Page 7 - ISO April 2023

85%
85%
INVESTMENT STRATEGY QUARTERLY

retirees, individuals who passed away from COVID-19, those Labour Force Participation
75%
75%
with long COVID, a reduced number of immigrant visas, men/
women working from home during the pandemic who resigned 85%
and left the workforce once asked to go back to the office, as
well as workers whose opportunity cost to return to work out- 75%
65%
65%
paced the monetary benefits.
65%
Early Retirees: The stock market rally in 2021 is likely to have
boosted retirement savings for many Americans at and about to 55%
reach retirement age. This sudden and unexpected boost in
55%
55%
wealth has probably allowed many to weigh their options and 45%
consider leaving the workforce early. Some people, especially
those with pre-existing medical conditions, may have had health 35%
45%
45%
concerns about returning to workplaces and catching the virus. ‘60 ‘67 ‘74 ‘81 ‘88 ‘95 ‘02 ‘09 ‘16 ‘23
On the other hand, others might have just opted to downsize and Men All Women COVID-19 (2020)
move to a location with a lower cost of living rather than spending Source: FactSet, as of 17/3/2023
additional years accumulating wealth.
35%
35% Long COVID: In addition to those who passed away from COVID-19,
An Economic Synopses publication from the Federal Reserve there are many estimates of how many people are suffering from
‘67
‘88
‘81
‘60
‘74
Bank of St. Louis indicates that “As Baby Boomers began retiring, ‘88 ‘95 ‘02 ‘09 ‘16 ‘23
‘60
‘67
‘74
‘09
‘16
‘23
‘81
‘95
‘02
long COVID and are unable to work. We have seen estimates of this
the percentage of retirees in the US population grew to 18.3% in number at between one and five million Americans. Research by the
Men
All
Women
Women
All
Men
February 2020, the eve of the COVID-19 outbreak. The per- Brookings Institution’s Hutchins Center has this number at between
centage then increased at a much faster rate, reaching 19.3% in 281,000 and 683,000. However, another report from the Brookings
2
August 2021.” In this research paper, the author estimates that Institution in August of 2022 reported that “new data shows long
1
3
the difference between the ‘normal’ rate of retirement and the COVID is keeping as many as four million people out of work.” How-
‘excess’ retirement rate after February 2020 was higher by about ever large or small this number is, it is clear that long COVID may be
0.9%. “Based on those numbers, as of August 2021, there were a contributor to today’s still low labour force participation rate.
slightly over 2.4 million excess retirements due to COVID-19, Immigration: The US issued well over eight million visas yearly
which is more than half of the 4.2 million people who left the between 2012 and 2018. However, the COVID-19 pandemic caused
labour force from the beginning of the pandemic to the second a significant decline in immigrants legally able to work in the US.
quarter of 2021.” Overall, in the last three calendar years combined, there have
been between eight and ten million fewer legal immigrants added
to the workforce.
Older Workers Aren’t Coming Back
Workers among most age ranges have returned to the labour force,
105
but 55+ workers are still below pre-pandemic levels.
100
95
90
85
80
Feb ‘20 Sep ‘20 Apr ‘21 Nov ‘21 Jun ‘22 Jan ‘23
25-54 16-19 20-24 55+
Source: FactSet, as of 19/3/2023

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