Blame the Baby Boomers for Lower Median Incomes

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By Jacob Maslow

three machinists
Machinist training younger workers

It is an established economic demographic fact the older an age set is, the wealthier it becomes. In the United States, the demographic king of the hill is the baby boomer. They are more experienced. They have had a lot more opportunities to invest, and they are reaping the benefits. In broad terms, this age set holds a large chunk of America’s inter-generational wealth.

In terms of income, things would typically normalize across different age sets once the baby boomers retire en masse. Unfortunately, this is not happening. Either they got used to earning at a certain level, or they got crushed by the recent financial crash of 2008; more and more baby boomers have committed to continue working.

While this is a great development for increasing the overall level of experience, wisdom, and proven management skills in the market, it can have a dampening effect on median household income. In many industries, for one wave of workers to enjoy higher earnings, an earlier wave has to retire. If there are enough baby boomers refusing to retire, this can slow down the succession process and given an otherwise anemic wage landscape, this can hold wages down temporarily.

How long can this go? The only limit really is mortality but considering the fact that the baby boomers are living longer; later generations might have quite a few more years to wait. Another thing to consider is that a large chunk of baby boomers actually hasn’t saved enough for them to retire. So it’s kind of a push-pull situation here: As much as many baby boomers would love to retire, many of them feel that they have no other option. As a result, the rest of the economy is impacted.

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