Older Americans haven’t returned to work — and they may stay out longer
Millions left the job market early during Covid. That surge has normalized, but the 55 and older group isn’t coming back.
The pandemic scrambled the US labor market in countless ways — from empty offices to the work-from-home shift — but one of the stickiest changes might be the exodus of workers. In early 2020, the labor force participation rate (the share of workers and job seekers out of the total working age population) plunged to a 50-year low, and still hasn’t fully recovered to prepandemic levels.
Many workers, across all age groups, left the job market during Covid, whether from health concerns, childcare hurdles, or sheer burnout. But one cohort in particular hasn’t returned to the workforce like others: older Americans.
According to the St. Louis Fed’s analysis, prime-age workers (aged 25-54) have fully bounced back, with their participation rate now even higher than prepandemic levels. Those 55 and older, however, remain about 2 percentage points below their pre-Covid participation rate.
The Great Retirement Boom
Older Americans’ mass exit was first triggered by what economists call “excess retirements.” Over 2 million extra retirees left the workforce during 2020-22, above what demographic trends would have predicted — accounting for more than half of the rise in total retirements during those years, according to Federal Reserve Board researchers.
Many of those early exits came from lower-income workers pushed out by job losses, who ended up relying on expanded unemployment benefits and stimulus checks. At the other end of the spectrum, wealthier baby boomers rode the 2020-21 asset boom — stocks surged and home values jumped nearly 20% — giving many the means to match their mindset to retire sooner.
In fact, however, “excess retirements” had faded by early 2025 toward more normal levels. But broader demographic trends are now the drag: nearly a third of the 55 and older workforce is now 65 or older, as boomers are aging into retirement en masse — while the younger population isn’t growing fast enough to offset it.
The shift isn’t just pandemic-driven: it’s been building gently for years. The latest New York Fed survey shows Americans’ expectations of working full-time past 62 have fallen from 55% in mid-2015 to 49% in mid-2025. While the reasons aren’t clear — it could be wealth effects, part-time preferences, or simply a rethink of work — the line has been bending lower for at least the past decade.
