Sunday, December 6, 2015

"The economy's foundations are growing and the headwinds are subsiding, What else could you ask for? World peace?" Brad McMillian, chief investment officer at Commonwealth Financial Network

Well, world peace would be nice, wouldn't it? Not the point though of this story. This article (12 million jobs added since the recession) refers to the recent November jobs numbers released last Friday which indicate unemployment continues to decline and 211,000 jobs were added. In addition. wage growth is on the upswing.  
Is the economy truly improving? What do the unemployment numbers really mean? It depends on who you ask. This video  took a dismal view last month when the October numbers were released.  This report in US News and World Report sheds some insight into why unemployment seems to be so low but the labor force participation rate is shrinking with nearly 94 million people neither employed or looking for work. But why? According to the article, this is not a new phenomenon, but a slow trend that began around the year 2000. It may be that a fair chunk of that labor force are retirees as baby boomers started turning 62. Coupled with this though  is the highest percentage of people working later in life ( 40.7%) , since 1961. As the article further states, "It's also important to note that the percentage of older workers participating in the labor market started climbing in the mid-1990s, well before the Dot Com bubble crashed and the Great Recession walloped Americans' nest eggs. The narrative that older workers are still reluctant to retire solely because of the Great Recession just isn't as applicable as it was a few years ago." The low levels of participation in the labor force may not be primarily related to economic factors, but rather the changing demographics.
The reasons may be that large numbers of retirees hit at the same time, younger folks are staying in school longer  and a surprising factor, disability. An older work force will have more with disabilities who may not return to the work force. 
There has also been a drop in the so called " prime age workers" between the ages of 25-54. There is no easy explanation for that. male participation in the workforce has been declining ( 69%) for 66 years and female participation has dropped in recent years to 56.7%. These trends are expected to continue.
There is no magic pill. There are a lot of job openings, but as the article explains there may also be a skills mismatch  and perhaps allowing more legal immigration of highly skilled workers to fill these gaps would stimulate the economy.
As the piece concludes, even though this has recently become a hot button issue, it has been a long time in coming and will take a long time to turn around. 

1 comment:

Joseph Cormier said...

The articles make no mention of the jobs that went out of country, like manufacturing, when the boomers were actively employed by the same. The boomers are just beginning to retire! The boomers are classified as those born approximately between the years 1946 and 1964, giving an age range between 51 and 69 as of 2015. I ARE ONE!!!

Just the tip of the spear!

Social Security for full benefits retirement age for the beginning boomers is 66. Retirement at 62 may or may not be the majority.

I was born (hatched) in 1947. Makes me 68 years young, right now. I retired at age 66 in 2013. I had threatened to work till age 70 (punish my employer), and accumulate the additional 8% per year in added Soc. Sec. funds. Retiring at 62 gives the additional four years, but only 75% of the monthly funding. If there's an age difference with your spouse, you should look at spousal retirement, and you might gain by delaying one of you, while going on the spouse's Soc. Sec. and change at 70.

Relative to the job markets, boomers might be working longer because they have to. They might be competing for the same jobs as the "younger".

Skills mismatch are a surety. The emphasis on college degrees, as opposed to what academia is teaching is a disgrace to what should be common sense. The markets can only support a limited number of degreed basket weavers, especially at the cost ... and then expect it to be "free".

Maybe "things" are/will get better, employment-wise, not because of government, but in spite of it. The perception first, then the actual. Business knows a new federal regime will come into play with the elections ... no matter who wins the Oval office.

The Federal Reserve will cease with the interest-rate games, way before the changing of President on Jan. 20, 2017. Businesses that have been stagnant, growth-wise, might be willing to roll the dice.

Places like China are also going through change. As their demographics demand life-style change and higher wages, maybe manufacturing will "return" to being a staple of U.S. economy and good-paying jobs.

A good deal of MoBo's boomers are probably not dependent on Soc. Sec. and have other means, but will create "demands" of their own, notwithstanding the clamor for younger folks. Reality is ... what it is!

Numbers, like statistics, may or may not be meaningful.