Baby Boomers Give Up, Drop Out of U.S. Labor Force

Insurance Journal ^ | 2/11/14 | Victoria Stilwell

[smokingfrog]

When Robin McLane’s generation hit public schools in the 1950s, there were never enough classrooms or teachers to accommodate the bulge, she said. So she’s not surprised about the latest shock that boomers are delivering to the U.S. economy.

“People all around me, relatives and friends, are either retiring, or they’re finding it’s very difficult to find work anywhere from 55 on,” said the 65-year-old, who lives in Portsmouth, New Hampshire, and retired from her job as a high school literacy specialist in June. “For me, I was ready to move on.”

The share of Americans in the labor force, known as the participation rate, is hovering around an almost four-decade low as the population ages and discouraged job seekers give up looking for work. Federal Reserve research shows retirees are at the forefront of the recent exodus, which blunts the impact of policy aimed at boosting the economy and workforce.

In the two years ended 2013, 80 percent of the decrease in labor force participation was due to retirement, according to calculations by Shigeru Fujita, a senior economist at the Federal Reserve Bank of Philadelphia. And while the number of discouraged workers rose sharply during and after the recession, the group’s ranks have been roughly unchanged since 2011.

That tilts the debate on whether the participation rate can fully rebound alongside the improving economy, as retired workers are unlikely to re-enter the workforce, said Michelle Girard, chief U.S. economist at RBS Securities Inc., in Stamford, Connecticut. A tighter supply of workers means wage pressures would build faster than otherwise, something Fed Chairman Janet Yellen may watch as a leading indicator of inflation, Girard said.

[kabar]

The author needs to be better informed. We are almost back to the level of 1980. And retirement has nothing to do with it. When you look at the 25-54 year age group, the prime period for employment, you find a much different picture.

Civilian Labor Force Participation Rate - 25 to 54 years

2014-01: 80.9 Percent

Monthly, Not Seasonally Adjusted, Updated: 2014-02-07 9:41 AM CST

"After the labor force participation rate fell from 63.7 to 62.8 percent during 2013, we saw a slight recovery back to 63.0 percent in January. However, it remains at a very low level for all age ranges below 55 years old. The weak labor market also continues to dampen wage growth, as average hourly earnings have grown just 1.9 percent over the past twelve months," Hall wrote for the Mercatus Center.

On the other side are those such as senior fellow and director of Economics21 at the Manhattan Institute, Diana Furchtgott-Roth who, in a Jan. 14 piece for RealClearMarkets.com noted that "since 2000 the labor force participation rates of workers 55 and over have been rising steadily, and the labor force participation rates of workers between 16 and 54 have been declining."

Which is absolutely true. Since 2003, those 65 years and older have seen their labor force participation rate rise from 13.99 percent to 18.7 percent. Those aged 55-64 saw their rate rise from 62.44 percent to 64.36 percent, a recent Americans for Limited Government (ALG) study of Bureau data from 2003-2013 shows.

Meanwhile, participation by those aged 16-24 dropped from 61.56 percent in 2003 to 55.05 percent in 2013, and for those aged 25-54, it dropped from 82.98 percent to 82.01 percent.

So, does older Americans working longer, younger people failing to enter the labor force and the middle-aged dropping out account for the decrease in labor force participation?

Yes on all counts, the ALG study shows.

[doorgunner69]

the article is making it sound like Baby Boomers are en masse deciding to throw in the towel early.

I did, as I posted, mostly because it was the Kenyan stripping NASA of funding that was going to kill my job. Had not happened just yet, but I had always been one step ahead of a layoff notice, and did not want to ruin my perfect record.

As I posted in another reply, depriving Obunghole of income tax from a $100k+ income to contribute to his welfare state just cemented my decision. After 40+ years of paying massively into the black hole of the federal money pit, they had enough of me.

Funny, but after I had pretty much cemented my plans (house sold, etc,) another company tried to contact me for an interview. Too late, my thoughts were already elsewhere and the train was gone.

[RitchieAprile]

I’m 61 and expect to be able to work for a while yet.
Just keep learning and expect change.

[98ZJ USMC]

Lies, damn lies, statis.....

Nowhere more so than this bilge. Those "statistics" assume a whole hell of a lot. Yes, statistical analysis takes proven assumptions into account. Nowhere near as much as these lies do.

[doorgunner69]

That Employment-Population Ratio, 25-54 yrs in the second graph is intriguing. Quite a drastic drop right as the Kenyan in elected.............

[dalereed]

“I had 39 students in my first grade class and no aides or assistants in those days.”

In the 40s if there wasn’t 43 in the class they combined classes.

[buwaya]

And good luck to you!

[dalereed]

“Lies, damn lies, stast......”

On the first day of my statistics class we were told that “statistics is the art of how to make figures lie and how to lie with figures and that the graph was the biggest aid to the perfect lie and that anyone that used the word statistics in this class would receive an F”.

[buwaya]

You have my sympathy. I am skirting that edge myself. One of these years, unless the economy turns up.

[buwaya]

Great information, very interesting.
It does look like the early retirement theory is busted.
I wonder if the 25-54 number can be further broken down.

[CatOwner]

I'm in a similar situation. Defense software systems for 30+ years. Company had been slowly laying off people the five year prior to finally getting around to me right around the 2012 election. Partly in response to sequestration.

I hadn't planned on retiring for about 3 more years, but finding anything other than a retail job with late hours and weekend work has been difficult. Thankfully, the wife's job is stable for now.

[dr_lew]

I learned statistics in grad school from the classic text of Reif : Fundamentals of Statistical and Thermal Physics. It’s the way the world works. You’re living it every second.

[Paul R.]

Those are very interesting numbers. Two observations:

The “65+” category is unbounded on its upper end. As a general rule, more people are staying healthier longer (or at least healthy enough to work). So, if one was to look at, say, persons 75 years old (only), it would stand to reason that their participation rate has increased — even if they are just the greeter at Wal-Mart. That would push up the participation rate for the 65+ age group.

Anecdotal evidence would seem to suggest that when it comes to persons in the 55-64 year group, many primary wage earners have lost jobs, and either have not found new work, have only found work at a lower wage, or have retired. However, their spouses are either continuing to work when they otherwise might have retired, or, in some cases the spouse has entered the workforce to give the family a second income to try to bring the total back up to what it previously was. Are there any statistics that might support or disprove this idea?

[SargeK]

Wage pressures?

Mrs. and I haven’t seen a raise in 7 years. Any gains we’ve made were through working multiple jobs.

[PGR88]

Baby boomers were born into unprecedented peace and prosperity. Will they have such good fortune to go out that way as well?

[firebrand]

One thing that has changed in the last decade and a half, or so, is that someone’s age can be found on the Internet. Before that, employers were not allowed to ask your age. They could only ask if you were between 18 and 65. Before this happened, if you were young-looking for your age you could cut off part of your resume to make yourself look younger. Now there’s no point in even trying. Nothing shall be hidden. Everything shall be known. It makes a shambles of the age-discrimination laws.

One way around this sometimes is to request a temporary contract rather than an actual hire. This way, they get the benefit of your experience and better work habits without worrying about old-age issues. You don’t get health insurance, for example. You have to focus on the employer’s needs and why they would want someone in their fifties or sixties.

[jamaksin]

FYI:

How to Lie with Statistics, Darryl Huff, W.W. Norton and Company, New York, NY, 1954.

Available as paperback, my copy is 53th printing. The quote comes from Disraeli.

[Dusty Road]

Planned on retiring two years ago but they won’t let me, they just keep offering more money. I’m 64 this November and making more money than I ever thought I would. With the explosion in the Permian basin oil fields old experienced hands are hard to find. I sold my business last January and told my partner I’ll stay with his business until I hit 68 then I’m out for sure, my wife will be 62 and we’ll retire to our place in Capitan New Mexico. I take care of all the families production on a total of 42 square miles of ranches and thats going to hard to walk away from. I hired a young engineer about 3 years ago and hopefully I’ll have him ready by then.

[Renegade]

Starting in 1971 I had an avg. of 39 in 5 different classes

[eartick]

Yep, right when Odinga was elected the lil youngsters did not think they needed to work anymore.

Pretty simple to see if you split the ages apart and plot it over. The young, dumb and full of c___ just figured the magic nigra was going to give them everything they needed.

Boy, I bet they are happy happy happy now....