In COVID Year 2, Older Workers Faced Tough Choices

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The first year of the pandemic, a period of great uncertainty, was even more fraught for older workers, who were at higher risk of serious illness or death if they contracted the virus.

The second year brought more uncertainty. Older Americans were embracing the new vaccine as variants of the virus continued to evolve. Unemployment, after spiking at nearly 15 percent the previous year, was coming back down. In September, the generous cash assistance approved in Congress that had kept many Americans afloat expired.

Despite the job market recovery in Year 2 of COVID – April 2021 through March 2022 – new research finds that fewer older people were employed because many of them had decided to stop working or were still unable to find a job. Their labor force participation, which had plunged when the COVID shutdowns threw millions of people out of work, continued to lag pre-pandemic levels.

If they weren’t working and had limited financial resources, what did they do? Social Security provided a couple of options: apply for disability or start their retirement benefits earlier than they’d planned.

The researchers found that applications for Social Security’s retirement benefits were unchanged in Year 1 of COVID, March 2020 through March 2021. But in Year 2, more individuals were deciding to retire. People in their 60s who were eligible for benefits applied at higher rates relative to the pre-pandemic trend.

Applications for disability benefits went in the opposite direction, perhaps due to Social Security closing its field offices during COVID. In Year 1, applications fell below their pre-pandemic levels for disability and for another cash benefit for very low-income workers, Supplemental Security Income (SSI). The following year, that trend persisted.

Still, the authors find some evidence that more people did start applying for disability after the federal government’s more generous unemployment benefits expired.

In March 2020, Congress passed the CARES Act, which provided laid-off workers with an additional $600 per week in jobless benefits. The extra benefits lapsed in August but resumed in January 2021 at $300 per week. They finally ended in September 2021, but some states chose to end them earlier, in the summer months.

An analysis, based on the different state expiration dates, showed that an increase in disability applications “revers[ed] approximately half of the decline” earlier in the pandemic, the researchers said. The loss of these additional financial supports may have “resulted in an increase in disability claiming.”

Amid the uncertainty around COVID, this study shows, older workers faced difficult decisions about their options for accessing the Social Security benefits they’d built up over a lifetime.

To read this study by Gopi Shah Goda, Emilie Jackson, Lauren Hersch Nicholas, and Sarah See Stith, see “Older Workers’ Employment and Social Security Spillovers through the Second Year of the COVID-19 Pandemic.”              

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.