Baby Boomer Retirement Depress U.S. Unemployment Figures

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By Jacob Maslow

Too Old! Age discrimination
A middle-aged graphic designer, downsized from her job, fills out an employment application and gets rejected for being too old. Computer and keyboard in the background.

There has been a lot of noise made about the recent improvements in jobless claims in the United States. The Obama administration has made a big deal of these numbers. After all, it makes the administration’s initiatives and policies look great. It also lends support to the idea that the U.S. economy is growing.

Be that as it may, there is one giant cloud hanging over the recent rosy U.S. jobless figures. That big cloud, of course, is the historically low level of American’s labor market participation. What gives? It seems that an alarming number of people have simply given up looking for work.

A lot of Obama administration backers and supporters point to the baby boomer generation for this. They are saying that these people have simply retired. There is a lot of truth to this because the baby boomer generation, individuals born in mid-40s to late 40s, are beginning to retire in a massive way. This represents a massive demographic shift.

However, the picture isn’t that simple. A significant chunk of baby boomers are actually not retiring. It is not that they don’t want to retire; it is that they are unable to retire. Many were wiped out by the great financial crash of 2008 and had their homes foreclosed upon. They are in no economic shape to retire. Still, as the economy improves and a large chunk of baby boomers get up on their feet economically, more and more will take the plunge into retirement. Expect more of these effects in the future.

Still, even if all baby boomers do end up retiring, this doesn’t fully explain the historically low labor force participation numbers in the United States. Does this involve a cultural change in how Americans view full-time work? Does this reflect a deep and an entrenched entitlement mentality? Hopefully in the coming quarters, we will get more insight as to what is driving labor force participation in the United States to such historically low levels.

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