Pandemic Puts Pressure on Workers
The COVID-19 pandemic has changed the face of today's workforce. Older workers are leaving their jobs in droves. It's uncertain whether the changes are permanent — or if employers can stem the tide.
The Schwartz Center for Economic Policy Analysis (SCEPA) at The New School reports that 2.8 million older workers have left their jobs since March at the start of the pandemic shutdowns. Another 1.1 million are expected to leave this fall.
The majority of these workers were laid off from their jobs. Of those who were invited to come back, however, many did not take advantage of the opportunity out of concern they might contract COVID-19. The Centers for Disease Control and Prevention reports that older Americans are most at risk for the disease. More than 90 percent of COVID-19 hospitalizations and deaths have been attributed to people age 55 and older.
Workers who are retiring early — either because they were laid off or are afraid of catching a serious disease — are facing some daunting financial challenges.
SCEPA says that many retirement experts recommend that someone who is planning to retire should have saved enough money to be able to replace at least 70 percent of their preretirement earnings. However, SCEPA points out that the replacement rate for older workers is expected to drop from 55 percent to 48 percent if they retire at age 62 and from 69 percent to 60 percent if they retire at age 65. Early retirees are at risk of outliving their savings because they have had less time to save and are using their savings sooner than expected. In addition, people who retire earlier than planned often claim Social Security benefits earlier, which could leave them with lower monthly benefits for the rest of their lives.
U.S. Department of Labor data shows that while women previously accounted for 47 percent of the workforce, they make up 54 percent of those who left the workforce April through August.
An Indeed Hiring Lab survey reveals that the biggest reasons women left the workplace are childcare and family responsibilities. And while the number of women who said they needed to stay home to take care of family increased 178 percent, the number of men citing similar reasons was far less.
Labor Department data confirms that women and workers aged 65 and older comprise a disproportionate share of the 3.7 million people who are no longer working or actively seeking a job since the pandemic shutdowns began. Reuters released a report showing that the loss of these workers, along with those who were laid off and may not be rehired, could negatively affect U.S. economic recovery in the short term as well as the country's prospects in the long term.
U.S. Bureau of Labor Statistics projections show employment growth of 0.4 percent annually from 2019 to 2029, which is much slower than the 1.3 percent expansion rate following the Great Recession. However, this did not take into account the potential impacts of the COVID-19 pandemic.
Possible Employer Solutions
Employers often rely on benefits to attract the best workers, and certain benefits can make it easier for women and older workers to remain in or return to the workforce.
Employer-sponsored childcare benefits would make it easier for working couples — not just women — to stay in the workforce. And while few companies can afford to provide onsite daycare, the government does provide incentives. Form 8882, Credit for Employer-Provided Child Care Facilities and Services, allows employers to:
- Claim the credit for acquiring and running a childcare facility
- Contract with a childcare facility to provide childcare services to employees of the taxpayer
- Provide childcare resource and referral services to employees of the taxpayer.
Another way to add these kinds of benefits is to create a dependent care FSA (flexible spending account), which allows employees to use tax-free funds to pay for care services, whether for a child, a disabled parent or a spouse who needs daily care while you work.
For older employees, the opportunity to work from home can keep mitigate their concerns about getting sick and keep them on the job. Working from home is already becoming a popular option for many employees. As quoted in another article in our newsletter this month, Stanford researcher Nicolas Bloom has stated that 42 percent of the U.S. labor force is now working from home.
And while some employers may be concerned that older workers aren't suited for telework, Chris Farrell, author of "Purpose and a Paycheck: Finding Meaning, Money, and Happiness in the Second Half of Life," says data suggests older workers are actually very good candidates. He said today's older workers not only have a well-developed work ethic, but also are proving to be technologically adept.
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In this issue:
IRS Announces 401(k) Contribution Limits for 2021
Pandemic Puts Pressure on Workers
Have an HDHP? Fill in the Gaps With HI
How to Thwart Identity Theft in the Workplace
Taking #MeToo Allegations Seriously