WASHINGTON – When Robin McLane’s generation hit public schools in the 1950s, there were never enough classrooms or teachers to accommodate the bulge, she said. So she’s not surprised about the latest shock that boomers are delivering to the U.S. economy.
“People all around me, relatives and friends, are either retiring, or they’re finding it’s very difficult to find work anywhere from 55 on,” said the 65-year-old, who lives in Portsmouth, N.H., and retired from her job as a high school literacy specialist in June. “For me, I was ready to move on.”
The share of Americans in the labor force, known as the participation rate, is hovering around an almost four-decade low as the population ages and discouraged job seekers give up looking for work. Federal Reserve research shows retirees are at the forefront of the recent exodus, which blunts the impact of policy aimed at boosting the economy and workforce.
In the two years ended 2013, 80 percent of the decrease in labor force participation was due to retirement, according to calculations by Shigeru Fujita, a senior economist at the Federal Reserve Bank of Philadelphia. And while the number of discouraged workers rose sharply during and after the recession, the group’s ranks have been roughly unchanged since 2011.
That tilts the debate on whether the participation rate can fully rebound alongside the improving economy, as retired workers are unlikely to re-enter the workforce, said Michelle Girard, chief U.S. economist at RBS Securities Inc., in Stamford, Conn. A tighter supply of workers means wage pressures would build faster than otherwise, something Fed Chairman Janet Yellen may watch as a leading indicator of inflation, Girard said.
“Even when the employment situation improves and the job prospects improve, it’s unlikely that this group is going to be enticed back into the labor market,” Girard said. “The implication is, well, if they’re out for good, you may not have as much slack in the labor market as you think.”