Labor force participation collapse from younger dropouts not retirees, Zero Hedge nails it, More younger people born to replace older, Labor force should be increasing not decreasing
“People 55 to 64 years old, the first forget-about-retirement generation, are staying in the labor force to an ever greater degree. In 1992, only 56.2% were still in the labor force, in 2012, 64.5% were. Similar for older folks. The participation rate for people 65 to 74 years old jumped from 16.3% to 26.8%. Reality is this: fewer people can afford to retire.”…Zero Hedge January 8, 2014
“11.4%: What the U.S. unemployment rate would be if labor force participation were back to January 2008 levels.” …James Pethokoukis, American Enterprise Institute, June 2013
“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″
As pointed out at Citizen Wells, there should be an increasing labor force not decreasing. More younger people are born than are left in the aging populations to retire. And older workers are not retiring in droves.
From Citizen Wells November 9, 2013.
Is the repeated emphasis by the Washington Post on the impact of baby boomers on the plummeting force participation rate an intentional lie or just sloppy or biased reporting?
Intentional or not it is a lie.
Citizen Wells first criticized the Washington Post on May 9, 2012 for this false report.
“The Washington Post on May 4, 2012 posted a very misleading article titled “The incredible shrinking labor force.” Is this another example of sloppy or biased journalism or both?”
“The verbage in the top right corner looked suspicious, ”As the most recent recession hits the workforce, larger numbers of baby boomers begin to retire.” Yesterday I called the Bureau of Labor Statistics and discovered that they had not placed those words there. It was the work of the Washington Post.
So why did the Post superimpose that wording about baby boomers on the graph?”
“Critics of the Obama administration have been quick to seize on this as the real reason for the falling unemployment rate. In February, the Republican National Committee released a research note on “The Missing Worker,” arguing that “over 3 million unemployed workers have called it quits due to Obamanomics.”
Economists say the story is considerably more complicated. For one thing, the trend predates President Obama. And while part of the story is clearly that the labor force is shrinking because the bad economy is driving workers out, another significant factor is that baby boomers are beginning to retire early — a trend that has worrying implications for future growth.”
“But a number of economists are arguing that the recession is distracting people from the real story — long-run demographic trends that have nothing to do with the current economy. Baby boomers are starting to retire en masse, which means that there are fewer eligible American workers.”
On September 6, 2013 the Washington Post reported.
“So why is the labor force dropping? There are a couple big factors going on here. Older Americans are retiring, younger Americans are going back to school, and many workers have been discouraged by the weak U.S. economy. Here’s an updated breakdown:
1) The aging of America. One big reason the participation rate dropped involves long-run demographic trends that have nothing to do with the current economy. Baby boomers are starting to retire en masse, which means that there are fewer eligible American workers.
Demographics have always played a big role in the rise and fall of the labor force. Between 1960 and 2000, the labor force in the United States surged from 59 percent to a peak of 67.3 percent. That was largely due to the fact that more women were entering the labor force while improvements in health and information technology allowed Americans to work more years.
But since 2000, the labor force rate has been steadily declining as the baby-boom generation has been retiring.”
On November 8, 2013 the Washington Post once again listed older workers retiring first as a cause of the drop. They did, however, add some clarification as if to back off of their position.
“So what’s up with that broader trend? Why has the participation rate been dropping in recent years? There are a couple big factors going on here. Older Americans are retiring, younger Americans are going back to school, and many workers have been discouraged by the weak U.S. economy. Here’s an updated breakdown:
1) The aging of America. One big reason the participation rate dropped involves long-run demographic trends that have little to do with the current economy. Baby boomers are starting to retire en masse, which means that there are fewer eligible American workers.
Demographics have always played a big role in the rise and fall of the labor force. Between 1960 and 2000, the labor force in the United States surged from 59 percent to a peak of 67.3 percent. That was largely due to the fact that more women were entering the labor force while improvements in health and information technology allowed Americans to work more years.
But since 2000, the labor force rate has been declining steadily as the baby-boom generation has been retiring. “
“So what’s going on? One theory is that the weak job market is causing people to simply give up looking for work — they’re crumpling up their resumes and going home. A recent paper (pdf) from the Boston Fed suggested that these “non-inevitable dropouts” might even account for the bulk of the decline.”
I am going to make this real simple.
Let’s ignore immigrants increasing our work force for the moment.
The baby boomer generation is known for it’s size. However, due to the growth in the US, recent generations are even larger.
Let’s take the example of those turning 65 in 2014, born in 1949 and those turning 22 in 2014, born in 1992. I chose age 22 to account for college even though some of them entered the work force earlier, if they could find a job.
There were 3.56 million people born in the US in 1949. 85 % or 3.026 million are alive.
There were 4.08 million people born in 1992. Probably at least 4 million still alive.
Let’ assume that all of the people who turn 65 next year retire.
That is still a net gain of about a million potential workers.
As we all know, all of those people do not stop working unless they cannot find a job.
From the CBO.
“The resulting rise in the projected rates of labor force participation for older people is noteworthy. For men ages 62 to 64, CBO projects that the rate of labor force participation will rise from about 52 percent in 2012 to about 55 percent in 2022. For men ages 65 to 69, the projected rate rises from about 37 percent in 2012 to about 41 percent in 2022. The changes for women are similar: The projected rate of labor force participation for women ages 62 to 64 rises from about 44 percent to about 48 percent, and for women ages 65 to 69, the projected rate increases from about 28 percent to about 32 percent. In 2022, the FRA will be 67 only for people age 62 or younger in that year. As that group ages and the FRA gradually becomes 67 for all older people, CBO projects that the labor force participation rate for older people will continue to increase, although at a slower pace.”
http://www.cbo.gov/publication/43834
That’s right. You read it correctly.
Men ages 62 to 64: rate of labor force participation about 52 percent in 2012.
Men ages 65 to 69: 37 percent in 2012.
Once again I am compelled to award the Washington Post 4 Orwells.
Zero Hedge nails it again.
“A few days ago we disproved, in what we hoped would be the last time, any insinuation that the collapse in the labor force is due to demographics (a topic we had covered before) when we showed that it was just 10 short years ago that the Bureau of Labor Statistics itself was forecasting an increase in the overall participation rate – here we assume logically that America’s demographic profile was known to its labor market experts in 2004 – only to slowly at first, then very fast, revise it ever lower… and still it was unable to catch up to the unfolding gruesome reality.
Yet somehow, so called finance experts, econ PhDs, central planners and other ivory tower dwellers still refuse to let this topic go, and continue to reference the participation rate and demographics in the same sentence. So to truly end any speculation that the plunge in the labor force is due to “old people”, defined as workers 55 and over, retiring, here is a chart (which in an update of a post we didfirst in October 2012 and it took the rest of the media world only 14 months to catch up) of the cumulative job gains broken down by “young”, or those 16-54, vs “old”, those 55 and over.
Spot something wierd?
It seems that the “old” age worker group – that which is supposed to be bleeding workers to retirement – has had zero job losses since the start of the Depression in December 2007, while it was the “younger” workers who according to the BLS’ Household Survey, have hit the labor cliff and seen their number collapse, dropping as much a 6 million, and only slowly rising, with another 3.5 million jobs left to catch up before pre-recession levels are met.”
Read more:
http://www.zerohedge.com/news/2014-01-20/spot-labor-force-collapse-culprit
Citizen WElls 