Wednesday, July 08, 2015

No Jobs for the Young, No Retirement for the Old

We shouldn't wonder why people are working into their 70s--we should wonder why anyone retires, assuming they'll still be receiving their full pension in five years.
You may have seen a variation of this chart of employment in the U.S. by age group. This chart--courtesy of mdbriefing.com-- shows the number of those employed (with any kind of job--full-time, part-time, self-employed) as a percentage of the Civilian Noninstitutional Population (CNP), which includes everyone 16 years of age and older who is not institutionalized or on active duty in the Armed Forces.
A number of striking features pop out of this chart:
1. Employment in the 16-19 age cohort has been dropping for 35 years, and fell off a cliff in 2008.
2. Employment in the 20-24 and 25-54 age cohorts topped out in 2001 and has yet to recover the pre-recession levels of 2008.
3. The only age cohort with employment growth since 2000 is the 55 and older group.
There are many theories as to why youth employment has plummeted while 55+ employment is rising, but demographics and financial insecurity likely play major roles. Back when Social Security was established, few people lived beyond their 60s. A retirement age of 65 meant most people lived only a few years beyond retirement.
Now people live into their 80s, and medical technologies are enabling many to remain active even in their advanced years.
As people live longer, those reaching retirement age (early to mid 60s) often have elderly parents in their 80s who need care and financial support. People living into their late 80s, once a rarity, are now commonplace.
As the economy has stagnated, financial demands on their own children (in their 30s and early 40s) have increased, leaving many of those reaching retirement age with two generations needing help. Retirement is not much of an option when every scrap of income is needed.
Over the past 35 years, defined pension plans that were once common benefits of corporate employment have vanished and been replaced by 401K plans which transfer the risk to the employee. As the stock market has soared and crashed twice in the past fifteen years, those approaching retirement can no longer trust that their pension fund is secure.
The Federal Reserve's Zero Interest Rate Policy (ZIRP) has destroyed low-risk yields on retirement funds (401Ks, IRAs, etc.), greatly reducing the yield on retirement savings. As a a direct result of Fed policy (designed to recapitalize banks at the expense of savers and retirees), those hoping to retire have been forced to put their savings at risk (investing in risky assets such as junk bond funds) or working longer because the low-risk yield on retirement savings are now meager.
The reality is that financial insecurity is rising for everyone heading into retirement. Even state and local government workers are concerned that their pensions aren't as secure as they were a generation or two ago, as the fiscal imbalances of many local government budgets are the New Normal.
The Federal government can effectively create money to pay Social Security, veterans and federal employee pensions, but there is no guarantee that these pensions will keep up with inflation or not be taxed to oblivion. One key source of financial insecurity is the growing awareness that the rules will be changed without consent of the governed to preserve the perquisites of the Ruling Class and powerful vested interests.
It would be foolish in the extreme to trust that the Powers That Be won't change the rules in a heartbeat when their power and wealth are threatened by instability. The Nobility will change the rules and the peasants will pay--end of story.
In this context, we shouldn't wonder why people are working into their 70s--we should wonder why anyone retires, assuming they'll still be receiving their full pension in five years.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
 
Thank you, Robert S. ($10/month), for your outrageously generous subscription to this site-- I am greatly honored by your support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:


Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative). If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.


PRIVACY NOTICE FOR EEA INDIVIDUALS


This section covers disclosures on the General Data Protection Regulation (GDPR) for users residing within EEA only. GDPR replaces the existing Directive 95/46/ec, and aims at harmonizing data protection laws in the EU that are fit for purpose in the digital age. The primary objective of the GDPR is to give citizens back control of their personal data. Please follow the link below to access InvestingChannel’s General Data Protection Notice. https://stg.media.investingchannel.com/gdpr-notice/


Notice of Compliance with The California Consumer Protection Act
This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising. If you do not want any personal information that may be collected by third-party advertising to be sold, please follow the instructions on this page: Limit the Use of My Sensitive Personal Information.


Regarding Cookies:


This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative) If you have other privacy concerns relating to advertisements, please contact advertisers directly.


Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP