Is 'Unretirement' the Answer to the Labor Shortage?
Upshot
The results of their study was that “the rate of unretirement has been relatively low over the last four decades, averaging just over 6%,” they state.
Further, unretirement does not appear to be “very sensitive” to labor market conditions.
An example they gave was that in the three years before the Great Recession, when the job offer rate was relatively high for the era, unretirement averaged 7.5%. But in the three years after the Great Recession, that dropped to 6.4%.
Yet using regression analysis, they found a “slightly different picture.” That is, “the effect of an increase in the job opening rate on unretirement is statistically significant, though relatively small.” In fact, a 1-percentage-point increase, year-over-year, in a state’s job opening rates is associated with a 0.5-percentage-point increase in unretirement, they state.
And those retirees more often reentering employment were younger (retired) workers, more educated workers and men.
To put this in perspective, the authors note that using the regression calculation estimate, an expected 1.9% more workers were to unretire typically during an economic recovery. Based on 15 million retirees (ages 55 to 70), that would mean 300,000 additional workers.
But here’s the problem: This is less than one-tenth of the 4 million worker shortage, the authors state, “certainly, a non-trivial fraction but not a solution to the shortage either.”
Yet there’s another factor separating past data versus what’s happening today, the authors state. Today, we are recovering from “a major pandemic that has included a large-scale change in working conditions, particularly the ability to work remotely.”
This could be a game-changer in bringing needed labor out of retirement. It still isn’t enough, but it could break past patterns.
“In these strange times, when a labor market recovery could also be accompanied by more opportunities to work remotely, such a break does not seem impossible,” the authors conclude.
