By Alex Cook

The COVID-19 pandemic brought a significant shock to the U.S. economy in 2020. Unemployment rose to 14 percent in April of that year — a figure that doesn’t include those who voluntarily exited the workforce. Many Americans lost their jobs, while others stopped working due to business shutdowns or fear of contracting the virus.

Two years later, under different economic and public health conditions, many people have returned to work. But while older adults may choose to retire during economic downturns — which many did in 2020 — some of them are returning to work, as the unemployment rate has plummeted and job openings have risen far past pre-pandemic highs.

Even though the number of retired Americans 65 and older is nearly three percentage points higher than in 2020, the number of working older adults is more than two percentage points higher, reflecting the broader economic recovery and strong labor market conditions, according to a national study.

The study, conducted by MagnifyMoney, a financial information service of LendingTree, analyzes U.S. Census Bureau Household Pulse Survey data to examine the labor environment for older Americans, comparing data from April and May 2020 to April and May 2022. Key findings include:

• A rising share of adults 65 and older are working.In late April and early May 2020, 19 percent of Americans 65 and older were working. That figure jumped more than two percentage points in late April and early May 2022 to nearly 22 percent. At the same time, the share of adults who reported that they’re retired is up similarly — from 14 percent in April-May 2020 to 17 percent in April-May 2022.
• More than a quarter of working Americans 65 and older are self-employed. 25 percent of employed older Americans are self-employed — more than triple the rate among working Americans 25 to 39. Meanwhile, the government isn’t the landing spot it once was for older workers: In April and May 2020, 15. percent of employed Americans 65 and older worked for the government. In April-May 2022, however, that percentage plummeted by a third to 10 percent.

New Jersey saw the largest jump in older adults in the workforce since the beginning of the pandemic, going from 18 percent in April-May 2020 to 37 percent two years later. Washington ranks 13 in that regard; 15 percent of its older adults were working in 2020, compared to 22 percent in 2022, a gain of 7 percent.

There are many potential reasons why older adults may be unretiring, or starting new jobs. For example, there’s more competition among businesses for workers, leading to sign-on bonuses, better benefits, and more choices for job-seekers. In addition, the unemployment rate nationally dropped from 14 percent in 2020 to 3 percent in 2022. And during the same two-year period, median weekly wages have also risen from $951 to $1,030, according to the U.S. Bureau of Labor and Statistics. However, due to inflation hitting a 40-year high, the real value of those wages declined slightly.

Higher pay and higher inflation could encourage people to get back to work. Likewise, the 2022 stock market downturn could have older adults concerned about the state of their retirement savings.

Of course, the pandemic itself helps explain why a higher rate of older adults is working now than two years ago. COVID-19 disproportionately affects older people — though vaccinations have proved effective in helping prevent infections and deaths, and a vast majority of older Americans are now vaccinated. As such, older adults returning to work may feel safer interacting with co-workers or the public.

More than any other age group, older Americans prefer to work for themselves. Fewer than 10 percent of workers younger than 40 are self-employed, compared to more than a quarter of workers 65 and older.

The percentage of older workers employed by private companies, non-profits and family businesses — as well as those who are self-employed — ticked slightly upward over the past two years. In contrast, the percentage of Americans 65 and older employed by the government fell from 15 percent of workers in 2020 to 10 percent in 2022.

In the early days of the COVID-19 pandemic, employers tried to entice older workers to retire to trim their payroll costs — and government workers were no exception.

However, older Americans aren’t the only ones with fewer government jobs: 14 percent of workers 18 to 24 were employed by the government in 2020, compared with 8 percent in 2022. Even though the U.S. economy has a strong labor market, the number of government jobs hasn’t recovered to its pre-pandemic high, and both the youngest and oldest workers are most impacted.

Alex Cook is a writer for MagnifyMoney, whose parent company is Lending Tree.