Let’s say we believe the federal government’s unemployment number is correct and the US is essentially at full employment as defined by the Labor Department at 4.7%.
What will the Trump administration do to grow this economy? Can we take the part-time Wal-Mart greeters and put them on an assembly line and expect to get 4% GDP growth?
The demographics of the US is going against being able to grow the economy. More than 52% of the US workforce is over 50 years of age.
Is that an age group you can retool for a new career? Not likely.
If you look at the 55+ cohort in the Labor Department’s numbers, then you see that there is little excess. The group has been seeing robust hiring even during the downturn in 2009-2010.
Another aspect of the older American workforce is that there is little economic expansion in their decisions. This group more than likely already are settled in a home, they already have most of their needs and wants, so discretionary spending is a low point and they are done with raising a family. So they have little need to borrow money for any reason, which is bad news for banks.
So they are selling the family home to move to a lower maintenance home or condo, which were once the starter homes for younger Americans.
All these decisions are deflationary for the US economy.
US companies are facing 10,000 baby boomers turning 65 each day this year. How do you cope with that. Many of these people are doing jobs that millennials either can’t do because of what they learned and did not learn in high school or feel they are over qualified for with their advance degree to do.
“The labor force will continue to age, with the average annual growth rate of the 55-years-and-older group projected to be 1.8 percent, more than three times the rate of growth of the overall labor force,” The most recent Bureau of Labor Statistics report on the subject said. “The group’s share of the labor force is anticipated to increase from 21.7 percent in 2014 to nearly 25 percent in 2024.”
Back in 1994, the median age of US. employees was 37.7 years old, according to the BLS report. That climbed to 40.3 years old by 2004 and hit 41.9 years by 2014. By 2024, the median age of US workers is expected to be 42.4 years old.
The demographic change has come about because of the Great Recession, where these boomers lost a good chunk of retirement funds to the market crash and many did not jump back in to recoup their losses. Another factor is if the average American will live to 80 years of age, retiring at 62 years old would stretch these limited resources even further.
The Trump administration’s idea to keep jobs here is admirable, but turning the US economy from focused on services toward manufacturing will take more than just jawboning.
Do we have a workforce to accomplish this transformation?