Why Baby Boomers Aren't Causing Lower Labor Participation Rates

Once again, the nation's unemployment rate fell on a shrinking labor participation rate and, once again, people on the left are explaining it away on the basis that 10,000 Baby Boomers are retiring every day; starting 4 years ago in 2011.  Therefore, we are led to believe that there are more people retiring than entering the workforce. Well, not according to this population pyramid derived from Census Bureau data:

Simply, there are roughly 17.5 million theoretical retirees (age 65-69) against almost 23.5 million theoretical job seekers (age 20-24). The net of which should result in an annual increase of 1.2 million workers per year. Yet, month after month, the size of the workforce barely increases or even falls.  In fact, it fell by 432,000 workers last month.

References:

Labor force participation rate falls to 38-year low: http://www.businessinsider.com/labor-force-participation-rate-falls-to-38-year-low-2015-7

US Age Structure 2014: http://www.indexmundi.com/united_states/age_structure.html

The April's Jobs Report: More A Story Of Giving Up Looking For Work

According to the Bureau of Labor Statistics, the unemployment rate dropped from 6.7% in March to 6.3% last month.  It did so by adding only 288,000 jobs.  Of course the relative math here, doesn't make a whole lot of sense. 

If you have a labor force of 156.2 million workers in March going into April and, you multiply that by the four tenths of a percent drop in the unemployment rate, you come up with 625,000.  That's how many workers would have had to actually find work in order for the unemployment rate to drop to 6.3%.  So, obviously, something else happened in April.

That something else is the fact that 806,000 workers simply dropped out of the labor force.  Of that number, 783,000 where considered to be discouraged workers; with the remaining  23,000 being actual retirees.  By definition, a discouraged worker is a person of working age; capable of work; wanting to work; but, in the frustration of not finding a job, has just given up looking.  Because of this, the Bureau of Labor Statistic no longer considers them part of the workforce and, as a result, they are the primary reason that the unemployment rate dropped so dramatically.  In other words, twice as many workers stopped looking for a job as those who found one. 

For those who would believe that baby boomers, who are retiring at a rate of 10,000 a day are responsible for the lowering of the workforce, the so-noted 23,000 retirees hardly squares with this false belief.  The reality is that we had a true unemployment rate of 12.3% in April when that month's 9.5 million discouraged workers are taken into account.  All told, we actually have 19.2 million unemployed Americans.  Not the published 9.7 million.  This is horrible.  Especially, considering the fact that we are closing in on a day when more people will have given up looking for work than there are those who are actively pursuing it.  This has not happened since the Great Depression.  This despite the fact that the recession ended nearly 5 years ago.

References:

April Employment Situation Report Overview: http://www.bls.gov/news.release/empsit.nr0.htm

Definition of Discouraged Worker: http://www.investopedia.com/terms/d/discouraged_worker.asp

April Employment Situation Report: Table A-15: Alternative Measures of Labor Underutilization: http://www.bls.gov/news.release/empsit.t15.htm

The January Jobs Report: Shooting Holes In December's Baby Boomer Excuse For A Shrinking Workforce

Last month, when the workforce declined by 347,000 in the December Jobs Report and, as a result, the unemployment rate fell dramatically by three-tenths of a percent, a number of liberals blamed the decline in workers on the retirement of baby boomers.  I countered that with a blog entry titled: "The Big Lie: Workforce Contractions Are Due To Baby Boomer Retirements".

Well, this month, in the January Jobs Report, the workforce grew by 523,000 from 154.937 million  to 155.460 million workers.  Strangely, we haven't heard one peep out of all those idiots that had used the "baby boom retirement" excuse for a shrinking workforce in December. 

Reference:

January Jobs Report: http://www.bls.gov/news.release/empsit.a.htm

USA Today: Tom Mullaney: Jobs report highlights the aging of Baby Boomers: http://www.usatoday.com/story/money/business/2014/01/12/labor-force-participation/4413811/

The Big Lie: Workforce Contraction Are Due To Baby Boomer Retirements: http://cuttingthroughthefog.blogspot.com/2014/01/the-big-lie-workforce-contractions-are.html

The Big Lie: Workforce Contractions Are Due To Baby Boomers Retiring.

It seems like, every time there's another one of these head-scratching and really questionable employment reports -- where the only reason for the unemployment rate falling is a shrinking workforce -- a bunch of talking-heads crawl out of the woodwork to justify the declines on the basis of a well-worn lie that 10,000 "Baby Boomers" are retiring every day.

This time around, the "Baby Boomer" spin is in defense of the December report where only 74,000 jobs were created; yet, the unemployment rate fell three-tenths of a percent to 6.7%.  A feat that could only have happened because, in addition to the 74,000 new jobs, 347,000 previously unemployed workers left the workforce; resulting in a net benefit of 421,000 jobs.  Which, by the way, is close to, but still well short of the 462,000, truly needed to lower the unemployment rate by three-tenths of a percent.

The 10,000 a day number is simply based on the fact that, during the Baby Boom years (1946-1964), a near average of 10,000 babies were born each day; starting with 7,700 babies being born per day in 1946 and rising to a high of 11,800 babies in 1961.  But, this number wrongly assumes that every "Baby Boomer" will live to retirement; or, that no "Boomer" will work beyond retirement; or, that, somehow, no one is standing in line to replace these retiring workers.

According to Life Expectancy Tables and Actuarial Life Tables, a person born in the Baby Boom years  had 29.5% probability of dying by age 65. Therefore, in reality, only about 7,000 workers a day are actually retiring; not 10,000. At the same time,  almost 11,000 youths per day, age 16 and older and born in the 1990's, should be entering the workforce.  This based on the fact that, since 1989, an average of more than 4 million babies per year were being born. What this means is that the workforce should be growing by a minimum 120,000 a month; not declining by 347,000 as in the December employment report.  On top of that, because this recovery has been the worst in history and because personal wealth (value of homes) has declined, many seniors are being forced to work well past retirement age.


References:

December Employment Report: http://www.bls.gov/news.release/empsit.toc.htm

Births Per Year: http://www.infoplease.com/ipa/A0005067.html

United States Life Tables And Actuarial Life Tables: 1939-1941, 1946: https://archive.org/details/unitedstateslife1940unse

Actuarial Life Tables 2009:  http://www.ssa.gov/oact/STATS/table4c6.html

Life Expectancy By Year: http://demog.berkeley.edu/~andrew/1918/figure2.html

January 2009 Employment Report: http://www.bls.gov/news.release/empsit.a.htm

Debunking The 10,000 Baby Boomers Retiring Every Day Claim

This post has been updated.  Please go to this link: http://cuttingthroughthefog.blogspot.com/2014/01/the-big-lie-workforce-contractions-are.html

The Bogus Baby Boomer Retirement Argument For Record Low Workforce Participation Rates Under Obama

Every month, the Bureau of Labor Statistics calculates what percentage of our population is working.  Today,  that number is at historical lows.  At every turn, Republicans make sure that the voters know this. Of course, people on the left don't like them to know that number because increasing record lows in the workforce participation rate discredits the highly manipulated and supposedly falling unemployment rate.

So, lately, left-leaning economists and Obama apologists have been floating the belief that the workforce is actually getting smaller because baby boomers are retiring at a faster rate than the population is growing. Those people doing the arguing always point back to that overused  statement: "starting in 2011, ten thousand baby boomers will retire each day over the next nineteen years."

Of course, having dealt with statistics for most of my college life and business career, I have always had problems with nicely rounded numbers like 10,000 a day.  To me, a number like that is often more political than statistical.  Further, that number, contrary to usually compounded population growth, is assumed to be unrealistically constant over that period of 19 years.  And, that just can't be.

In 1946, the first year of the baby boom, 2.738 million baby's were born.  So, theoretically, if none died, you would have slightly more than 7,500 babies per day hitting age 65 in 2011.   Not the 10,000 a day number that is being tossed around.  But, depending on what study you look at, somewhere between 30 and 40 percent of those born in 1946 would die before reaching age 65.  After all, the life expectancy for someone born that year was only 66.7 years.  So, best case, by using the 30% factor, only about 1.9 million of the original 2.738 million who were born in 1946 would still be around in 2011 and reach that ripe old reach age of 65.  Therefore, more realistically, you would have about 5,200 boomers turning 65 each day in 2011; almost half that ridiculous 10,000 a day number.  At the same time, 2011 should have added about 2.751 million new workers to the labor force; just due to the population additions that occured in the 20, or so, preceding years.

Now, call me crazy, but, what I have shown, above, seems to contest the belief that, somehow, the smaller workforce size is all due baby boomers retiring.  And, this is before you even consider the fact that many "age-sixty-fivers" are hardly in a financial position to retire; having lost 40% of their wealth  in the last 5 years.  Nor does my workforce calculation take into consideration that the U.S. allows 1.1 million people per year to lawfully enter the country on a permanent basis; and, of that, about 800,000 are of working age and should have entered the workforce in 2011.

The reality is that a lot of people have just given up looking for work under Obama's stewardship.  A fact that the left just won't admit. As for the baby boomers...?  Their impact will be to slow the "net" growth of the workforce.  Not to shrink it.

The Baby Boomers Are Lowering The Workforce Participation Rate?

Following a week ago last Friday's disastrous job creation number and, especially, the record low workforce participation rate, liberals have been scrambling to come up with an excuse for the number of Americans no longer working.  The answer they came up with is that the declining labor participation rate is all due to the rate at which baby boomers are retiring.  I even had one "anonymous drive-by" idiot throw that in my face with a comment left on that Friday's blog entry about the employment report. 

But, the "baby boomer" excuse is a complete exaggeration.

First off, the baby boomer generation only started  to hit retirement age as of last year; and, the process won't be complete until 2029. Yet, the workforce participation rate has fallen each year since 2008; starting with the height of the recession and continuing through Obama's more than three years in office.  Secondly, there is no automatic retirement age for most seniors.  Many stay in the workforce because they just can't live off of Social Security checks and some small pension they may be getting.  Lastly, according to the Bureau of Labor Statistics own data, the participation rate for the senior age group of 55 and older has remained constantly high with every other age group seeing substantial declines in the last four years.  (Click to see graph).

Those economists and media types who want to proliferate the "baby boomer lie" are totally in the tank for Obama and are a disgrace to the concept of fair and factual reporting. They have merely replaced the facts with  political ideology.