WI22-09: The COVID-19 Pandemic and Older Adults' Employment and Economic Security: Insights from Earnings and Credit Panel Data

Abstract

This study examines the relationship between reductions in labor force participation and earnings during the first 15 months of the COVID-19 pandemic and older adults’ economic security. Our particular focus is on consumer credit and debt. We construct a unique panel dataset, combining individual-level administrative data on quarterly labor force participation, unemployment claims, and earnings and detailed financial information from credit report data for adults ages 50 and older in Ohio from January 2018 through June 2021. Our findings indicate that financially vulnerable older adults—including those who were older, from Black neighborhoods, with lower credit scores, and with less available credit – were more likely to exit the labor force during the COVID19 pandemic than the pre-COVID-19 periods. They were also more likely to miss debt payments after an exit. However, labor force exits were associated with an increase in creditor forbearances during the COVID-19 pandemic, thereby mitigating the typical negative effects of labor force exits on credit outcomes observed in pre-COVID-19 periods in Ohio. With regard to Social Security retirement benefit claiming, we find that Ohio counties with older adults carrying more nonhousing debt and with lower credit scores had a higher share of eligible older adults claiming Social Security retirement benefits early during the COVID-19 pandemic—with indicators of financial vulnerability in a county's older population being more predictive of early claiming than exits from the labor force. These findings offer important insights for public policies targeting the economic security of current and future Social Security beneficiaries.