On Jan. 1, 2011, the first baby boomers turned 65. And now, every day for the next 19 years, about 10,000 more will cross that threshold, according to the Pew Research Center. By 2030, when all baby boomers will have turned 65, about 18 percent of the nation's population will be at least 65 or older compared with about 13 percent now, Pew said.
The boomers have changed just about every institution and lifestyle question they have touched as the huge cohort (it’s about 23 percent of the total population) moved through life. And there is no question they’re about to change retirement. But one of the most interesting pieces is the impact the boomers already are having on the labor force in the United States.
That impact could, perhaps inadvertently, change the presidential election race this year because the size of the labor force is one of the ingredients that goes into the ratio that determines the national unemployment rate. The size has been shrinking rapidly in the past few years and most believe the drop has been caused by the Great Recession. Workers have just given up and dropped out, becoming so-called “missing workers.”
So when the economy begins to improve, the missing workers show up again, boosting the work force and pushing the unemployment rate up despite the fact that the economy continues to improve. Since most of us regard the unemployment rate as a good barometer of the economy, a rising rate could be bad news for President Barack Obama and good news for whoever the Republican challenger is.
Another factor is that many in the work force are working longer, well past the traditional retirement age. My own situation is illustrative of the issue and how people and jobs are counted. I am nearing 70 but still consider myself employed, at least part time, as a consultant and, of course, writing for Crosscut. So how would I be counted in the employment figures?
“You wouldn’t show up in the payroll numbers which count jobs, not people,” said David Wallace, economist with the Washington Employment Security Department. “However, the household survey would find you employed — assuming that was the answer you gave them.”
The Bureau of Labor Statistics, keeper of employment and unemployment data, has two monthly surveys that measure employment levels and trends —the Current Population Survey, also known as the household survey, and the Current Employment Statistics survey, also known as the payroll or establishment survey. The payroll survey provides a highly reliable gauge of monthly change in nonfarm payroll employment. The household survey provides a broader picture of employment, including agriculture and the self employed. And both are important to understanding how the economy is doing.
So while I might be counted in at least one of the labor surveys, a larger percentage of people turning 65 are retiring. A recent article by the Chicago Federal Reserve Bank estimated that at least half of the decline in the labor force participation rate (LFPR) in the recent recession was due to retirement.
The participation rate, simply the percentage of people in the general population who are working, peaked at 67.3 percent in early 2000 and then fell by 3.6 percentage points to 63.7 percent as of January 2012, a decline more than twice as large as any since World War II, according to the Chicago Federal Reserve Bank.
The Chicago Fed concluded that “labor force participation has fallen significantly over the past decade. At least some of this decline is due to the recent deep recession and lackluster recovery. Additionally, for quite some time, economists have forecasted that shifting demographics, particularly in the age structure of the population, would put downward pressure on labor force activity. We estimate that just under half of the decline in LFPR since 2000 is due to such factors. We expect these demographic patterns to continue for at least the next decade, and likely far beyond, as the large baby boom cohort continues the transition into retirement.”
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