I’ve come across a few articles discussing the idea that the older workers are, or are not, taking jobs from the young. I find this discussion interesting and one I want to ponder over a bit.
The first is one from the Dallas Morning News posing the question, “Will the surge of older workers take jobs from the young?“. The article begins with a few economists claiming that there is no evidence to support the idea. They rely on the Lump of Labour fallacy to explain away the possibility that too many older workers may be crowding out younger workers. This is where I part with my economist colleagues.
While not a topic for this particular conversation, I see a much needed bifurcation happening in the field of economics; where some economists will rely on complex mathematical models and theories and others will use a more holistic and dynamic approach to understanding the economic world we live in.
I am more inline with academic James Galbraith of the University of Texas at Austin, who says in the article that, “it’s like refuting elementary arithmetic.” Look at the chart below and see who has seen the fastest growth in employment.
Another story came across the wire on NPR’s Marketplace discussing the prospect that younger workers can expect lower wages and underemployment – something that will affect them for the rest of their lives. I find this relevant to the discussion of whether younger workers are being crowded out and important to understand how it is going to impact them.
There are serious long term issues that we will be facing from this situation. If you look at the U.S. Employment Level by age group, you will see that the 55 and older cohort has increased from around 15% of the labor force to its current level of around 23% – a more than 50% increase. They have been the fastest growing portion of the labor market over the last decade. This growth has presumably been at the expense of the younger workers.
This is not to say that Boomers are at fault, they are just as entitled to participate in the labor force as the young. It is simply to give background to what we are experiencing and to find a solution.
Keep in mind that those same young workers who are idling at low-paying jobs and expected to experience significantly lower earnings over their lifetime are the same ones that will be expected, and severely needed, to pay into the Social Security system that will support the retiring Boomers.
As I have mentioned previously, there will be challenges to businesses who are not preparing themselves for the ‘crew change’ that will take place when Boomers begin retiring in significant numbers.
The politics of this can be expected to get ugly. On the one hand you have retiring Boomers who have been paying into Social Security for their entire lifetime and will be adamantly opposed to scaling back benefits for what they consider theirs while you have the younger workforce, who is crucial to sustaining the system by paying into it and therefore providing the benefits that Boomers are expecting, that is not going to be happy with paying large sums of their already low earnings into a system that they have little confidence will be there when it is their time to collect.
A solution will need to be found in the middle and pain will need to be felt by everyone involved. We will have to make the best of a bad situation where too much was promised and not enough was committed.