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Retirees are one reason the Fed has given up on a big worker rebound

Workers are in short supply three years into the pandemic job market rebound, and officials increasingly think they aren’t coming back.

December 27, 2022 / 04:10 PM IST

Alice Lieberman had planned to work for a few more years as a schoolteacher before the pandemic hit, but the transition to hybrid instruction did not come easily for her. She retired in summer 2021.

Her husband, Howard Lieberman, started to wind down his consulting business around the same time. If Alice Lieberman was done working, Howard Lieberman wanted to be free, too, so that the pair could take camping trips and volunteer.

The Liebermans, both 69, are one example of a trend that is quietly reworking the fabric of the American labor force. A wave of baby boomers has recently aged past 65. Unlike older Americans who, in the decade after the Great Recession, delayed their retirements to earn a little bit of extra money and patch up tenuous finances, many today are leaving the job market and staying out.

That has big implications for the economy, because it is contributing to a labor shortage that policymakers worry is keeping wages and inflation stubbornly elevated. That could force the Federal Reserve to raise rates more than it otherwise would, risking a recession.