How age dynamics have reshaped the post-Covid job market landscape

In the aftermath of the Covid-19 pandemic's impact on the US job market, a profound shift emerges. Older workers, particularly those aged 65 and above, have stepped back, altering the landscape of labour force participation. Their departure, largely due to health concerns, has left a significant gap in the workforce. Meanwhile, younger demographics, notably teenagers, are making unexpected forays into employment. Yet, amidst this complexity, the lasting effects of the pandemic on job market dynamics reveal a nuanced interplay between age groups..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Justin Fox.It has now been four years since the US job market went into an unprecedented freefall because of the Covid-19 pandemic. With that anniversary and the release last week of February jobs numbers comes a once-a-year opportunity to examine the shape of the recovery — once a year because some of the most interesting jobs data aren't available in seasonally adjusted form. .___STEADY_PAYWALL___.The most striking change is the departure of Americans 65 and older from the job market. This has often been described as the departure of Americans 55 and older because the Bureau of Labor Statistics publishes 55-and-older numbers in handy seasonally adjusted form every month. In truth, it was only the 65-plussers who left, marking an abrupt end to decades of rising labor force participation. (Note that 65-and-older labor force participation was so high in the 1950s in part because most Americans didn't survive much past 65 then; average life expectancy didn't hit 70 until the 1960s.).Their departure from the job market, a reasonable reaction to the rapid spread of a disease that was far more dangerous for them than for younger workers, has left the US with 700,000 to 800,000 fewer 65-and-older workers and would-be workers than if the group's labor force participation rate had stayed at the levels prevailing in late 2019 and early 2020..Covid-19 has also killed more than 800,000 people 65 and older in the US. Taking into account the age distribution of those deaths, that comes to a labor force decline of — very roughly — 100,000. Despite all those deaths, the US 65-plus population has grown rapidly since the beginning of the pandemic as baby boomers keep turning 65 (the last of them will do so in 2029). This has put yet more downward pressure on labor force numbers as those in the 65-69 age range have a much lower participation rate than those 60-64. My super-duper-rough estimate is that this has reduced the labor force by more than a million since early 2020..Read more: Rare adverse events linked to COVID-19 vaccines revealed in largest study yet.By removing about 2 million people from a US labor force currently estimated at 167 million, these 65-and-older dynamics would seem to be the single biggest supply-side cause of the labor market weirdness of the past four years. The immigration shutdown early in the pandemic is the closest contender, with the foreign-born labor force going from average annual growth of nearly 500,000 in the five years leading up to the pandemic to effectively zero from February 2020 to the end of 2021, although it has made a big comeback since. Long Covid is another, with separate economic studies conducted in 2022 estimating that it had reduced the labor force by 500,000 or 420,000. (There are other, much higher long-Covid estimates, but they're harder to reconcile with the jobs data.).Another frequently voiced explanation for recent job market tightness is that young people don't want to work. As the first chart shows, labor force participation and employment have in fact dropped for Americans in their 20s, with participation also down for those in their late teens. At the same time, there's been a rush of younger teenagers into the job market, although after decades of declines their labor-force participation rate still averaged only 26.4% over the past 12 months, down from above 40% in the 1990s. And while participation and employment went up for all other age groups between 30 and 64, they fell for those in their early 50s..Or … did they? Monthly age-group labor market numbers can be quite noisy. I've already used three-month averages to dampen the noise, but as a reality check, here's the same chart comparing the past 12 months to the 12 months ending in February 2020.It looks as if those early-50s declines were a fluke. All age groups from 30 to 64 have posted strong gains in labor force participation and employment by this measure, and the gains for 16- and 17-year-olds are epic. The weak labor market performance of young adults seems to be for real, though, especially for those in their early 20s. Employment downturns usually hit the youngest workers hard, plus the pandemic disrupted schooling for many in their late teens and early 20s, but the persistence of these declines is surprising and disturbing..At about 200,000 lost workers and job-seekers, however, a 1% decline in labor force participation among 20-to-24-year-olds does not amount to a huge labor shock. Some young people may not want to work, but it's old people not wanting to work that has most affected the job market over the past four years..Read also:.🔒 WSM reflects on Covid-19: Chickens coming home to roostJustin Fox revisits COVID-19: We got the risk right, but the response wrongGenerative AI and it's impact on the entry-level job market: The future of work for Gen Z – Sarah Green Carmichael.© 2024 Bloomberg L.P.

How age dynamics have reshaped the post-Covid job market landscape

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