April 5, 2020
A new study by economic professors Olivier Coibon of the University of Texas at Austin, Yuriy Gorodnichenko of the University of California at Berkeley, and finance professor Michael Weber of the University of Chicago’s Booth School of Business shows a troubling trend that they gleaned from a series of surveys conducted over January and April of this year. Utilizing the Nielsen Homescan network, they were able to survey just under 100,000 households for two surveys, one in January and another in early April- roughly before and during the covid-19 crisis, respectively.
The responses that they received were alarming: the job loss rate that the responses indicated were higher than what the new unemployment claims suggest. But more alarmingly, the data shows that the employment to population ratio has dropped a staggering 7%, which they note is far above the 3% decline from 2008-2016.
When they asked those who indicated that they lost their job and were not looking for one currently the reason for the change, the only response that increased between the pre-crisis survey and the survey from early April was “Retiree.” The professors suggest that early retirement can nearly perfectly account for the reduced labor force participation rate for both those surveyed who were previously employed as well as those who had previously been looking for work, but are no longer.
In our previous post, Why So Many American Seniors Are Putting Off Retirement, we discussed a survey by Provision Living that looked into why so many seniors were working into their retirement years. Remarkably, at the time over 20% of the US population over age 65 was still working, and 62% of those individuals were doing so for financial reasons. This new trend resulting from the Covid-19 crisis will clearly upend the retirement planning for many seniors in that situation, unfortunately.
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