An analysis of employment trends as a result of COVID-19 by the University of Chicago found that many people who are out of work following the crisis are choosing not to look for a new job. A primary reason for that is that they decided to go ahead and retire.
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For the paper, “Labor Markets During the COVID-19 Crisis: A Preliminary View,” the authors used the Nielsen Homescan panel to survey over 18,000 people in January, prior to the widespread shutdowns cause by the pandemic; a subsequent survey in early April included nearly 10,000 respondents.
The authors found that nearly 20 million jobs were lost as of April 8. Using the BLS definition of unemployment — those not working and looking for a job — the authors discovered that unemployment increased only two percentage points.
Participation in the labor force — the number of people actually working or actively looking for work — fell seven percentage points, according to the paper. This is “an unparalleled fall that dwarfs the three percentage point cumulative decline that occurred from 2008 to 2016,” the authors wrote.
Survey data show that the increase in people stepping out of the labor force is largely due to people opting for early retirement. The percentage of respondents in the second survey who said they weren’t looking for jobs because they didn’t need one, they were homemakers or providing care, or they had a disability was level with the first survey. However, the percentage of people who said they had retired increased from 53% to 60%.
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The authors noted that the age distribution was comparable between the two surveys, suggesting that some of those retirements were taken earlier than planned.
“With the high sensitivity of seniors to the COVID-19 virus, this may reflect in part a decision to either leave employment earlier than planned due to higher risks of working or a choice to not look for new employment and retire after losing their work in the crisis,” according to the survey.