|Are Baby-Boomers Retiring?|
Come to find out that the unemployment rate has dropped because workers are leaving the job market and not because of job creation.
Normally, disillusioned workers would be a terrible indicator of a failing system. So, to make us feel better, our leaders are blaming Boomers. Their story is that only retiring Boomers are departing the job market in large numbers because of age. But the argument seems convenient at best. As the government loses track of millions of workers who have fallen out of the labor market, our leaders in Washington are missing a few hints.
It turns out that it doesn't make sense to blame Boomers.
First, Boomers are not like their parents. Members of the Greatest Generation liked telling stories of war as they chilled under the porch. Boomers, on the other hand, are much more active. They dislike both dependency and immobility.
From early on, Boomers' free spirit drove them to change the rules to society. Starting with the role of women, they then demystified sex and even found a place for drugs. As their personal productivity increased, they became the biggest spenders in the history of the planet.
But spenders they are no more. You see, Boomers are kind of broke. They do not have enough money to retire. So, they will have to continue to work longer than their parents to make ends meet.
How can I be sure? Well, if they had enough to retire, we would witness great signs of celebration honoring their accomplishments; from parties, to travel, to spoiling grand kids. Boomers have left no doubt about their desire to do everything bigger, better and faster than any other generation. But I just don't see the indication that this is taking place.
|Labor Participation Rates vs. Recessions |
(by Thomson Reuters)
So what's pushing Labor Participation Rates down? Who are the workers giving up looking for jobs?
If my assumption is correct, a different large group must be leaving the work force in place of Boomers.
It is evident in the Labor Participation Rate chart above that rates peaked at the end of the 90's. More recently, rates have collapsed further after the recession ended. Unlike with all other recessions in the chart, this one failed to rebound, even after a prolonged period of time.
Who is missing?
|Labor Participation Rate (65 years and over)|
Honestly, the clear lack of correlation between this and the chart of the total Participation left me stunned as I reviewed the information. While I did not believe the story promoted by many mainstream economists, I certainly did not expect for this age bracket to contradict the trend by such large margin.
|Labor Participation Rate (55 to 64 years)|
I should probably highlight that the probability of a sudden change in direction of an uptrend is very low. It is much more probable that these uptrends move sideways as they exhaust the energy that pushed them higher.
So far, these two charts corroborate my suggestion that Baby-Boomers are not moving towards retirement yet. There is no doubt that at some point they will, as it is natural. We will simply have to wait longer.
If not Boomers, then who?
|Labor Participation Rate (16 to 24 years)|
Perhaps counterintuitively, this group has been pushed further and further out of the labor force. The decline in the chart dates to the end of the 90's. Furthermore, the recent declines are very robust in nature. You see, when we discuss impacts on demographics, we tend to focus mainly on Baby-Boomers because they are the largest single group that can easily affect economy. But what we often miss is that their children, the Millennials, are showing up in two larger waves. In the aggregate, there are more Millennials than Baby-Boomers. It thus makes sense that Millenials would also create seismic shifts on the economy.
|Labor Participation Rate (25 to 54 years)|
That these charts completely contradict the general consensus among economists who think that Labor Participation drops are due to Baby-Boomer retiring is not surprising. We live in a world where everybody is afraid of being exceptional. Everyone follows everyone else; even if it means we all end up in the precipice.
This is one more piece of evidence that the stories served by our nation's leadership are bogus at best. Our Presient would like us to believe that jobs are coming back thanks to his great economic projects. But the reality behind the scenes is different. Boomers are having to work longer to pay for retirement. With a lack of jobs, Boomers face accepting lower paying jobs; something that takes entry level jobs away from younger professionals.
We are letting headlines distort our economic impressions in a way that directly contradicts our intuition. In a nutshell, the country is broken and our leadership is either driving disinformation or they have no idea on how to better our position.