Has Distant Work Prolonged Employees’ Careers? – Middle for Retirement Analysis

Introduction 

For a lot of, the shift from 5 days every week within the workplace to a minimum of some quantity of work from home appears to be an enduring impact of the pandemic.  Latest analysis means that this shift has helped late-career employees with disabilities, encouraging greater charges of employment than earlier than the pandemic.¹  However, distant work might have an effect on older employees with out disabilities too.  The flexibleness and ease of commute supplied by distant work might encourage late-career people to work longer and delay retirement.  Or, employers might view their distant employees’ productiveness negatively, ushering in a faster exit from the labor market.

Given the significance of working longer to retirement safety, this temporary explores which of those potentialities performs out utilizing questions on distant work just lately added to the Present Inhabitants Survey.  The dialogue is organized as follows.  The primary part supplies background on distant work and its potential connection to retirement timing.  The second part introduces the information and methodology, and the third part presents the outcomes.  The ultimate part concludes that these working remotely seem considerably much less prone to retire than those that don’t, even controlling for job traits like sector, trade, and earnings.

Background

Previous to the pandemic, distant work was unusual.  In 2019, solely 6 to eight % of all workdays have been accomplished remotely.  That fee greater than tripled in the beginning of 2020 with the onset of the pandemic.  And regardless of a considerably steep decline in direction of the top of 2021, the share of days working remotely has remained at over twice the pre-pandemic fee.² 

Up to now, a lot of the analysis on distant work and retirement has targeted on employees with a incapacity.  This focus was spurred by two observations.  First, through the pandemic, the employment-to-population ratio of people with a incapacity hit a multi-decade excessive.³  Second, employees with a incapacity noticed a bigger improve in distant work through the pandemic than their counterparts with out a incapacity.⁴  One examine discovered that, within the years following the pandemic, distant work elevated the employment fee of older employees with a incapacity by 10 % – even controlling for the post-pandemic tight labor market and different components.⁵  

The query stays, nonetheless, how distant work affected different employees approaching retirement.  On the one hand, some research have discovered that distant work will increase job satisfaction and reduces turnover, suggesting it’d encourage individuals to work longer.⁶  Distant work may be a part of a phased retirement plan, whereby employees purchase extra flexibility, however sacrifice pay and duty, making them prepared to increase their profession.⁷ 

However, it stays unclear how employers view distant work.  Though a lot of the proof on the affect of distant work on productiveness is constructive, restricted proof exists that in some industries the impact would be the reverse.⁸  And, in any case, employers’ notion of distant work varies significantly, with some viewing it negatively – particularly alongside dimensions of innovation and creativity.⁹  To the extent that distant work really reduces some employees’ productiveness and even carries that notion, working remotely might end in some older employees being ushered in direction of retirement.  Given the shortage of readability on distant work’s impact, this temporary examines distant work’s affect on retirement timing for employees with out a incapacity.

Knowledge and Methodology

This evaluation is predicated on information from the Present Inhabitants Survey’s (CPS) Fundamental Month-to-month questionnaire, which the U.S. Bureau of Labor Statistics makes use of to estimate month-to-month unemployment.  The CPS added questions on distant work in October 2022 and has included these new questions within the survey since then.  Determine 1 exhibits the share working remotely a minimum of someday per week amongst employed individuals ages 55+ with none bodily, cognitive, or sensory difficulties.¹⁰  The quantity has hovered between 15 and 24 % from October 2022 by February 2025.

The query is whether or not these employees who work remotely a minimum of someday per week retire roughly shortly than others.  To reply this query, the strategy depends on the panel nature of the month-to-month CPS.  Particularly, respondents are surveyed in every of 4 consecutive months; then are out of the pattern for eight months; after which re-enter the pattern for an additional 4 months.

The evaluation seems at how the labor power standing of these ages 55+ modified between their fourth month within the survey and their final month within the survey (see Determine 2).  That’s, was an individual working within the fourth month nonetheless working within the closing month or had they retired?  The final personnel thought of on this evaluation was surveyed about their distant work in February 2024, with their retirement standing checked in February 2025.  Over all the interval thought of, 7.1 % of these working remotely have been retired the next yr, versus 9.0 % of those that weren’t.

So, at first look it appears distant work is related to barely longer work lives, however individuals who work remotely differ significantly from those that don’t alongside a number of dimensions (see Desk 1).  Specifically, distant employees are more likely to be faculty educated, earn considerably extra per week, and are much less prone to work in bodily industries.  To the extent that every one of those traits are related to longer careers, failure to regulate for them would overstate the discount in retirement related to distant work.  After all, different traits that we can not management for might additionally play a task.  For instance, if older employees who all the time deliberate to increase their work lives choose distant jobs as the best means to take action, then the affect of distant work on retirement could be overstated.

To account for these components, a regression evaluation is run to match in any other case comparable individuals who occur to vary of their distant work standing.  The regression evaluation controls for the demographic, familial, and job-related traits described above.  The regression estimated is:

Likelihood of retiring = f (distant work, age, training, race, household, job)

Outcomes

The regression outcomes are proven in Determine 3.¹¹  The primary takeaway is that even controlling for demographic, familial, and job traits, distant work is related to a statistically important discount within the likelihood of retirement.  An individual working remotely is 1.4 share factors much less prone to retire than an in any other case comparable particular person.  On condition that on this pattern 9.0 % of non-remote employees retire by the subsequent yr, this discount represents a lower of 14.4 % (1.4/9.0).¹²  This discount displays two potentialities.  The primary is that the character of distant work permits longer careers – a causal affect.  The second is that employees who need to work longer select distant jobs, which permit them to increase their careers extra simply.  Which of those two is driving the impact speaks as to if making it simpler for added employees to work remotely would lengthen their careers.  Addressing this subject is a helpful space for future analysis.

In keeping with many prior research, job traits other than distant work additionally appear to have statistically important results on retirement timing.  The outcomes counsel a doubling of earnings reduces the likelihood of retirement by 1.1 share factors, whereby public sector work and part-time work are related to will increase within the likelihood of retirement by 1.2 and 4.2 share factors, respectively.  Household additionally appears to matter, with the presence of dependent kids lowering the likelihood of retirement, seemingly as a consequence of monetary constraints.  Having a partner who’s retired has a predictably giant impact – 4.1 share factors – in direction of a extra seemingly retirement.  Race, ethnicity, and training have been all statistically insignificant.

Conclusion

Distant work stays elevated relative to pre-pandemic ranges and, for a minimum of some employees, seems to be right here to remain.  Given the shortage of financial savings of many People, so too is the necessity to work longer.  The excellent news from this temporary then is that distant work appears to facilitate, not impede, longer careers.  Employees with out disabilities who work remotely are 1.4 share factors much less prone to retire inside a yr relative to an in any other case comparable counterpart.  Future analysis ought to give attention to whether or not this end result displays facets of distant work that enhance profession longevity or as an alternative the truth that these wanting longer careers choose into these types of jobs.  The query is necessary, because it speaks as to if providing distant work choices is a option to concurrently lengthen careers.

References

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Pabilonia, Sabrina W. and Jill J. Redmond. 2024. “The Rise in Distant Work For the reason that Pandemic and its Influence on Productiveness.” Past the Numbers 13(8). Washington, DC: U.S. Bureau of Labor Statistics.

Tahlyan, Divyakant, Hani Mahmassani, Amanda Stathopoulos, Maher Mentioned, Susan Shaheen, Joan Walker, and Breton Johnson. 2024. “In-Particular person, Hybrid or Distant? Employers’ Views on the Way forward for Work Submit-Pandemic.” Transportation Analysis Half A: Coverage and Observe 190: 104273.

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Appendix

Endnotes