02 February 2021

This is Not a Growing Vibrant Economy

Over the past 20 years, total employment in the US has grown by 11,767,000.

Over the same 20 years, employment among workers over 6o has increased by 11,879,000.

To put that in perspective, 101% of all the jobs gained in the past 20 years were among people who would have retired if the economy actually worked for people.

This might explain why the economists' view of our economy, and that of ordinary people diverge so sharply.

To quote Douglas Adams, "This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.

What is going on, at least if you don't buy into the rosy scenario promulgated by the St. Louis Fed, is that older people are working longer, because life has become more more precarious, with the end of defined benefit pensions, Wall Street looting of defined contributions (IRA, 401(K), etc.), and the general fall in wages over the past 45 years.

So people CAN'T retire, and younger workers are finding that the jobs that they would ordinarily get during their careers are not opening up.

It is a recipe for social unrest and extremism, but the green pieces of paper are quite happy:

Total U.S. employment grew by 11,767,000, or 8.5%, in the 20 years ending in December 2020. All that growth—11,879,000, or 101% of the total—was due to increased employment of people age 60 and older. Meanwhile, the net employment change over the past two decades of people ages 16-59 was -112,000 (-1% of the total change), despite this younger group being 3.8 times as large as the older group in December 2000 and still 2.4 times as large in December 2020. (See the figure below above.)

What’s Driving This Outcome

This age-skewed labor-market outcome was the result of two differences between the groups:
  • The older population (60 and older) grew much faster than the younger population (16-59).
  • The employment-to-population (E-P) ratio among those 60 and older increased significantly while the E-P ratio among the younger population declined, on balance.
With the exception of the large decline in the E-P ratio of the younger population, which is difficult to predict in the years ahead, the basic trend of rising employment among older workers is likely to continue for some time for the following reasons:
  • The older population is likely to continue growing faster than the younger group.
  • The E-P ratio of the 60 and older group is likely to increase further as the health and educational attainment of older people continues to improve and the demand for older workers persists.


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