Why it's a LIE that olders workers are taking jobs from the young (pt2)

By Neil Patrick

This morning I was disappointed to read the article below from the Denver Post which promotes the notion that work opportunities for the young are being ‘stolen’ by older workers in Colorado.

Titled misleadingly, ‘Youths hit hard as older workers claim most new jobs’, the Denver Post article claims to show that mature workers are ‘stealing’ the job opportunities from the young. It even includes an apparently persuasive graph to 'prove' the point.

Of course this is all nonsense and I've provided the full transcript below for you to judge for yourself.

Granted, it’s a pleasingly convenient idea to grab when you look at the graph below, but as with so many news stories, it doesn’t actually tell the whole truth.

In fact it even contradicts the some of the key findings of the Report it cites, the Express Employment Professionals' white paper. This paper stated that, ‘The first Boomers turned 60 in 2006, so no one is surprised that they’re retiring. The size of this generation, which comprises 26.4 percent of the population and makes up the largest percentage of the workforce in the U.S. at 38 percent, is producing an increase in the retirement rate, impacting the labor force simultaneously”.

So it is clear that because of the large size of the baby boomer group, retirements in the US are actually increasing. If this is true, how can they also be taking jobs from the young? How can we reconcile these apparent contradictions?

Actually when we dig a little deeper, it’s not too hard to find the truth:

1. The fall in the level of workforce participation by the young can be directly attributed to increased numbers staying in education, the increase in those that have given up looking for work and the fact that many are choosing to stay at home, eased by ‘subsidies’ by their parents and others. To quote the Express Employment Report directly, “There are an estimated 1.8 million young adults who are not in the labor force because they have given up on job hunting for the time being”.
2. The article identifies two ‘outcomes’ i.e. the stable rate of labor force participation by older workers and the falling rate of employment amongst the young and assumes that the former is causing the latter. This isn't a causal relationship - one has not caused the other, so it is inaccurate to state that ‘older workers are claiming most new jobs’. 
3. The data is based on LFPR (Labor Force Participation Rate). This has absolutely nothing to do with job hirings. It is simply a measure of the proportion of people within a given group that are in paid employment. The LFPR for a group can rise or fall without anyone changing their job, simply by the number of people in that group changing for any reason e.g. retirement or emigration. 
4. Similarly, the growth in employment numbers for any given group doesn't equate to new jobs being filled; it has as much or more to do with the numbers that actually do not leave employment as it does with those that gain it. So for example if the numbers in employment increase in any given period, this number is the result of the net outcome of people joining and leaving the workforce. It does not equate to new jobs being filled.

So what is actually happening is that mature workers’ labor force participation is being stabilized by a balancing between a shrinkage of the group due to increasing numbers of retirees and others working longer and delaying retirement. Meanwhile, the LFPR by the young is falling due to low growth in the parts of economy generating jobs for which the young are qualified and a growth in those who are either staying in education or have given up looking for work.

Hardly the same story as the headline is it? And it’s the sort of sensationalist argument promoting inter-generational resentment that we don't need. Neither does it highlight the real issues which are nothing to do with age and everything to do with restoring real growth to the US economy.

Anyway, here’s the full story as it appeared in the Denver Post last weekend.

Youths hit hard as older workers claim most new jobs

By Aldo Svaldi The Denver Post


Welcome to the brave new labor force, where the young struggle to find a job, the old delay retirement and a shrinking share of the population is working.

"We have an actively disengaged portion of the population, and the implications are far reaching," said David Lewis, an executive with Express Employment Professionals, which put out a white paper on the topic last week.

Back in 2000, nearly half of 16- to 19-year-olds were employed in Colorado, and eight in 10 of those age 20 to 24 worked. But in 2012, fewer than three in 10 teenagers were employed and only 64.2 percent of those in their early 20s, according to the U.S. Bureau of Labor Statistics.

At the other end of the demographic curve, employment among 55- to 64-year-olds in the state went from 60.8 percent employment to 64.8 percent over the same period. Among those 65 and older, it went from about 12 percent to 18.8 percent in 2012.

Since employment levels bottomed out in December 2009, workers age 55 and older have claimed nearly three out of four new jobs created in the U.S., according to the Center for Economic and Policy Research.

They were claiming about 84 percent of the jobs created in the 12 months through April, the center reports.

A look at unemployment rates disproves the myth that older workers were hit hardest by the recession, said Alexandra Hall, the state's chief labor economist.

Those age 55 to 64 in Colorado had a 6.8 percent unemployment rate last year. The unemployment rate among teenagers was at 26.2 percent.

The greater participation of older workers, including those past traditional retirement age, bucks the overall trend of fewer people working or looking for work with each passing year.

"Overall labor force participation rates will continue to decline as they have since 2000, through 2040," forecasts Cindy DeGroen, the state's director of population and economic forecasting.

People on either end of the age curve have more options when it comes to not working, which is why those groups are seeing some of the biggest shifts, Hall said.

One key explanation for fewer young adults working is that more of them are going to college, which is a positive for the economy, she said.

But even those with four-year college degrees are increasingly finding themselves underemployed, said futurist Tom Frey, executive director of the DaVinci Institute in Louisville.

About half of college graduates last year are holding jobs that don't require a degree, and about 35 percent are trying to start their own businesses, he said.

Some of the decline in youth employment is tied to a lack of opportunities, as older workers take jobs that traditionally would have gone to younger workers.

Some of it is also generational. Millennials, those age 18 to 30, are more optimistic than their elders about their employability, despite the difficult economy.

About 62 percent are confident of the possibility of a career, making them much less willing to settle for a "job," according to survey released Thursday by employment search provider Monster Worldwide.

"They believe they are worth more than the market does, especially if they graduate with a liberal-arts degree," Lewis said.

Lewis said that a third of millennials were raised by single parents, and many have tight familial bonds, making them less willing to move for an opportunity and more comfortable living at home.

Hall said the labor statistics show young adults, despite getting a later start, increasingly join the ranks of the employed by age 25 and beyond. The employment rate in Colorado among those age 25 to 34 is 78.3 percent.

But delayed entry into the workforce carries a cost, especially when it comes to developing what labor experts refer to as the soft skills, things like dependability, problem solving, professionalism and the ability to communicate with co-workers.

"They are getting older, but they are not very skilled because they haven't had a chance to work," Frey said.

At the other extreme are baby boomers, those born between 1946 and 1964, who find themselves, either by choice or necessity, working far longer than previous generations.

"You need more money to support a longer life span," DeGroen said of the group that has been called the healthiest and wealthiest generation.

Two severe bear markets in equities and one in real estate, not to mention low interest rates, have prevented many baby boomers from building the nest eggs they needed to retire.

Retirees over age 65 in Colorado are replacing, on average, about 56.5 percent of their pre-retirement income instead of the 70 percent that financial advisers recommend, according to astudy from Interest.com.

And a growing number of seniors in the country, about 338,000 of those over age 60, have financial responsibility for their grandchildren, according to the U.S. Census Bureau.

Still, even at 20 percent, the share of those 65 and older employed is only a fourth of the level seen among "prime age" workers, those from age 25 to 54.

Given that they can't work forever, one unknown is whether the accelerating departure of the baby boomers from the workforce will create opportunities for young adults.

"As employers have more demand for labor and bid up what they are willing to pay, workers will come into the workforce," Hall said.

Economist Lawrence Mishel, at the Economic Policy Institute, argues that the federal government should create a temporary five-year program to allow retirement at age 60 and above.

"Get them out of the way and let younger people have jobs," he said.

Colorado, which has one of the highest concentrations of baby boomers of any state, will see the number of residents over age 65 triple between 2000 and 2030, according to the state demographer's office.

But there are those who argue that demographics aren't the key factor. Labor markets are undergoing a fundamental shift that is changing the very definition of work and a job.

"We are becoming much more a free-agent and freelance society," said Frey.

The overhead costs for a full-time employee now average $10,000 a person, and employers remain reluctant to add to their workforce, he said.

Young adults simply have no choice but to become more entrepreneurial and flexible in how they make their living, he said.



http://www.denverpost.com/business/ci_23986720/youths-hit-hard-older-workers-claim-most-new