More Older Americans Are Working, But Why?

As you know, I write frequently about the economy and specifically about the unemployment rate, as I did in my E-Letter on Tuesday. While the official unemployment rate fell to a six-year low of 5.9% in September, I emphasized that the “labor force participation rate” (those working or seeking work) fell to the lowest level in 36 years. This is not good.

Earlier this week, I ran across the chart below from the “Economics Group” at Wells Fargo Securities. This chart illustrates the workforce trends in employment by age group.

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Many Americans aged 16-54 are dropping out of the labor force, as you can see. The sharpest drop in labor force participation is among those aged 16-19, which includes many who have never been able to get a real job, followed by those aged 20-24.

Within these two younger groups, many have opted to stay in school longer because the jobs they seek are simply not available (some of which are now occupied by older Americans – more on that below). They are betting that more education will pay off in the future.

However, given the rising delinquency rates for student loans, there is mounting evidence that the bet on more education (rather than work) is not generating the income necessary to repay the student loans. In other words, the extra education was not a good decision, at least so far.

Yet what struck me most about this chart is the fact that older Americans, those aged 55 and older, are actually adding to the workforce. With over 10,000 Baby Boomers retiring every day, how can this be happening?

The economists at Wells Fargo suggest that this increased workforce participation by older folks is due to people being in good health and living longer. “Perhaps this is a signal of improving health conditions of baby boomers compared to the past…”

While better health and living longer are certainly factors, I would argue that the increase in participation by older Americans (55+) is mainly because they have not saved nearly enough to retire. In fact, there is a real retirement savings crisis in America, and I plan to focus on that in an upcoming E-Letter where I can discuss it at greater length.

While I don’t know about the conditions where you live, I see people who are clearly above retirement age who are still working just about everywhere I go – whether it be at Walmart, the supermarket, department stores and even at fast-food joints and the like. I don’t get the impression that they are working there just to pass time. And many that I see have been working these jobs for years.

More & More Adults Are Deciding Not to Work

Now let’s change gears and look at another troubling development. At the same time that a lot of older Americans are re-entering the workforce, more people than ever before are choosing not to work at all, at least not in traditional jobs.

From the early 1970s to the recession of 2001, there was a gradual upward trend in the civilian non-labor force – those people who simply decided to drop out of the workforce. After the 2001 recession, however, there has been a sharp upturn in the non-labor force. The question is, why?

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The economists at Wells Fargo speculate that this trend has occurred because as America has become more affluent, more people choose not to work in traditional jobs and opt instead for more non-compulsory “leisure” activities, such as volunteering.

I’m not sure I buy that argument, especially in the wake of the Great Recession and the financial crisis that saw stock markets plunge over 50% and home prices plunge by almost as much in many areas of the country. Many families are still trying to recover from that devastating hit.

I believe, on the other hand, that our non-working population of 92.6 million people has skyrocketed in recent years largely because the government has made it easier not to work.

By the way, this is no accident. President Obama and Democratic leaders want more people dependent on the government. That’s because people who are dependent on the government reliably vote for candidates with a “D” next to their names.

I realize that this is a very political statement to make, but I believe it is nonetheless true.

I’ll leave it there for today and will revisit the issue at greater length in my E-Letter.

Do you agree or disagree with me? Post your thoughts below.

3 Responses to More Older Americans Are Working, But Why?

  1. I enjoy reading your comments on the economy, and, yes, at this point I have been saying to others exactly what you have written. With over 50 million on food stamps, it is not saying much for America or the individuals we elect to represent us. It is very sad.

  2. The primary reason the participation rate is down is the jobs aren’t available. The main reason jobs aren’t available is our govermant”s “Free Markets” approach destroys jobs in our country. We open our economy wide open and allow our companies to send their work oversees to countries like China and Mexico where wages are lower and allow the companies in those countries to ship their less expensively produced products here with no financial restrictions. Thus the USA is stimulating the economies of foreign countries and
    increasing the standard of living of their workers while we borrow money to increase our national debt and pay welfare and unemployment benefits. Go back to a fair tarif system, bring the main jobs back and also get all the associated jobs. The USA approach is foolish and no good business would ever allow it to happen to itself. Stop the USA economic suicide and our economy’s power will come back with all the jobs our people want.

    • I agree with Mr. MacKenzie’s statement that “jobs are not available in the US” but that is as far as my agreement goes. “Jobs are not available because of our free enterprise system” he says. WTF?? the only reason any jobs are available at all are because of what little there is left of our free enterprise system. The same system that has made us the greatest economy in the history of the world, is what is making our economy the strongest growth vehicle in the global economy today!! Yes it is a pathetic growth rate compared to our historical growth rate, but, as so many economists have pointed out, in words less offensive than what I’m about to say, our economy is still growing, not because of Obama’s socialist policies, but rather, in spite of his regulatory imposition onto corporate America. If we want to see accelerated growth we need to overthrow excessive government politicians “the wet blanket politicians” the socialists, that are imposing burdensome regulations on our capitalist system. If you don’t understand what I’m saying then you’re probably a socialist at heart, not a capitalist which is an American in the truest sense. Join me, and educate yourself on history, political systems and economics, and if you do so, you will no longer vote democrat (socialist), as I use to do. If we reject Socialism we preserve the American way. If we accept it, we go the way if the USSR, Cuba, China, Greece, Italy, France, Spain and Portugal. Educate yourself and you will no longer fall prey to Socialist thought which has always failed when embraced, history proves this.