Record Retirements, Quitting & New Business Starts in 2021
We are living in unprecedented times and I wanted to unpack this and get your feedback.
Record Number of Retirements
A recent report from the Schwartz Center for Economic Policy Analysis made the following points:
- Retirement Boom: At least 1.7 million more older workers than expected retired due to the pandemic recession.
- Retirement Inequality: At earlier ages, vulnerable older workers retired sooner, while more privileged workers delayed retirement. The share of retired workers among adults aged 55-64 rose 5% for those without a college education but fell 4% for those with a college degree.
- Racial Inequality: Black workers without a college degree experienced the highest increase in the share who are retired before age 65. This rate rose 1.5 percentage points, from 16.4% to 17.9%, between 2019 and 2021.
Approximately 2 million 55+ workers retired each year for about the last 10 years. This almost doubled in 2020. The distribution was not even though. If you were college-educated and stayed employed you probably put off retirement to let your retirement nest egg grow. If you were not college-educated and over 55 years of age, the likely hood of you retiring went up a lot.
Those who were the most vulnerable likely retired.
College-Educated Workers Delayed Retirement at Earlier Ages, Increased Retirement At Older Ages
The report goes on to state the following:
Retirement patterns for college-educated older adults diverged from those without a college degree. Adults ages 55 to 64 with a college degree were less likely to retire during Covid-19 compared to pre-pandemic, while those over age 65 were more likely to retire. The retirement rate for adults 55 to 64 with a college degree decreased from 16.4% to 15.8%, or a decrease of 4% in the probability of retirement—almost a mirror image of the 5% rise in the probability of retirement for non-college adults 55-64.
I will be running a survey on how the pandemic affected you but I would like you to respond to me privately via my contact form.
What has the pandemic done to your retirement plans?
People are Quitting in Record Numbers!
The Atlantic has a great post titled What Quitters Understand About the Job Market.
The quote I like the best is the following:
Quitting your job is hot this summer. More Americans quit in May than any other month on record going back to the beginning of the century, according to the Bureau of Labor Statistics. For every 100 workers in hotels, restaurants, bars, and retailers, about five of them quit last month.
It is not just blue-collar jobs that people are leaving. In May, more than 700,000 workers in the bureau’s mostly white-collar category of “professional and business services” left their job.
I would also encourage you to listen to the Wall Street Journal podcast, “Why Is Everyone Quitting?”.
There are a lot of reasons for the rush of people quitting.
- Quitting jobs was very low during the pandemic and therefore, a lot of people were waiting for the pandemic to end before leaving their current jobs
- Power has shifted back to the worker, especially in low skill jobs in hospitality and retail
- The pandemic has gotten a lot of people to rethink what they are doing in their career
It is really difficult to know what is going on. The White House recently published a post called, The Pandemic’s Effect on Measured Wage Growth in which they said the numbers this summer may look a little berserk.
If you have quit your job in the last year could you send me a quick note via my contact form to tell me why you quit?
Record New Business Starts
The US Census Bureau reports that new businesses are forming at an explosive rate. This is not just a US phenomenon but there is similar data coming out of the UK.
In researching this topic there are two explanations for this growth.
So many experienced, older, and college-educated people have been laid off and have been unable to find full-time work. These people have decided that self-employment is their only viable solution.
The barriers to entry in starting a business have dropped considerably in the last 10 years. Very often there is no need to find office space, finding contract labor to assist with just about anything is available via the Internet, and costs to get started can be very low.
The second explanation is disruption creates opportunities. There are lots of innovative startup companies popping up.
The sector with the greatest growth in startups is retail. You are probably saying WHAT! Retail is getting hammered in this pandemic. This surge in retail trade was primarily driven by the subsector “non-store retail trade,” which was up 77 percent over 2019. As you would expect this is online retail.
I think I was a bit ahead of the curve when I moved the Career Pivot business to be completely virtual in 2018 to be a digital nomad.
Have you started a business in the last year? If so, could you send me a quick note via my contact form and let me know about the project?
Will This Continue Through 2021 into 2022?
My guess is yes. I am in a mastermind group with entrepreneurs in the UK, Switzerland, and Canada and they still have quite a few restrictions in place. My guess is they are 3-6 months behind the US in their recovery from the pandemic.
The pandemic also has taken an incredible mental toll on the world population. In the US this is showing up in the crime and gun violence statistics. It is the old and less prosperous being forced into retirement and the younger population who are less prosperous that have suffered the most.
My guess is there are still unforeseen consequences of the pandemic that will continue to arise and disrupt various parts of the economy. All we can do is be vigilant and pay attention to what is happening.
Feel free to use my contact form to let me know how you have been affected if none of these three situations apply to you.Marc Miller