Did 500,000 Retirements Cause Inflation?

tl;dr Uh, no, because there weren't 500,000 extra retirements.

The Bank of England is blaming inflation and our current recession on 500,000 mostly older people who quit working before 65 over the last two years. This, according to the Bank, is creating an upward pressure on wages and hence prices. It's talking nonsense, of course, but then, that's it's job(*).

Let's go find those miscreants. The Labour Force survey looks at the economic activity of everyone aged 16-64 (it's still living in an age when 65 was a mandatory retirement age). If there are 500,000 people who should be in the labour force but retired early, we would expect to see 500,000 more people retired in the 2022 Labour Force surveys. There were 501,000 retired 16-64 y/o men at the end of 2019, and 523,000 in summer 2022 : an increase of 22,000. For women the numbers were  610,000 in 2019 and 658,000 in 2022: an increase of 48,000. That's a total of 60,000 more retired 16-64 y/o people, 12% of the Bank's claim.

There's more. According to the ONS 

Our latest estimated number of workforce jobs for June 2022 (next updated December 2022) was a record high of 35.8 million, an increase of 171,000 jobs from December 2019, and the first time it has exceeded pre-[lockdown] levels. The total number of jobs includes both employee jobs and self-employment jobs, with both rising in the quarter to June 2022. Employee jobs in June 2022 continued to grow and are now at a record high of nearly 31.5 million, 710,000 above their December 2019...level. However, this rate of growth has not been seen in the self-employment jobs which remain 548,000 below December 2019 levels.

So there are more people in full-time work than there were before the lockdowns. Not less.

What is getting everyone excited is this graph 

showing that there were 1,246,000 vacancies at the end of September 2022 against 820,000 at the end of 2019: an increase of 426,000.

Vacancies arise from a) economic growth that creates employment, b) industrial re-structuring as new sectors appear, c) everyday churn as people leave this company and join that one, d) people leaving employment to e.g. care for family members or take up education, e) retirement. Vacancies decline because of a) economic recession, b) improvements in productivity, c) industrial re-structuring as existing sectors decline, d) removing jobs as people leave. Net all that out, and we get an underlying rate of around 600-700 thousand vacancies a quarter (plus or minus economic trends). Which is two-three per cent of the number of jobs in the economy.

Vacancies fell in 2020 because employers whose work was expanding (parcels companies, supermarkets) could find people as soon as they needed them, so those new jobs were never reported as vacancies, while the employers who were shrinking (cafes, hotels, airlines) had no vacancies because they were being prevented from doing business. Vacancy levels returned to the underlying rate in Summer 2021, despite many industries still being in hibernation. People carried on retiring, changing jobs, and temporarily leaving the workforce, effectively migrating out of sectors which were not hiring into sectors that were. As the lockdowns and economic restrictions eased during H2 2021, and then were removed in Spring 2022, a lot of hibernated jobs become available again. "Pent-up demand", if you like. But the people who would have done those jobs, are now working somewhere else (maybe back in their home countries) at better jobs.

What kind of jobs are not being filled? The largest numerical increases in vacancies are in "Accommodation & food service activities", "Human health and social work activities" and "Professional scientific & technical activities". Aka baggage handlers, airport security, zero hours retail jobs, on-call cleaners, cooks, care workers, hotel staff... 400,000 mostly low-paid / fake-self-employed / zero-hours s**t jobs that no-one wants. Pre-2020 those jobs were done by all sorts of people for all sorts of reasons: many left the country, or they switched sectors, found full-time work, or signed on(**).

So that's why that's happening.



(*)The job of the Bank of England is not to provide insightful analysis, but to lead the harumphing



so everyone can protect their phoney-baloney jobs. Nothing does that better than claims that can't be checked and blame a bunch of harmless victims.

(**) The Claimant Count was 1,240,000 at the end of 2019. It's 1,554,000 now, an increase of 314,000.