A side-effect of a surging stock market: More boomer and Gen X workers are exiting the labor force

• The labor force participation rate is down in part because Gen X and boomers are retiring early.

• Americans 55 and older account for most of the drop in the labor force participation rate, BofA said.

• The bank said the trend was a “side-effect of soaring stock prices.”

Soaring stock prices might be a major reason the US workforce has been shrinking.

That’s a conclusion from Bank of America, which examined the possible causes behind the US’s declining labor force participation rate. The number of people participating in the job market has ticked higher recently, but has generally trended lower over the last several years, and settled at a level that’s below the pre-pandemic norm, Bureau of Labor Statistics data shows.

Around 62% of Americans were considered to be in the job market in September, down around one percentage point from levels prior to the pandemic.

The total size of the US workforce has also shrunk slightly, clocking in at 170 million in September, down from a peak of 171 million in late 2025.

Some market pros have floated the possibility that more workers are giving up on searching for work, which leads the labor force participation rate to fall and artificially suppresses the unemployment rate.

But there’s another reason for the shift, BofA says. A lower participation rate may be driven by a wave of retiring boomers and Gen X workers leaving the workforce to live on the wealth generated by their stock portfolios.

The majority of the labor force decrease over the last six years has been driven by workers older than 55, the bank said, which encompasses the oldest Gen Xers and the boomer generation. The labor force participation rate among younger or “prime-age” workers, meanwhile, has risen slightly over the same time frame.

“We think the surge in equity wealth has likely made it easier for many workers to retire,” a team led by Aditya Bhave said wrote, describing the phenomenon as a “side-effect of soaring stocks.”

Older Americans who have been investing in stocks for decades have been among the major beneficiaries of the yearslong secular bull market, with the gains accelerating with the advent of the AI boom.

People 55 and older hold onto the majority of all household stock wealth, sitting on $51.5 trillion worth of stock and mutual fund shares in the second quarter, according to Fed data. The S&P 500, meanwhile, is up 140% since the start of 2020.

The FIRE—financial independence, retire early—movement has been a growing force as the stock market continues to climb. An Allianz survey this year found that 42% of Americans retired earlier than they anticipated.

More than a fifth of those who retired early said they did so because they were “financially ready earlier than expected,” and 21% said early retirement was brought on by an unexpected job loss.

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