Why does the Fed keep claiming that Baby Boomers are the main reason for the decline in labor force? The real reason is because there aren't enough jobs for prime-age workers, and not because older workers are leaving the work force.
Regarding this post: The Economic Outlook and Forward Guidance from the Atlanta Fed:
It states, "About half of the fall in participation can be explained by demographic trends— that is, baby boomers choosing to retire."
This is totally false, so I can not understand why so many people are still saying this when simple numbers belie this claim.
But then they say, "At the same time, a nontrivial portion of the decline seems to be associated with a rising share of prime-age workers who are not in the labor force."
Consider this: Birth-rates have been historically low and immigration is also down, so while although the U.S. has a aging population (the Boomers) and a record number of Boomers have been retiring, there have also been a record number of young adults graduating from high school every year—many more than those who are retiring.
And the argument can't be made that many high school graduates enter college, because at the same time, people are also graduating from college and are also trying to enter the work force. This might also explain why so many young adults are moving in with their parents (or not leaving home at all).
The first Boomers turned 62 in 2008 — and if they were laid off during this time, chances are many took early retirements because the unemployed and older workers were not (and are still not) being rehired.
|Year||New retirees on Social Security||New High School Graduates|
In 2011, after 99 weeks of unemployment benefits had expired for the Boomers who were laid in 2008/2009, the Boomers turned 65.
|Year||New retirees on Social Security||Number of High School Graduates|
In other words, we've had more "non-starters" than "quitters" accounting for the declining LFPR, which has been in decline since April 2000—long before the first Boomer took an early retirement in 2008.
There are a proportionate number of prime-age and older workers who are "discouraged" who were forced out of the labor market because they couldn't find work.
So as a Boomer, I just want to tell the Fed: Stop making false claims. Boomers are not the reason for the declining labor force; it's because of bad trade agreements and a skewed tax code that allowed for the offshoring of so many jobs (although, technology has also been a contributing factor).
It is the responsibility of the Fed (and our political leaders) to see to it that the U.S. has full employment. But they failed at their job and now they want to blame the demographics (the Baby Boomers) for a declining labor force...as though they were all slithering off into comfortable retirements at the expense of the taxpayers.
So knock it off already!!!
I posted all the data with links to that data backing up my claims here: