By Richard Jackson

Elderly workers have become an increasingly critical driver of U.S. economic growth, accounting for almost 60% of all gains in U.S. employment during the 2010s. But since the onset of the COVID-19 pandemic in February 2020, more than one in 15 elderly workers have dropped out of the country’s labor force.

Near term, the decline in elderly labor-force participation is slowing the current economic recovery. Long term, if the decline proves permanent, it could worsen the already challenging economic, fiscal and retirement security outlook for an aging America.

Everyone knows that the pandemic caused a huge spike in unemployment. What is less well-known is that it also caused a large drop in labor-force participation — that is, the number of people who are either working or actively seeking work. While the unemployment rate has fallen as the recovery has progressed and is beginning to approach its pre-pandemic level, the labor-force participation rate is not much different from what it was a year ago at the height of the pandemic.

There are a number of reasons why labor-force participation has been slow to rebound. Many women were compelled to exit the labor market due to pandemic-related caregiving responsibilities, and some may have decided not to return. Government stimulus checks, together with rising asset prices, may also have enabled some workers to exit the labor market, at least temporarily, while the health effects of long COVID may be keeping others at home.

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