Boomers are pretty much all at or beyond a typical retirement age now.

 

[Vincenzo Corleone]

Same here. I'm not so sure they malevolently dumped people, but they made it clear that employees weren't valued. Cuts in benefits and pay, long hours, and a total lack of loyalty to their employees. This was during a time when the job market favored the employer, and they took full advantage of it. Don't like it? Leave!

They also treated employees like a commodity. Get rid of the long-serving, knowledgeable staff and hire the ambitious young kids who think they know it all and will work cheap. With the turnover in HR, nobody really knew what skills they were losing by doing that. This kid took a Java class in middle school - hire him as a Systems Programmer!

I'm hopeful (for the next generation) that this attitude is changing. I know organizations I'm involved with are bending over backward to recruit and retain good staff.

As an aside, I wonder how much of the "Great Resignation" is just demographics. Boomers are pretty much all at or beyond a typical retirement age now.

At least in tech - as long as things like the H-1B visa and Optional Practical Training programs exist, I'm not counting on it.

[I don't mean to hijack this thread with what could be considered controversial issues, so I won't engage in any back-and-forth on this. If you'd like to discuss/debate, please feel free to send me a private message.]

 

[disneysteve]

Same here. I'm not so sure they malevolently dumped people, but they made it clear that employees weren't valued.

I just read an article today about the airlines. When the pandemic hit and air travel dropped to a fraction of normal, airlines offered sweet early retirement packages to try and trim the ranks and lighten their payroll. The offers were far more popular than anticipated and something like 60,000 employees left.


The hope was that on the other end, new young workers would fill in those vacancies once they started hiring again, but that wave of new people hasn't materialized.


Now air traffic is nearly back to pre-pandemic levels but the airlines aren't back to pre-pandemic staffing. Add in rising COVID cases and quarantines and you have this week's situation with thousands of flights cancelled over the holiday because there just aren't enough workers to maintain operations.