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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.

Hyunsoo Rim

8/29/25 8:11AM

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.

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“The stock rose as much as 1.5% to $69.55, topping a peak it hit on Jan. 24, 2020. The shares are up 90% this year, after soaring 84% in 2025. Intel is now roughly 8% from its all-time closing high of $74.88, established on Aug. 31, 2000.”

That’s just the most recent late-’90s-era throwback we’ve been seeing in tech shares lately. Oracle is currently pacing for its best week since late 1999.

What’s even more remarkable, however, is that Intel’s forward price-to-earnings ratio today dwarfs the premiums the market was putting on the stock during the nuttiness of the dot-com mania.

That reflects the fact that the recent run-up in Intel shares is, essentially, giving the chip giant credit for a massive turnaround that hasn’t actually happened yet.

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The FDA approved Foundayo on April 1 and shipments began on April 9. In its first week, roughly 1,400 US prescriptions were written for the drug, according to IQVIA data cited by Deustche Bank analysts in a Friday note.

Novo Nordisk, Lilly’s rival in the GLP-1 market, released its GLP-1 pill earlier this year, and early signs show that it’s expanding the market, inviting patients who were turned off by weekly injections. Novo’s pill had a stronger first week than Lilly’s, with its Wegovy pill hitting 3,071 US prescriptions in the first four days after its launch on January 5.

Lilly’s pill has an advantage over Novo’s, which is that it can be taken at any time of day, with or without food. Lilly disclosed in a February regulatory filing that it had $1.5 billion worth of prelaunch inventory ready ahead of the FDA approval — which is about as much as analysts polled by FactSet expect it to sell this year.

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