I have written before that I am more focused on the labor participation rate than the unemployment rate as a gauge on our economy. 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 young 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.
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 by the President they supported in a significant way in the last two elections?
This chart by calculatedrisk.com shows the labor force by selected age groups since 1960. You can clearly see that more and more people age 55 and over staying in the workforce and fewer and fewer in the younger cohorts are working.
This chart by dbshort.com shows the growth shares since 2000 for selected age groups.
The falling labor participation rate has nothing to do with " baby boomers retiring". Baby boomers over age 55 are working in record numbers. However, their children are not and that is a big reason that almost 4 out of 10 people over the age of 16 are not working today.
What do you do if you can't find a job? One answer is to get more education. That is generally a good thing. However, looking at the amount of student debt that has been taken on over the last few years raises even more concerns for the younger generation. How are they going to pay off their student loans, the federal debt and also pay for the Social Security and Medicare of their parents?
Student loan balances now exceed both credit card and auto loan debts.
Student loan debt has tripled since 2004 and has increased by 50% since 2008.
There is a lot of scary data here for younger Americans. It is just as scary for older Americans. Those that have a job are clinging to it because of uncertainty about the future. The low interest rate policy of the Fed means that they can't get a decent, safe return on what retirement savings they have. What is going to happen to their Social Security and Medicare benefits in the future? What do they do if we get hyperinflation?
What does it all mean? The young can't get a job because the old won't give up their job.
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