Boomer Retirements Drive Down Jobless Rate
Last month's drop in unemployment to 8.1 percent from 8.2 percent resulted from a shrinking labor force, suggesting that many discouraged workers gave up job searches.
But analyses by two economists show growing Baby Boomer retirements were behind most of the decline in the labor force — those employed and looking for work.
That's key because some fear the unemployment rate will rise again when better job prospects draw discouraged workers back to the market. A Boomer exodus could more than offset the re-entry of discouraged workers.
Payroll growth was disappointing for a second straight month in April, at 115,000 jobs, far less than the 200,000-plus pace in January and February, the Labor Department said Friday.
Yet the jobless rate dipped as the share of adult Americans employed or seeking work — the labor force participation rate — fell from 63.8 percent in March to 63.6 percent in April, lowest since December 1981.
Many more employed than unemployed Americans dropped out of the labor force last month, likely indicating that most were retirees rather than discouraged workers, says Mark Zandi, chief economist of Moody's Analytics. Of the 6.7 million people who dropped out of the labor force last month, about 60 percent were employed.
That's been the pattern since at least 2010. The number of employed Americans leaving the job market has risen, while the ranks of unemployed dropping out have fallen.
Dean Maki, chief U.S. economist of Barclays Capital, cites more evidence from government data. In the first quarter, 18.8 percent of Americans who were not in the labor force and said they didn't want jobs were 55 or older, up from 17.8 percent when the recession started.
He says that closely tracks the rise in Social Security recipients. Maki says the increase in Boomer retirements likely means job growth of only 75,000 to 100,000 a month is needed to keep the unemployment rate steady.
One factor helping nudge more older workers into retirement is the expiration of extended unemployment benefits, Zandi says, because states require recipients to actively look for work. Fifteen states ended extended benefits in April, the National Employment Law Project says.
Others simply tire of a harsh job market. Jean Coyle, 67, of Alexandria, Va., lost her job as a minister in 2007 and finally stopped looking for full-time work in the past year: "You get tired of being rejected, discarded and disappointed."
This story first appeared in USA Today.