The 55-and-Older Labor Market Exodus Is a Statistical Mirage

I’m in my late 50s and I’m on the job. So are more than 70% of Americans aged 55 through 59, according to the Bureau of Labor Statistics. In fact, my age group’s labor-force participation rate was approaching record levels earlier this year before undergoing its usual summer decline.

As a result, I tend to bristle a little whenever I read about the big drop in labor-force participation among Americans 55 and older and its supposed adverse effects on the labor market and the economy. It is true that, as of August, the labor-force participation rate for the entire 55-plus age group was, at a seasonally adjusted 38.6%, down 1.7 percentage points from just before the pandemic in February 2020 and near its lowest level in 15 years. But as I’ve already demonstrated, those of us in our late 50s aren’t the problem. We’re still working at record rates!

Americans in their early 60s are pretty close to record labor-force participation, too. The big declines are all among those 65 and older. But — and here’s where things get really weird — those declines are still smaller in percentage-point terms than those for the 55-and-older group overall. This strange data quirk is the result of so-called composition effects, caused by the shifting age distribution within the age group, which I’ll discuss a little later. First, though, let’s get around the strange quirk by looking at labor market changes for smaller age groups.

The reason the 55-and-older numbers get so much attention is that it’s the one of the few age groups for which the BLS provides seasonally adjusted labor market data. The unadjusted numbers come with big seasonal swings and, especially when you’re looking at narrow age groups such as 55 through 59, a fair amount of month-to-month statistical noise. Still, there are ways to deal with both, such as comparing three-month averages from this summer with those from before the pandemic in 2019.