Key facts
- Soaring stock prices may be a major reason the US workforce is shrinking.
- Bank of America examined possible causes for the declining US labor force participation rate.
- The majority of the labor force decrease over the last six years has been driven by workers older than 55.
- People 55 and older hold $51.5 trillion worth of stock and mutual fund shares.
- The S&P 500 has risen 140% since the start of 2020.
- 42% of Americans retired earlier than anticipated, according to an Allianz survey.
Soaring stock prices may be a significant factor contributing to the decline in the US labor force, according to an analysis by Bank of America. The number of Americans participating in the job market has recently seen a slight uptick but remains below pre-pandemic levels, with data showing about 62% of Americans in the job market in September.
The total size of the US workforce has also slightly decreased, standing at 170 million in September compared to a peak of 171 million in late 2025. While some suggest workers are giving up on job searches, Bank of America points to a different driver: retiring Baby Boomer and Gen X workers leveraging wealth generated from their stock portfolios.
Bank of America noted that individuals over 55, encompassing the oldest Gen Xers and Baby Boomers, have been the primary drivers of the labor force decrease over the past six years. Conversely, the participation rate among younger, prime-age workers has seen a slight increase during the same period.
"We think the surge in equity wealth has likely made it easier for many workers to retire," a Bank of America team led by Aditya Bhave wrote, characterizing the phenomenon as a "side-effect of soaring stocks." Older Americans who have invested in the stock market for decades have benefited from the prolonged bull market, with gains accelerating amid the AI boom.
Individuals aged 55 and older hold the majority of US household stock wealth, possessing $51.5 trillion in stock and mutual fund shares as of the second quarter, according to Federal Reserve data. The S&P 500 has surged 140% since the beginning of 2020.
The FIRE (financial independence, retire early) movement has gained traction as the stock market continues to climb. An Allianz survey indicated that 42% of Americans retired earlier than they had planned, with over a fifth citing being "financially ready earlier than expected" as the reason, and 21% attributing it to unexpected job loss.