COVID = More ERs?

[Tekward]

An interesting large-scale survey of households to characterize how labor markets are being affected by the covid-19 pandemic.

• First, job loss has been significantly larger than implied by new unemployment claims: we estimate 20 million lost jobs by April 6th, far more than jobs lost over the entire Great Recession.
• Second, many of those losing jobs are not actively looking to find new ones.
• Third, participation in the labor force has declined by 7 percentage points, an unparalleled fall that dwarfs the 3-percentage point cumulative decline that occurred from 2008 to 2016. The bulk of the COVID-19 job market impact is being absorbed by the 50-64 opting out of the Labor Force (early retirement).https://www.nber.org/papers/w27017.pdf

 

[gwraigty]

I didn't read the paper. If that's an excerpt or accurate summation, I'm not impressed. Considering that there are now 30 million unemployed as of late last week, this is old news and hopelessly out of date. I agree that number is probably still understated, as many still can't get through the bottleneck to file for unemployment. It's been discussed on this forum why the unemployed may or may not be looking for work including, but not limited to, the lack of child care with day cares closed, the extra $600 per week making it profitable to stay unemployed rather than take a near-minimum wage temporary job, the fact that you can't squeeze a substantial number of the unemployed into the relatively comparatively few jobs that are available, general fear among some workers, etc.

I haven't read of large numbers of people deciding to retire early because of this, here or elsewhere. Apologies if I'm missing the point of your post.

 

[RunningBum]

+1 to gwraighty's post. Also comparing the raw number of job losses to the depression isn't that meaningful. The US is almost 3 times as populated now, and the 1930s workforce didn't include a lot of housewives, I'd bet.

 

[Chuckanut]

It's been discussed on this forum why the unemployed may or may not be looking for work including, but not limited to, the lack of child care with day cares closed, the extra $600 per week making it profitable to stay unemployed rather than take a near-minimum wage temporary job, the fact that you can't squeeze a substantial number of the unemployed into the relatively comparatively few jobs that are available, general fear among some workers, etc.

FWIW, my child who was unemployed thanks to CV19 in Mid March has just started getting her unemployment checks. She has looked for jobs, but when tens of thousands of people in your city are suddenly out of work within a few weeks, the competition is enormous.

My other child is working, but the huge increase in daycare costs has virtually wiped out about 2/3 of her take home pay. If it were not for the fringe benefits (pension, savings plan, better medical insurance, etc.) working would not make much sense. She has a relatively secure job, so we will just work through this and wait for better days.

I will be splitting my $1200 between them.

 

[Brat]

My son's business needed an office worker and received 100s of applications (believe you me they are trying), mostly former restaurant workers who didn't have the skills needed. I can understand why many who lost their jobs aren't looking, many of the jobs for which they have experience aren't available. If I were a restaurant worker I would consider acquiring skills that will be more marketable once the economy opens up.

 

[nash031]

Might be the case for me. This has given me confidence we will be good with lower income, so I may quit the bridge job and go semi-ER and start chasing dreams while making not very much,

 

[gwraigty]

My son's business needed an office worker and received 100s of applications (believe you me they are trying), mostly former restaurant workers who didn't have the skills needed. I can understand why many who lost their jobs aren't looking, many of the jobs for which they have experience aren't available. If I were a restaurant worker I would consider acquiring skills that will be more marketable once the economy opens up.

Some restaurant workers are college students. Those who aren't students and were happy with their jobs will eventually be back in a good place when the economy stabilizes. I don't expect restaurants to become extinct.

 

[jollystomper]

Some restaurant workers are college students. Those who aren't students and were happy with their jobs will eventually be back in a good place when the economy stabilizes. I don't expect restaurants to become extinct.

I do not believe restaurants will be extinct, but I do believe there will be fewer restaurant jobs, partly due to (a) limitations on the amount of table service allowed and (b) a greater effort to increase restaurant service automation.


In terms of more ER (I assume that is Early Retirement), I doubt that. I suspect there will be less. Most people depend upon high market returns to rapidly grow their nest egg to hope for early retirement. I suspect that you will not see the stock market grow for several years. High savers will be impacted with interest rates being kept low. A lot of people define ER as "leaving a job I do not like to earn income doing what interests me", but there is another thread here somewhere that discusses how many of those people are panicked now that their income has dried up and what they have saved will not support their "retirement'.

 

[USGrant1962]

I don't know about ER, but I would expect a jump in age 65+ "normal" retirements. A good number of folks still working out of habit, fun, escape from the spouse, etc. might just pull the plug and start SS rather than go back out into the COVID-sphere.

 

[FinanceGeek]

is Corona driving the OMY crowd to ER?

Reading this paper on corona related unemployment mentions that many of those unemployed aren't looking for new work.

many of the newly non-employed people are reporting that they are not actively looking for work ...

we find an extraordinary decline in the adjusted labor force participation rate, from 64.2% to 56.8% ...

we see a large increase in those who claim to be retired, going from 53% to 60%.

The author's only mention one possible cause of corona-induced ER - older folks already close to retirement age have more health risk due to corona. But I wonder to what extent other things are a factory

• generous unemployment benefits (you can resign and remain eligible in many cases)
• realization that the rewards for future work just aren't worth it once you factor in possible infection, higher taxes
• stability of the ACA (if not full on universal coverage) is far more likely post-corona. Huge numbers of voters have just seen the downside of relying on employment coupled coverage.

Many of us (myself included ) have been perennial OMYers for a decade now. Corona may just be the catalyst to hang it up.

 

[gwraigty]

That paper and this topic is already being discussed in another thread:

COVID = More ERs?

 

[pb4uski]

I suspect that both are true. Those who were close to retirement and lose their jobs may not try to find another one. OTOH, I know some people who have stable jobs and were thinking about retirement who plan to stay until the uncertainty over the economy is clearer.

 

[MichaelB]

Two threads on the same topic were merged.

 

[John Galt III]

The free $600 per week extra unemployment compensation from the Feds stops in July, unless they extend it. I heard on the radio today some employer who had employees on unemployment (state UI of x amount plus fed UI of $600 per week) and when he called them back to work a few days ago, most of them refused to return, since they were making more money on the overly generous UI claims. The employer called the state unemployment office to contest the employee's claims, and the state said they were 'at this time' not going to stop the unemployment checks to the laid off employees. Don't know if the employer tried to alert the feds about it, but it was my understanding the fed $600 per week was rock solid to the laid off employee, no matter what (at least until July). I remember watching the Senate debate on this subject and some of them predicted exactly this : employees gladly staying home rather than working, even when work was available. I don't really blame the employees for doing this, since it's all legal, but wow.....

 

[gwraigty]

The free $600 per week extra unemployment compensation from the Feds stops in July, unless they extend it. I heard on the radio today some employer who had employees on unemployment (state UI of x amount plus fed UI of $600 per week) and when he called them back to work a few days ago, most of them refused to return, since they were making more money on the overly generous UI claims. The employer called the state unemployment office to contest the employee's claims, and the state said they were 'at this time' not going to stop the unemployment checks to the laid off employees. Don't know if the employer tried to alert the feds about it, but it was my understanding the fed $600 per week was rock solid to the laid off employee, no matter what (at least until July). I remember watching the Senate debate on this subject and some of them predicted exactly this : employees gladly staying home rather than working, even when work was available. I don't really blame the employees for doing this, since it's all legal, but wow.....

I posted elsewhere that Ohio now has a form on it's unemployment website to allow employers to report employees who refuse to return to work when work is available for them. I'd think other states will be following suit with similar measures. It's not true that the federal $600 is rock solid. The employee still has to remain qualified for their state unemployment.

Federal Pandemic Unemployment Compensation (FPUC) FAQs

This program provides an eligible individual with $600 per week on top of the weekly benefit amount he or she receives from certain other UC programs. An individual must first be eligible for UC or Pandemic Unemployment Assistance (PUA) benefits to qualify for the additional $600 per week in benefits.

My employer offered me my job back, but I would make more staying on Unemployment. Can I do this?

No. If you are offered work by your employer and refuse to accept it, without good cause, you may no longer be eligible for UC. Determining whether there was good cause for a refusal of work is driven by the facts of each claimant’s circumstances. During the current COVID-19 pandemic, if an employee refuses to return to work because they are at high risk of complications from the virus and their employer cannot make reasonable accommodations for them, or if they were being asked to return to work at reduced hours that result in them earning less than they did before the pandemic, UC staff would review those specific reasons and make determinations based on the facts of their individual cases.

If you do return to work at reduced hours, and this results in a reduced weekly income compared to your weekly income prior to filing for UC, you may be eligible for partial UC plus the $600 FPUC per week.

Some people are going to be in for a rude awakening if they think they can refuse to return to work just so they can sit home making more.

 

[rodi]

The corporation that acquired the division of my previous company that I retired from, just laid off everyone in my old division. Two friends said they are retiring. Both have been doing OMY for a few years and the year of severance pay eases the sting quite a bit.