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How boomers will change retirement and jobless rates

With 10,000 baby boomers a day turning 65, that large cohort will have an impact on unemployment rates this fall, when it could matter in the election race, and for years to come. Update: New employment figures show little gain in overall jobs.

A worker at his retirement party in Wisconsin.

A worker at his retirement party in Wisconsin. Lester (Wisconsin) Public Library

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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Comments:

Posted Fri, Apr 6, 10:53 a.m. Inappropriate

When anyone writes about this subject of Boomers in the workforce, I think it's essential to discuss the massive problem of age discrimination in hiring and the workplace. Older workers and younger workers were hardest hit by layoffs associated with the financial crash-driven recession, and those groups are having the hardest time getting back into decent jobs with benefits. People in their 50s and 60s are not easily going to be able to get back into the workforce if and when the economy improves. That's why it's essential for voters to take a very careful look at Mitt Romney's and Republican proposals to raise the age of eligibility for Medicare and Social Security, cut benefits, and eliminate the Affordable Care Act and its prohibition against insurers denying people coverage based on pre-existing medical conditions.

Posted Fri, Apr 6, 11:38 a.m. Inappropriate

Here's a not uncommon story of an older worker's travails in trying to find a job:
http://www.npr.org/2012/04/06/150126242/for-long-term-unemployed-help-is-running-out

Posted Sat, Apr 7, 12:14 p.m. Inappropriate

Seems like the dearth of comments speaks to how few people engage in these discussions or even care. Ignorance is bliss I guess.

Posted Sat, Apr 7, 2:22 p.m. Inappropriate

I'm an early Boomer who retired in 2006. Quite a few of my friends who planned to retire in 2008 and 2009 put those plans on hold when their 501k investments took a hit. Now that their retirement funds have recovered, they are all retiring this spring. My brother-in-law works for a local firm with 12 employees. Eight of the 12 including my brother-in-law are retiring between now and June.

I know that this is only a micro view but it is supported by Social Security stats. Applications for Social Security retirement benefits have increased by double digits each month of 2012.

I am happily retired and do not wish to return to the work force. However, I've been tempted by several offers I've received recently. Both came from former employers who were concerned that they no longer had any senior employees to mentor interns and new hires.

quiller

Posted Sun, Apr 8, 12:17 a.m. Inappropriate

Quiller re-inforces my point(s) very well. Thanks.

Posted Sun, Apr 8, 3:35 p.m. Inappropriate

Stephen, as quiller aply notes, his comments are a "micro view" that hardly prove older workers are easily going to be able to find work and continue in the labor force in decent jobs with benefits. I'm glad for quiller but the woman in that NPR piece I linked to who can't find a job despite excellent experience is at least as typical if not more so. That's borne out by the long-term unemployment statistics. Applications for Social Security benefits could very well be up because unemployed workers 62 and over have exhausted their unemployment benefits, can't find a job, and need the Social Security income to survive even though they'd rather continue working. Talk to people. That's a very common situation.

Posted Mon, Apr 9, 11:02 a.m. Inappropriate

I didn't set out to prove that older workers were easily going to find work. My field is actively seeking older workers but I know that is not true of most. I only wished to make the point that many boomers who delayed retirement for a year or two are now reconsidering and retiring because they feel more secure about their retirement savings than they did a few years ago. Their choice to retire is impacting the size of the work force because we are such a large group.

I am both older and female. Most of my friends and aquaintances are 58-68 and none of them are interested in working any longer than they must. Some, especially those with access to private pensions, will retire early. Others are determining whether they can afford to retire on reduced Social Security. Those who can, do.

I understand that unemployed older workers have a difficult time re-entering the work force.

quiller

Posted Mon, Apr 9, 10:16 p.m. Inappropriate

There are two indications that the status of some unemployed people is not as dire as that of other unemployed people: they mention that they are "consulting" (meaning that they have a profession within which to consult) and they have "investments".

Those really in trouble have neither, and they are often as young as 50 when they become unemployed. How will they survive?

sarah90

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