Will Retirees Return To Work With Bargaining Power?

Behind the sunny spin about the U.S. economy’s low unemployment rates, many older Americans are battling some grim realities. Take 67-year-old Tina Caston, who worked more than 20 years as an operations officer in the U.S. Navy and was ready for a comfortable retirement. Then, when her savings didn’t keep pace with rising costs of living, Caston had to take a new job as a substitute teacher—a job she now expects to work until she’s 72.

As Caston told NewsNation recently, “I thought I was doing all the right things — saving and taking care of family members. I never thought that at this point I would be retired and have to find another job.”

Caston is nowhere near alone—and inflation, the buzzword of the moment, is not the main cause pushing so many older workers back into the labor force. The sad (and fixable) reality, as I explained to NewsNation, is that America’s older workers are losing bargaining power, being pushed out of work before they are financially ready, and often pushed back into work to make ends meet.

Despite Indeed’s Nick Bunker’s perky interpretation on Twitter (shared by many)—that increased flows of older people back into jobs as the pandemic wanes means that people who retired voluntarily are now gladly returning to work—the data suggest a more grim reality.

So-called “retirements” during the pandemic were very different from those in the past. The nation has more than 1 million older Americans aged 55-74 who call themselves “retired” than we would have normally expected if there wasn’t a recession.

Evidence suggests that most of these people did not retire voluntarily. The overused phrase “Great Resignation” doesn’t apply to these older workers—the Great Pushout, causing massive increases in elderly unemployment and involuntary retirement, is more like it.

A team of economists at The New School found that older workers were likely pushed out of the labor force in 2020 and 2021 before they were financially ready to stop working, as in past recessions; essentially they “retired” reluctantly after being unemployed. In pre-pandemic times, more elder workers transitioned from work to retirement without being pushed back into work. It was, at least for some, the “gold watch and buffet lunch” kind of retirement that, decades ago, was more of a norm in America. (Though it’s worth noting, even before the pandemic, most retirements were not voluntary because most people retire earlier than planned.) In this pandemic, especially for older workers without college degrees, it was a “jobless then give up” kind of retirement.

The hidden force of massive unemployment hitting older workers without college degrees during the pandemic has thus changed the meaning of the benign phrase uttered to the government worker collecting data: for these less fortunate older workers, “I’m retired,” most likely means, “I was forced out before I wanted to leave employment.”

What is the evidence that older workers were pushed out instead of sauntering out to retirement?

There is a wealth of evidence showing that America’s older workers are in fact being pushed out before they are ready.

1. Older workers did not “retire” en masse when the pandemic started. Of the 35 million older workers who were employed in March 2020, 750,000 workers (2.1%) retired that April—which is what we would expect since 2% of older workers in 2019 also went from a job to retirement.

Instead, older workers lost their jobs en masse: 3.8 million workers aged 55-74 (a whopping 10.7% of all employed workers in this age group) became unemployed in April 2020. That is more than 20 times as many unemployed as in a pre-pandemic month. And in a trend we’ve documented previously, older workers experienced higher unemployment than prime-aged workers (ages 25-54).

2. This unemployment shock affected older workers’ retirement decisions. Out of the 3.8 million older workers who lost their job in April 2020, 400,000 retired a year later; before the pandemic, only 30,000 older workers went from unemployment to retirement.

3. In further evidence that older workers did not retire by choice, more people retired from employment in 2019 than during the pandemic—2.6 million compared to 2.4 million. During the pandemic, older workers held on to their jobs and those who were able to keep their jobs postponed retirement. . This fact contradicts the “Great Resignation” narrative that workers, particularly older workers, resigned and retired by choice. The massive job losses during the pandemic contributed to the current retirement surge; these so-called retirees did not resign and leave voluntarily.

4. Yet more evidence shows older workers have lost bargaining power—wage growth for older workers is relatively low compared to young and mid-career workers. This further suggests that elder workers are, unfortunately, not in a solid financial position to retire comfortably.

Will older workers who were pushed out of the labor force return to work?

Many are asking—will these elderly folks unretire? The answer depends on the demand for older workers. If employers want older workers, they will find older workers, who may find themselves in a weaker bargaining position than before they were pushed out. What we have here is a supply problem –these “retirees” likely want (or often need) to work because earlier-than-planned retirement drastically hurts older people’s financial readiness.

Here’s the bottom line: While Tina Caston and many others are being pressed back into work out of sheer financial need, overall we do not see the same large numbers of retirees who were pushed out now returning to the labor force. To be clear, this is likely due to a tight labor market and older folks’ decreased bargaining power—not because they are comfortably retired.

If employers were reaching out to older workers–and there is NO evidence they are—we would be seeing much higher “unretirement rates.” At the current pace, it would take almost two years to employ the 1.7 million excess “retirements” that accumulated because of the pandemic. Some older workers are returning, but these flows do not match the mass of pandemic retirements. Having an unretirement rate equal to what it was pre-pandemic is not enough to employ all those elders who now find themselves in need of work again.

Will retirees come back to work with bargaining power?

Given older workers’ desperate need to work to accumulate retirement funds and recover from massive cutbacks in hours and unemployment benefits, it is likely that they will not have the bargaining power to raise wages and improve working conditions significantly. To boost older worker bargaining power, the nation must enforce age discrimination laws; lower the Medicare age and make it the first payer of health insurance; and help older workers organize unions.

Unionizing warehousing work and home and personal care work—both occupations where conditions and pay are low and disproportionately hire older workers—would be a good place to start.

As these trends continue, rather than chirp about older workers’ return to the workplace, we’ll need clear-eyed, data-driven assessments that consider these elders’ realities: for most, they were pushed out of work prematurely before they were financially ready to retire, and, like Caston, are now under financial pressure to work deeper into old age just to survive.