Forget the RV and Hope for Change

The number of people of working age who are not in the labor force is nearly 88 million people.  This includes students, retired persons, stay-at-home parents and the unemployed.  There have never been more people not working in this country.  There are almost 8 million more people not working today than when President Obama took office in January, 2009.   This chart from Zero Hedge tells the story.

Going further back in history, there are nearly 20 million more people of working age who are not working today compared to the year 2000.  On the other hand, there are only about 5 million more people working today than in that year.  In other words, for every 1 additional worker today we now have 3 additional people who are not working compared to 12 years ago.

I have written before that I am more focused on the labor participation rate than the unemployment rate.  The unemployment rate calculation has become too subjective.  It only counts those as unemployed if they are actually looking for work.  It does not count those who become discouraged and have simply quit looking.  It does not count the teenage slacker who has dropped out of school and is living in his parent's basement playing video games.  It does not count the older worker who got laid off at age 59 and "retires" because of no decent job prospects.

In the end, every American is a mouth to feed, clothe and shelter.  If there are fewer people pulling the wagon and more people in the wagon, we have a fundamental problem.  The money gets spread around in thinner and thinner increments.  That is just basic economics.

Some people might look at the increasing numbers of persons not in the labor force and attribute it to our aging population of Baby Boomers.  However, the reality is that the percentage of the population over the age of 55 working today is greater than at any time in the last 50 years.  At the same time, there are fewer 16-24 age workers than at any time in the last 60 years.  Labor participation in this younger group has decreased by about 15 percentage points (70% to 55%) since 1990 while labor participation increased by 10 percentage points (30% to 40%) among the senior citizen cohort.  The young are getting stuck with all of the current federal debt that is being accumulated that will need to be paid off.  They also are not getting needed job experience to prepare them for the future.  When is this group going to realize that they are being taken advantage of? They really need to hope for change in the next election.

The labor participation rate for those age 55+ is growing for all senior age groups as evidenced by the chart below courtesy of Calculated Risk.  The increases are particularly apparent for those age 65 and over.  Over 30% of those 65-69 are working compared to only 20% 25 years ago.  Around 20% of those over age 70 are working. That is double what it was a quarter-century ago.  Some of this can be attributed to a healthier and more active senior population.  However, the data also suggest that many have to work to make ends meet as retirement income has deteriorated and health care costs and other expenses continue to rise.

Can a retiree even afford to gas up an RV for a sightseeing trip like they used to?  If you can't do that you might as well just keep working!  More older Americans are coming to that conclusion.  

Both young and old are paying the price in this economy.