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The War Against The Young

An analysis of recent jobs figures at reveals a disturbing development: the biggest beneficiaries from the economic recovery are Boomers, while everyone else is getting the shaft.

Since the Obama administration took office, there has been an epochal shift. Young workers have continued to lose jobs and incomes, while older workers have actually gained ground.

In fact, the Obama administration has seen a boom in the prospects of the 55+ crowd; their (I should say ‘our’) employment stands at a 42 year high. Net, there are 3.9 new jobs for people over 55 since the recession began in December 2007, but there are 8.1 million fewer jobs for the young folks since that time.

Neither group may feel particularly grateful. Many of the older people working are people who decided to defer retirement, perhaps after their portfolios or pensions took a hit. The gains in employment are even higher among the 60+ set than among the 55-and-overs.

Still, it’s ironic to say the least that a president swept into power on a tsunami of young voter support has presided over a boom for the grannies and a bust for the kids. Logically, President Obama should expect to do somewhat better among senior citizens and worse among young people than in his first campaign — but logic often goes one way and politics another.

We shall see.

(h/t: @tylercowen)

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  • John Richardson

    What economic recovery? Am I missing something?

  • Lorenz Gude

    If those figures are right that is turnip for the books. It seems perfectly likely to me that the young will vote for Obama because they are still in the grip of belief and the elderly like myself will shake their heads in disbelief.

  • Mark Michael

    Re: Great Depression and unemployed vs. employed

    What’s little known about the long Great Depression is that those who managed to keep their jobs did quite well. Those who lost their jobs had the devil’s own time finding another one. They did quite badly.

    This isn’t obvious at first blush, but prices fell a lot during the Great Depression, so even if your salary/wages didn’t go up, you could buy a lot more with them. Prices plunged as much as 10% per year for several years – 25% total. That’s a huge boost to real income – IF you kept your job!

    The government intervention in the labor markets had the perverse consequence of increasing the (relative) incomes of those who were employed versus those who lost their jobs. Unemployment stayed incredibly high throughout the 1930 to 1941 period: never went below 14% I think.

    It was 19% in 1939 when FDR’s Treasurer, Hans Morganthau went before the Senate and said more or less, We’re at our wits’ end; we have no idea what to do to bring down unemployment. If you have any ideas, please share them with us!

    Politically, the employed have much more clout than the unemployed. There are many more of them, even when 25% are out of work – 75% are still working!

    More directly, both Hoover’s and FDR’s wage policy was to work hard to hold up wages with the (mistaken) notion that it would keep “demand” up! Hoover jawboned his former business CEO colleagues in 1930 – 1932 to not drop wages, despite seeing their sales fall.

    He had great respect in the business community, and many companies did exactly that – until they faced bankruptcy! Then they had to both lay workers off and cut wages.

    FDR’s policies moved along the same lines. Re: paying farmers to not grow crops or to kill piglets or calves. The 1938 Agricultural Adjust Act (AAA) tried to curb the production of wheat in order to boost its price. An elaborate allotment of acreage for wheat production was developed and enforced. In fact, the notorious 1942 Supreme Court case (Wickard v. Filburn) of Ohio farmer Roscoe Filburn comes to mind. His allotment for wheat in 1941 was 11.1 acres, but he planted 23 acres! He intended to use it to feed his own cows (mostly) – not engage in “commerce” by selling it & surely not across state lines. He harvested an “excess” of 239 bushels of wheat. The gangster – how could he?! The Court ruled against him. He was violating the AAA law, which was within the “enumerated powers” of the U.S. Constitution under the Interstate Commerce Clause!

    Another (obvious) conflict between political motivation and getting higher employment: Efficient training of unemployed workers for other fields generates competition for the workers already in those fields. They object to that: it’ll lower their wages and (maybe) put them out of work. Hence, inefficient job training programs that stretch on for a long, long time kills two birds with one stone: delays increasing competition for jobs and “warehouses” unemployed with drawn-out job training.

    Increasing unemployment benefits to 99 weeks as we did in this recession accomplishes the same thing: keeps millions of workers from penury (just barely) and also “encourages” them not to look for a job too hard.

    Final thought. The free market is in practice much more egalitarian than a political class-controlled market. What economists call the “sticky wage problem” is generally reinforced by government labor laws, benefits, regulations. There are still lots of jobs in America that have very flexible wages: a WSJ article claimed that 55% of jobs do. Nonunion manufacturing companies like Nucor Steel, Lincoln Electric (make welding machines in Cleveland), most auto transplants (Honda, Toyota, et al), Wall Street with their notorious bonuses, Silicon Valley with their stock options/stock income all have flexible wages that go down in a recession. Government workers are a notable exception.

  • Heather

    I think you may be misreading these statistics. The article does not state that 3.9 million “new” jobs were created. For example, if a 54 year old has a job and, while holding that job turns 55, is that a “new” job?

    The Investors article simply states the fact that job holders 55+ have risen in number by 3.9 million since December 2007. The article admits that “some of this shift reflects demographics.” It goes on to say that the 55+ popultion GREW almost 10 million in that time period. If you look at the Investors graph, you see that the employment to population ratio for 55+ has nearly remained flat.

    Unfornately, the Investors graph does not break out the 25 -54 age population group into further subgroups. It would have been interesting to see what happened to the 50-54 age group. In order to understand what is happening to employement ratios, one must understand how the baby boomer demograpic bulge is traveling into the 55+ population group.

  • Frank

    The rise in 55+ employment also reflects wage compression. Time was, a business could reduce cost by replacing older highly-paid workers with young low-paid workers. Now, the cost delta between experienced workers & young workers is small; as long as the productivity of experienced workers is higher than younger ones, it makes sense to retain the experienced ones at the expense of young workers.

  • Army of Davids

    And then it is the young who will be left having to pay for these huge annual deficits via higher taxes, inflation, higher interest rates in the years ahead.

  • Dale

    There is something else at work here, in my opinion. Younger people have degrees in -Studies. Young people also come out of our degraded college and high school system. Is it any wonder employers avoid them en-masse?

  • Lina Inverse

    Echoing Army of Davids above, present consumption must come out of present production. When these currently employed Boomers retire for whatever reasons (many may want or need to continue working but can’t for medical reasons), the resources to support them must come from present production *somewhere*. The younger crowd in this country who are starting out poorly, which history tells us will result in permanent lower incomes; even if well employed they’re not going to be risk takers, are a poor prospect. The rest of the world will probably not be willing to indefinitely to lend us trillions to make up the gap, especially as it becomes more clear they’ll not get repaid, or repaid in full. I can’t see this ending well, which I suppose is in part the theme of the breakdown of the Blue Model.

  • Becky

    “the biggest beneficiaries from the economic recovery are Boomers, while everyone else is getting the shaft.”

    oh goodie! A large, nameless, faceless group of “OTHERS” we can blame and shame for all the world’s problems.

  • Mark L

    In some ways this illustrates the adage that “Democracy is three wolves and a rabbit voting on what lunch will be.” The boomers, as the largest cohort, set policies that favors them.

  • Arch

    Older workers have track records and experience. Usually, they have competed, working their way up the organization. Laying off someone approaching retirement also exposes the company to age discrimination suits.

    In contrast, hiring a new college or high school graduate requires an investment. As he is being trained, productive coworkers must supervise him, making the organization less productive.

    Workers who are 65+ also grew up in a different America than the one we have today. No one owed you a living. If you were male, there was the draft, which was not that bad a thing. You didn’t, as some of my son’s Ivy League classmates, take a year off to find yourself. College was also a lot less expensive than it is today and you didn’t borrow money to pay for it. In 1967 when I graduated, it took six years, but I owed zero.

  • Koblog

    Seems to me us older workers are simply staying on the existing jobs we have had for the last 30+ years.

    I know that’s true of my department. Only one of us is under 30, and that’s because one of us left for another department, opening up a slot.

    Others of us have taken what is called VRIF (voluntary reduction in force) — essentially laying yourself off. You then retire after receiving a nice package — generally a week’s pay for every year you’ve worked.

    This VRIF is designed to reduce higher-wage earners and reduce overall workforce, as that person’s department is not allowed to replace the person who took the VRIF.

    Those who remain are stubborn old-timers still plugging along because we’re just not sure we can afford to retire when we see massive inflation on the horizon.

  • JorgXMcKie

    Not only all of the above but zerohedge blog {I think, this is from memory] shows that the percentage of those unemployed who have been unemployed for at least 52 weeks is greatest among those 55+, and decreases straight-line among age groups. I’m guessing that education[or lack thereof] is a confounding variable.

    Yes, if you have marketable skills *and* a job and are over 55 [as am I], you’re probably okay. If you have a high school education or less, and previously had a job [or jobs] that didn’t require that you learned new skills applicable to today’s market, and are over 55 you may never work again.

  • hdgreene

    A lot of those jobs may be part time. Older people are more of an insurance risk but in many states part time worker don’t get benefits. Older workers are probably easier to train, more likely to show up, and, perhaps, less likely to join a union or go on strike — and if you have to cut staff they can retire.

  • argasdoc

    As with the Democrat manufactured war on women, the reality is the opposite.

  • Beth Donovan

    I dunno. I was laid off when I was 54 years old. It was a great high-tech job that paid almost 80 grand a year, and that goes very far in this part of the country.

    After failing to even get an interview anywhere, I decided to start my own, very tiny business – no government loans, just savings and a supportive husband.

    I might break even this year – 5 years later.

    And I know a LOT of people who were laid off when they were over 50 and have no chance of finding another job. We have ‘left the work force’, I guess!

  • Don

    Message to young Americans… Believe your eyes NOT your ears

  • Brendon Carr

    Beth — You’re right on target. Keep at it. Every overnight success takes ten years. In the end, you will have no regrets.

  • teapartydoc

    All economic policy right now is skewed to help the boomers. 40% of all stocks are owned by pension plans. Keeping interest rates at zero for the big banks promotes at least some investment by them and helps prop up stock prices. The ‘recovery’ we are in is almost completely to be found in government spending and in the stock market, as well as in gradual improvements in productivity that would be there anyway. It most certainly isn’t what anyone would call a business boom. NO ONE is taking any chances except Ben Bernanke. It is as if we are being held hostage by the pension tsunami. If stocks aren’t propped up some way everything starts to collapse. We are playing economic Jenga and that last block is there. Some one is going to have to pull it out some time. And it isn’t going to just sit there forever, either.

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