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America's Aging Baby Boomers, Forced To Work Until Death, Blamed For Collapsing US Productivity
zero hedge ^ | 31 July 2016 | Tyler Durden

Posted on 08/01/2016 5:29:28 PM PDT by vannrox

America's Aging Baby Boomers, Forced To Work Until Death, Blamed For Collapsing US Productivity

Tyler Durden's picture

The graying of America's workforce will come as no surprise to regular readers. Just earlier this month, we wrote that in a little noticed aspect of the "stellar" June jobs report, the vast majority - or 90% of all new jobs - went to workers 55 and older.

 

Hardly an outlier, this was the latest confirmation of a very troubling trend: all jobs created since the recession started in December 2007 have gone to workers 55 and older.

 

In fact, in the latest month, there was a record 34.5 million workers in this age group: the only one that has seen persistent growth this century (and with the concurrent surge in waiters and bartender jobs in recent years, we even have a sense of what they are doing).

 

We won't go into the reasons for this dramatic divergence (we have covered it extensively in the past); instead we bring up these observations because according to a new NBER paper, this stunning trend is what is being used to scapegoat the accelerating collapse in US productivity. As Bloomberg reports, "population aging is expected to drag on U.S. growth, and the hit could be substantial."

According to the National Bureau of Economic Research, the retirement of baby-boomers in the decade between 2010 and 2020 will lower GDP growth per capita by 1.2% a year from what would have been the case if the nation's demographics had held steady, while slamming productivity.

The thinking behind the study is simple: population aging is already long underway and by looking at variations in state population aging, authors Nicole Maestas at Harvard Medical School, and Kathleen Mullen and David Powell at policy research group RAND Corporation, are able to estimate how a graying workforce affects output, participation rates and productivity.

Now America's deteriorating productivity trend is nothing new; however for the first time it has been blamed on the demographic shift of the US workforce and specifically the vast preponderance of baby boomers stuck in the labor force, instead of - say - half the population of the US and Canada using Facebook on a daily basis. As Bloomberg adds, what's surprising is the composition of the slowdown: one-third is driven by slowing workforce expansion and the rest by a drop in productivity gains. The productivity slump isn't reserved to older workers: it takes place across age groups, the researchers find.

The authors suggest a few theories about why that's the case. It could simply be that younger and older workers complement one another. Or the most productive older workers might be leaving the workforce,  while less-productive old timers stay on the job.

This is another way of saying that employers keep hiring old, experienced workers at the expense of younger Millennials who are unable to find jobs due to bottlenecking as a result of the same older workers who refuse to retire for no other reason but simply because their savings no longer generate a cash flow.

"How much of it is that relatively productive workers are the ones who are choosing to retire? It's very hard to say," Maestas told Bloomberg. 

Regardless of what's behind it, the discovery that the aging workforce could be weighing on productivity comes in contrast to other guesses, is important. The Fed has long been pondering over the issue of sliding US productivity. As Bloomberg adds "it's not clear why productivity growth has dropped off, and the change has real-world implications: it's one factor that caused Fed officials to lower their projections for where interest rates will settle in the longer-run, based on meeting minutes from their June meeting."

What's worse about the new findings is the suggestion that already slumping productivity is set to get even worse. If growth over the next 20 years otherwise held near its average for the 1960-2010 period — about 1.9 percent — adjusting for the demographic shift would lower per-capita GDP gains to 0.7 percent this decade and 1.3 percent next, based on the estimates.

It also means that the natural rate of growth is likely at or below zero, which also confirms that any attempts to hike rates will be doomed to failure as the US economy simply can not sustain a rising cost of money, thus forcing the Fed to ease after every single rate hike.

But while we agree that the relentless aging of the US workforce will have dire implications for the future of the US productivity, as well as economic growth, it is clear that the study never got to the fundamental culprit, which is the Fed itself.

Because the glaringly obvious tangent is that old workers are stuck in what now seem to be "lifetime" jobs, with no hope of retirement, for one overarching reason: the interest income generated by savings is zero (and negative in real terms). This means that as an entire generation of workers has found out the hard way it will never have the planned cash flow from savings parked in the bank; it is therefore doomed to work until death. By implication, it also means that the entire younger generation, in this case the biggest one in US history, the Millennials, will be stuck unable to enter the workforce and to build critical labor skills, as a result of lack of hiring as employers retain their old, experienced, and thus much more cost-effective workers for as long as they possibly can.

Our advice to the Harvard authors of the study: in the next part of the study, the one looking at why the US finds itself in this situation, please look at the Fed's monetary policy. Because with over $10 trillion in savings generating no income, and thus crushing the velocity of money, the real reason why the US is facing a productivity crisis of epic proportions is because the central planners in the Marriner Eccles building have destroyed an entire generation's hopes of being able to retire.

As for those elderly Americans stuck in menial jobs until their dying day, our condolences.



TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; News/Current Events
KEYWORDS: age; politics; retirement; work
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1 posted on 08/01/2016 5:29:28 PM PDT by vannrox
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To: vannrox

Ask anyone in the role of hiring and firing what age group they desire for skill, reliability and emotional stability.

Then ask them what age group they are avoiding.


2 posted on 08/01/2016 5:32:16 PM PDT by lurk (T)
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To: lurk

Exactly. My mom is 66 and is still working-she puts in longer days and us more honest and productive than the much younger women in her office.


3 posted on 08/01/2016 5:36:14 PM PDT by NorthstarMom (God says debt is a curse and children are a blessing, yet we apply for loans and prevent pregnancy.)
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To: vannrox

I’m still at it (age 69).


4 posted on 08/01/2016 5:36:47 PM PDT by choctaw man (Good ole Andrew Jackson, or You're the Reason God Made Oklahoma...)
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To: vannrox

Centralized banking: a few living well off of the churn at everyone else’s expense.

That isn’t its flaw, it is its design.


5 posted on 08/01/2016 5:38:07 PM PDT by Rurudyne (Standup Philosopher)
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To: choctaw man

Me too (age 74) ...if you call UBER a job.


6 posted on 08/01/2016 5:39:36 PM PDT by spokeshave (Somewhere there is a ceiling for Trump.....Yeah, it's called The Oval Office)
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To: lurk

At present “snowflake” still doesn’t have protected group status so I would certainly want to find ways to detect them and as a consequence actively discriminate against them.


7 posted on 08/01/2016 5:40:21 PM PDT by Rurudyne (Standup Philosopher)
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To: vannrox

I’m 61, and I figure I’ll work until I die, or get too sick to work. Started in the berry fields at 7.


8 posted on 08/01/2016 5:47:04 PM PDT by HartleyMBaldwin
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To: lurk

I was going to write that. When I took a job at Barnes & Noble in 2011 due to the recession/depression, the most reliable workers were women over 50. Showed up on time, dressed appropriately, and no nonsense. Some of the kiddies who worked there were bizarre in the extreme.


9 posted on 08/01/2016 5:51:03 PM PDT by miss marmelstein (Richard the Third: With my own people alone I should like to drive away the Muslims)
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To: vannrox

They can be blamed, and with justification, for electing obama.

The rest is history.


10 posted on 08/01/2016 5:51:46 PM PDT by Jack Hammer
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To: vannrox

Instead of spending trillions on the stimulus, they should have given a few million older workers a generous anuity if they would promise to take permanent retirement.


11 posted on 08/01/2016 5:53:29 PM PDT by smokingfrog ( sleep with one eye open (<o> ---)
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To: NorthstarMom

I retired in 2010 at 62.
Went to work for myself on my own farm.
The hours are a lot longer, the work is a lot harder, there are no breaks, there is no help, there are no paychecks, there is no boss but me.
I LOVE IT.
I put in a 14 to 16 hour day on average; but the fruits, vegetables, and meats of my labor belong to me.


12 posted on 08/01/2016 5:56:22 PM PDT by 5th MEB (Progressives in the open; --- FIRE FOR EFFECT!!)
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To: vannrox
Hardly an outlier, this was the latest confirmation of a very troubling trend: all jobs created since the recession started in December 2007 have gone to workers 55 and older.

I wish these f'ing experts would make up their minds about who's getting all the new jobs. Last I read, immigrants to America have gotten all new jobs created since just before Obama took office.

Can't these jerkwads get their lies straight?

WHAT JOBS!!!!!

13 posted on 08/01/2016 5:58:25 PM PDT by usconservative (When The Ballot Box No Longer Counts, The Ammunition Box Does. (What's In Your Ammo Box?))
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To: vannrox

Anti Brexit pointers for the first time in my experience advocated denying elders the vote, something I’ve been anticipating for many years. What is new is the prejudice against active elders. It was the long ago prediction that the pretext for their political disenfranchisement would be that retirees weren’t self supporting. In the event, elder prejudice is legal.


14 posted on 08/01/2016 6:04:16 PM PDT by CharlesOConnell (CharlesOConnell)
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To: HartleyMBaldwin

Like an old plow horse I will probably die in the harness.


15 posted on 08/01/2016 6:05:25 PM PDT by central_va (I won't be reconstructed and I do not give a damn.)
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To: 5th MEB

Well done.


16 posted on 08/01/2016 6:05:46 PM PDT by deadrock (I is someone else.)
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To: vannrox

It was the baby boomers that largely drove the world’s debts to impossible amounts to pay back. There are consequences with that. If we weren’t paying so much in interest to service these debts, the economy could hold everybody.


17 posted on 08/01/2016 6:08:36 PM PDT by Jonty30 (What Islam and secularism have in common is that they are both death cults)
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To: spokeshave

I am looking forward to getting Social Security, not for income but as a tax cut.


18 posted on 08/01/2016 6:08:48 PM PDT by central_va (I won't be reconstructed and I do not give a damn.)
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To: spokeshave; choctaw man

Anything that brings in money from someone is a job. Am about to turn 76. Have two part-time employees who are 70. Smart, efficient and don’t waste time. Moved business to my house several years ago. Figure I can work as long as I can toddle down the hall to the office.

Everything cost more every year. Lots of us oldies have to continue working if we want to maintain our independence. Options are not anything I’m interested in. Better to wear out than rust out.


19 posted on 08/01/2016 6:10:47 PM PDT by Grams A (The Sun will rise in the East in the morning and God is still on his throne.)
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To: Jonty30
It was the baby boomers that largely drove the world’s debts to impossible amounts to pay back.

I think you're talking about the old leftist hippies who, like ticks, are now firmly buried within the bureaucracy...

20 posted on 08/01/2016 6:25:23 PM PDT by jonno (Cruz: came to a party, ate the food, drank the wine, and then pissed on the carpet.)
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