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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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To: vannrox

Are you kidding? The reason is the Millenials are ignorant of the real world, both in the US and the rest of the world. Of course companies are going to hire us for less money than someone from that generation.

Have you talked to those people? They have a confused world where their view of how things are don’t really match up to how things are, but they try to make it fit to their world view anyway. The few that do see clearly will have to fight against the tide of those who have abandoned logic. That will be a tough fight.


61 posted on 08/01/2016 10:04:46 PM PDT by VanShuyten ("a shadow...draped nobly in the folds of a gorgeous eloquence.")
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To: vannrox
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.

While it is true that we may need to work longer than previous generations, it is also true that younger workers are incompetent.

The Calvinist work ethic is gone and the employees can't get out of the place fast enough. That's why they are mopping floors and spraying poisonous cleaners around while the people are still eating. That's why the customer now comes last as they attend to all their little tasks.

Don't get me started on the recent immigrants, who don't even know what a vacuum-sealed bottle is but think you can replace a top and put the soda or juice back on the shelf. The faulty English has resulted in many an f'd-up order. Sometimes total incomprehension. The busboys come and try to take your plate away while you are still eating. They don't ask, they just stick their thumb right in there. They are all desperate for money. The college grads only want to be coddled and praised.

I could go on and on. I'm trying to get my Girl Scout badge in Curmudgeonry.

62 posted on 08/01/2016 10:06:19 PM PDT by firebrand ( Kingsley Amis is my patron saint.)
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To: kearnyirish2

An in-law points out that the property tax in NJ is actually regressive, because it impoverishes the middle class to the benefit of the really wealthy, who could care less.


63 posted on 08/01/2016 10:15:26 PM PDT by firebrand
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To: kearnyirish2

Not really. The Mason-Dixon takes a curve in order to keep NJ in the north.


64 posted on 08/01/2016 10:17:10 PM PDT by firebrand
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To: vannrox

bump


65 posted on 08/01/2016 10:54:56 PM PDT by gattaca (Republicans believe every day is July 4, democrats believe every day is April 15. Ronald Reagan)
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To: HartleyMBaldwin

**** “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” ****

I got ya .... I started at 6 driving the ol Studebaker Hay Truck (standing on the seat, Granny Gear, just steering)

But I know what you are saying and we are the same age, at 8 my Dad had Walking Pneumonia? Anyway he was in the hospital for 3 days and I had to milk the cows... Mom said I did a really good job so... it was my job forever after... then Berries Beans, Cucumbers and Hay (BEST DAYS OF MY LIFE)

I too will have to work till I die... married a Young Woman, divorced now and “That” Contract will probably not end till the day I Die, hoping that it ends sooner would deprive my children of their Mother so ... I’m OK, I’ll work.
Got nothing else to do


66 posted on 08/02/2016 12:05:57 AM PDT by TexasTransplant (Idiocracy used to just be a Movie... Live every day as your last...one day you will be right)
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To: central_va

*** “Like an old plow horse I will probably die in the harness” ***

I’ve thought/known that but never with the words that make it so palatable. Thank you


67 posted on 08/02/2016 12:10:25 AM PDT by TexasTransplant (Idiocracy used to just be a Movie... Live every day as your last...one day you will be right)
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To: spokeshave

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

Your PAX get a ride and a History Lesson! (You should Charge Double!)


68 posted on 08/02/2016 12:13:14 AM PDT by TexasTransplant (Idiocracy used to just be a Movie... Live every day as your last...one day you will be right)
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To: 5th MEB

BUMP!
Don’t throw me in that Briar Patch!


69 posted on 08/02/2016 12:24:05 AM PDT by TexasTransplant (Idiocracy used to just be a Movie... Live every day as your last...one day you will be right)
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To: Feckless

*** “a pitcher of Bloody Marys, and the hot tub” ***

I have a story about a Pitcher of Gin and Tonic (mostly Gin) and a Hot tub along with the three waitresses
(probably should keep it to myself)


70 posted on 08/02/2016 12:29:52 AM PDT by TexasTransplant (Idiocracy used to just be a Movie... Live every day as your last...one day you will be right)
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To: spokeshave; choctaw man

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

Godspeed, and good wages.


71 posted on 08/02/2016 12:30:06 AM PDT by Gene Eric (Don't be a statist!)
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To: FreedomNotSafety

*** “Topic two. Older workers know how to show up, are generally better educated, and less entitled” ***

And we take the Row assigned and figure out how to make it work instead of complaining ...

I do a lot of different “Jobs” I always look at it like ... “How do I make this pay Twice or Thrice”

Experience and knowing a lot of people and you can take the “Worthless” Contract or Job and make it work (most of the time) These are usually the only ones available to the non-frat party oldsters.
I don’t tell them if I succeeded or failed... I just ask for another one.


72 posted on 08/02/2016 12:40:13 AM PDT by TexasTransplant (Idiocracy used to just be a Movie... Live every day as your last...one day you will be right)
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To: wastoute

**** Everyone who could went Galt years ago. It had an effect****

I’m waiting for my Invitation to Go Galt, in the end I may have to Infiltrate and just lay low once I get there.


73 posted on 08/02/2016 12:43:32 AM PDT by TexasTransplant (Idiocracy used to just be a Movie... Live every day as your last...one day you will be right)
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To: central_va

I’m an outdoors person; won’t work...


74 posted on 08/02/2016 2:25:09 AM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: firebrand

Our property taxes basically are a high overhead that childless people in particular are unlikely to bear; there is no reason for them to absorb such costs without using the school system. The taxes primarily benefit the government worker caste (our upper middle class), and much of it passes through them right into the Democratic Party’s coffers - who use it to hire MORE government workers. A vicious cycle...


75 posted on 08/02/2016 2:31:50 AM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: TexasTransplant

I am a defacto mentor to many young people. Many are bright and well educated. They are great kids. But they simply do not know how to work hard and they cannot cope with harsh people. I help them with by both by being their “friend” and using them, abusing them, and just generally running them into the ground. But we are usually successful and I give them the credit. It has held launch several into the exec ranks already.


76 posted on 08/02/2016 2:18:50 PM PDT by FreedomNotSafety
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To: vannrox

Must be ME! I am working as a CAD Engineer refurbishing Tools for The Semi-Conductor Industry, I am 63, have a criminal record, make more money than I have ever in my Life,..he he..I have a job for LIFE..Just Paid off my Harley in one Year, having the time of my LIFE...http://www.entrepix.com/


77 posted on 08/02/2016 5:56:57 PM PDT by hawg-farmer - FR..October 1998 (MECCA and Medina, the SNAKE HEAD..)
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To: vannrox

bkmk


78 posted on 08/02/2016 6:50:24 PM PDT by AllAmericanGirl44 (If you ain't the lead dog, the scenery never changes.)
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