Rising inflation, signing bonuses luring older workers back

The pandemic triggered an exodus from the workplace, as many older workers lost their jobs because of the economic downturn or chose to retire. As the pandemic winds down, however, many of them are returning to work.

Although the number of retired Americans 65 and older is nearly 3 percent higher than in 2020, the number of working older adults is more than 2 percent points higher, reflecting the broader economic recovery and strong labor market conditions. Several reasons may help explain the reversal: 

• There is much more competition among businesses for workers, leading to sign-on bonuses, better benefits and more choices for job seekers. The labor market has recovered faster than expected over the past two years.
• Wages have risen accordingly, according to the U.S. Bureau of Labor and Statistics. Median weekly wages were $951 in the first quarter of 2020, compared with $1,030 in the first quarter of 2022. 
• Higher pay and rising inflation could encourage people to go back to work. Likewise, the 2022 stock market downturn could have older adults concerned about the state of their retirement savings. 

A MagnifyMoney study analyzed U.S. Census Bureau Household Pulse Survey data to examine the labor environment for older Americans, comparing data from April and May 2020 to April and May 2022. Among the findings:

Amid the pandemic, a rising share of adults 65 and older is working. In late April and early May 2020, 19.5 percent of Americans 65 and older were working. That figure jumped more than 2 percent in late April and early May 2022 to 21.9 percent. At the same time, the share of U.S. adults who reported that they are retired also is up, from 14.9 percent in April and May 2020 to 17.4 percent in April and May 2022.

More than a quarter of working Americans 65 and older are self-employed. This is more than triple the rate among working Americans aged 25 to 39. Meanwhile, the government isn’t the landing spot it once was for older workers: In April and May 2020, 15.2 percent of employed Americans 65 and older worked for the government. In April and May 2022, however, that percentage plummeted by a third to 10.1 percent.

New Jersey saw the largest jump in older adults in the workforce since the beginning of the pandemic. In April and May 2020, 18.1 percent of Americans 65 and older were employed in New Jersey. By April and May 2022, that was up 18.9 percent to 37 percent. The other states with double-digit increases were West Virginia (17.2 percentage points) and Pennsylvania (14.6).

North Dakota saw the biggest dip in the percentage of adults 65 and older in the workforce. The rate of older working adults went from 36 percent in April and May 2020 to 25 percent in April and May 2022, a drop of 11 percent. Other big drops were seen in Wisconsin (8.3 percent) and North Carolina (6.3 percent).

Only five states saw a drop in the rate of retirees as a percentage of the adult population. The percentage of retired adults in West Virginia fell from 23.3 percent in April and May 2020 to 21.6 percent in April and May 2022, the biggest drop across the United States.

The report urges would-be older workers to follow AARP’s recommendations and limit their resume work experience to more recent years and removing graduation dates. It also recommends learning new skills and being willing to pursue jobs in a different industry.