‘Any downturn’ in economy could affect workers’ retirement savings: report

Labor force participation is improving, but a downturn in the economy could have significant implications for workers’ retirements, according to a report from the Employee Benefit Research Institute.

“A continued strong labor market will likely lead to a return to the 2019 labor force participation rate and employment-population ratios,” according to the report. “However, a downturn in the economy would likely halt the movement back to 2019 levels, and who is out of the labor force after any downturn could significantly alter what companies’ work forces look like and what Americans have saved for retirement.”

EBRI defines the labor force participation rate as the percentage of the population that is working or actively looking for work. In 2020, according to the organization, the labor force participation rate among eligible workers aged 16 or more years decreased to 61.3% from 63% the previous year. That rate is beginning to move toward pre-pandemic levels, however, and sat at 62.2% in 2023. 

Labor force participation among Black males has been returning to its pre-pandemic level, whereas participation among white males is falling short of its pre-pandemic level, according to the report. Hispanic males had “by far the highest” labor force participation rate each year in 2019 through 2023, but the rate hasn’t fully returned to pre-pandemic levels, EBRI said.

Black females saw a high labor force participation rate each year in 2019 through 2023 compared with their female counterparts, but Hispanic females have seen the greatest recovery among women, surpassing their 2019 rate in 2023, according to report authors.

The age distribution among the labor force was fairly unchanged in 2023 compared with 2019, EBRI said. The largest change observed was an increase in the share of workers aged 35 to 44, moving from 21% in 2019 to 22% in 2023. The share of workers aged 45 to 64 decreased by one percentage point during that time, whereas the share of workers aged 16 to 24 increased slightly, by 0.4 percentage points, and the share of workers aged 25 to 34 decreased by 0.5 percentage points.