Wednesday, August 13, 2014

Are Baby Boomers Weighing on Wages? (excerpt)

Aging Baby Boomers may be keeping a lid on wage inflation. They are currently 50-66 years old. Since the previous peak in employment during November 2007, employment has been little changed, yet workers who are 55 years old or older grabbed 5.6 million of the jobs. That means that all the younger workers lost about as many jobs.

Of course, what really happened is that simply by keeping their jobs during the Great Recession, Baby Boomers “aged out” of the stats for the younger workers and bloated the stats for the older ones. In any case, they’ve probably done well enough so that they aren’t likely to be pushing for significant wage gains.

Meanwhile, the younger workers may not be in a position to push for better pay either since they are competing with Baby Boomers who are likely to remain on the job well past the traditional retirement age of 65. This creates a new source of labor, i.e., elderly workers, which may keep a lid on wage inflation.

We can already see this tendency in the number of workers who are 65 or older. Since November 2007, this segment of the working-age population has increased by 8.5 million. The number of these folks who have dropped out of the labor force (mostly to retire) has increased 6.3 million over this period. The number who remained in the labor force rose 2.2 million. There are lots more older workers coming as the Baby Boomers age.

Today's Morning Briefing: Another Good JOLTS. (1) Fed Chair is no slacker, but worries a lot about slack. (2) JOLTS report and NFIB survey upbeat on jobs. (3) Ratio of unemployed to job openings down to 2.03. (4) More hires than fires, and plenty of quits. (5) Quitting is a good sign. (6) Yellen’s comfort zone for wage inflation is 3%-4%. (7) Wage inflation remains remarkably low around 2%. (8) Lots of Baby Boomers will retire. (9) Lots will keep working, providing a new source of labor, i.e., elderly workers. (More for subscribers)

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