Labor participation rates (LRP) for older workers have been somewhat of a surprise is recent years. "Due to the rising share of 55+ age group in the labor force and population, their LPR and total LPR in the economy was expected to decline." Instead the LRP for the 55+ group has been increasing since 2001. Among possible reasons, Bykere cites rising life expectancy, improved health condition, ability to get higher Social Security benefits by deferring retirement, ability to work after 65 without losing benefits, and need to maintain employer health insurance.
With respect to future labor market implications, Byykere writes:
Like the last recovery, many jobs may again disappear, LPR for teens and women may decline further while older workers depending on their skill level may or may not return to the labor force. There are also concerns that if the current recession is prolonged or subject to a slow recovery, it might lead to significant job losses, pushing up the unemployment rate to higher than expected levels. These factors along with retiring baby boomers will have important implications for the future growth in labor force, job creation and productivity growth as well as the long-term potential output, natural rate of unemployment. This is especially true as the recent recovery failed to take the economy to full-employment.Source: Roubini Global Economics, LLC. (RGE) "U.S. Labor Market Dynamics Amid a Slowing Economy" (July 3, 2008)