The overall U.S. labor force participation for those of “prime age”—25 to 54—has surpassed its pre-pandemic and pre-recession peak, but a closer look at the numbers reveals that the recovery is not even, Bloomberg reported.
There are 58 million working Americans outside of that bracket: 21 million are aged 20 to 24, and 37 million are 55 older. The experiences of these two outer segments are more complicated. The details help explain recent shortages of workers.
More than 400,000 Americans in their 20s are missing from the labor force. It is plausible that this cohort, which would be expected to be starting their careers, were adversely affected by the pandemic, which caused hire rates job losses rate than other age groups, as well as a lack of hiring. There are several other reasons for this phenomenon.
"One is that they may have experienced labor market 'scarring' and seen their skill sets erode to the point where they can no longer find work for the wage they used to receive,” Anna Crockett and Jason Saving of the Federal Reserve Bank of Dallas, wrote in December in 2021. “Another possibility is that COVID-era safety nets were sufficiently generous that some individuals may have been incentivized not to work. A third is that young adults may have been disproportionately pulled into elder care or child care responsibilities.”
Since early 2021, demand for labor has been higher, and young and low-wage workers have benefited by rising wages. Participation and employment have risen for teenagers, albeit after decades of declines. Those in their 20s, however, are still experiencing labor-force participation rate declines, which can be reversed by continued strong labor demand—and that is dependent on the current financial and economic environment.
As for adults over 55, there are different complications.
One is the shifting age composition of baby boomers. While Americans in their late 50s and early 60s are actually more likely to be in the labor force and working now than before the pandemic, those 65 and older are not. One factor is that 75 percent of the pandemic's impact in the United States (and almost 90 percent in recent months) hit that older age group. Those effects are not likely to be reversed.
As most baby boomers are now 65 or older, the 55-to-59 age group, with its higher participation and employment rates, consists of mostly of Generation X, a less numerous group. According to Bloomberg, that means that not much can be done about the decline in labor force participation among the 55-and-older group. That group will keep skewing older until millennials start turning 55 in the mid-2030s.