The Great Recession led many older workers to take early retirement but improved life expectancy may mean that Americans stay in the labor force longer, said Goldman Sachs Group Inc.
The labor force participation rate for U.S. workers ages 55 to 64 increased by 0.7 percentage points a year from 2000 to 2008, according to Goldman’s analysis. But that trend reversed when the U.S. economy sank the most in 80 years.
“Since 2008, the U.S. is the only country where the 55- to 64-year-old participation rate has declined,” Goldman economists Jan Hatzius and David Mericle said in an Oct. 14 report obtained by Newsmax Finance
. “Even when we account for the starting participation rate in 2008 and limit the sample to men, the recent deceleration of U.S. old-age participation remains somewhat unusual.”
For people ages 65 to 74, the U.S. is second only to Japan in the percentage of people still working, according to Goldman’s comparison of the U.S. with other countries in the Organization for Economic Co-operation and Development.
Based on comparisons with other countries, they forecast that the labor force participation rate will rise among older workers, even as it declines for the broader population. Last week, Goldman forecast that the unemployment rate will fall below 4.5 percent by the end of 2018 from 5.1 percent now as people keep dropping out of the work force.
The labor force participation
rate last month reached a 38-year low of 62.4 percent as Baby Boomers left the work force and people gave up looking for work. The number of Americans who aren’t working or looking for a job rose to a record 94.7 million people
, according to the U.S. Bureau of Labor Statistics.
The participation rate will keep falling by a quarter percentage-point annually in the next few years, according to the bank. Because people who drop out of the work force aren’t counted as jobless, according to the methods used by the U.S. Bureau of Labor Statistics, the unemployment rate will also drop.
“The retired share of the population has increased more than we expected,” Hatzius and Mericle said in an Oct. 10 report. “There has been an increase in the share of prime-age workers who report that they do not want jobs.”
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