Friday, December 16, 2016

Baby Boomers not to Blame for lack of Jobs

Baby Boomers are not to blame for the dramatic rise in the number of people "not in the labor force". Retirees and those on disability are making for a smaller and smaller share (on a monthly basis) as to the number of people "dropping out" of the labor force.

Boomers aren't to blame for lack of jobs.

A little over half (56.8%) of those in the U.S. who are not employed and "not in the labor force" receive some form of Social Security. To date (12/16/2016) 54 million working-age American adults are receiving Social Security benefits (retired, disabled, widowed, etc.) out of a total of 95 million working-age American adults who are not in the labor force.

Only 18% of the additional people who the Bureau of Labor Statistics added to the category of "not in the labor force" since last month had retired on Social Security (as the number of those receiving disability DECREASED); the other 82% of those who were added to the category of "not in the labor force" are just without jobs, but are not counted in the 7.4 million who are "unemployed". From November 2016 to December 2016 (over the past month alone) the U.S. had an additional 366,275 people NOT IN THE LABOR FORCE that did NOT retire or go on disability.

41,174,259 Nov.
41,082,060 Oct.
92,199 MORE people retired

8,833,909 Oct.
8,821,435 Nov.
12,474 LESS people on disability

A difference of 79,725 who are now on Social Security since last month and are no longer in the labor force -- from a total of 446,000 additional people who are now "not in the labor force" from Nov to Dec. Over time, more and more people "not in the labor force" have been exceeding the number going on Social Security because there has not been enough job creation to keep up with those graduating from school (not comparing to population growth or the employment-to-population ratio because of foreign-born workers: Foreign-Born New Hires Outpace Native-Born)

At Business Insider Akin Oyedele wrote: "Fewer people are active in the labor force partly because baby boomers are retiring in droves." This has been a common, but inaccurate assessment for years — but yet it's still parroted all the time in the business pages ... but for the most part, it’s simply not true. 18% of those that are no longer in the labor force are not "droves".

When Akin Oyedele used the word “partly”, it was only partly true, but wasn’t the BIGGEST part, so why even mention it? Was it to make the old argument to cut “entitlements” because so many people are on the “government dole”? It seems so.

FYI for last month: 446,000 additional people were "not in the labor force" from Nov to Dec – while only 79,725 additional people were added to the Social Security rolls (for retirees, not the disabled) from Nov to Dec. Is this the “droves” of people that Oyedele was referring to?

The pundits and many economists are blaming the rise in those "not in the labor force" (and the drop in the labor force participate rate and the employment-to-population ratio, which has been in decline since April 2000) as those retiring or going on disability — and that this is primarily the Baby Boomers. But this is simply not true. Just as an example, for over the past one month alone:

446,000 additional people are no longer in the labor force, but only 79,725 were added to the Social Security rolls during that same time. The labor department reports 178,000 jobs were created and 387,000 LESS people are counted as "unemployed" — meaning, they are still considered part of the labor force, but don't have jobs (and why the unemployment rate always drops) —while 446,000 additional people are no longer in the labor force. [See the links below and do the math.]

Per the Bureau of Labor Statistics: 178,000 jobs were created in Nov. 2016
"The number of unemployed persons declined by 387,000 to 7.4 million."

Bureau of Labor Statistics data for those unemployed:

Per the Department of Labor: Of 7.4 million unemployed, 2 million are currently receiving unemployment benefits.

At Business Insider they wrote: "Fewer people are active in the labor force partly because baby boomers are retiring in droves." (Not true!)

Bureau of Labor Statistics: Not in Labor Force

----95,055,000 Not in labor force Oct. 2016
- -94,609,000 Not in labor force Nov. 2016
=- 446,000 Number who dropped out of labor force since the month before.

Social Security database:

---49,995,694 Retired and disabled on Social Security Nov. 2016
-49,915,969 Retired and disabled on Social Security Dec. 2016
= -79,725 Added to Social Security rolls in past month ---> out 446,000 who dropped out last month! --> A balance of 366,275

* As an added note: According to the National Center for Education Statistics (NCES) over the past 8 years alone, the U.S. has had over 3 million young people every year who are graduating from high school — and it doesn’t matter that most go on to attend college, because a vast majority of them (at some point in the future) either drop out or graduate and attempt to enter the labor market. That equates to 250,000 jobs created every month just to break even with those who are currently in school — not including those who come to the U.S. on work visas or drop out of high school to look for work (EXCLUDING those who die, are hospitalized, move abroad or are incarcerated.)

Bottom line: It isn’t Baby Boomers that are primarily driving the increase in the number of people “not in the labor force” --- it’s a lack of jobs, and most likely due to offshoring (for bad trade deals like NAFTA and PNTR for China), and robots, AI and automation — and guestworker visas (like H-1B) ... and why eventually, most people will need a Basic Income.

There were once arguments that older people were working longer to recoup losses from their homes and 401ks during the Great Recession, and that younger people were complaining that these older people weren’t retiring fast enough to make room for them in the labor market. The “participation rate” for workers over 55 actually INCREASED as those in their PRIME years (25 to 54) declined immediately after the recession. [Chart below]


BELOW: Just from the past month alone, the pink shaded area are Social Security retirees, and the blue shaded area are mostly those who could work but don't have jobs. BLS: Not in the labor force, want a job now --- 5.8 million working-age Americans.

Most people didn't retire or go on disability, they were left jobless.

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