FED Action Delays Retirement – Means Fewer Jobs for Young Workers

September 10, 2012 05:50


There is not a chance in hell that younger workers are going to prosper looking at this chart. As a result, future tax revenues will be less than planned. The economy will lag well below potential. – Bruce Kasting

 

 

 

By Bruce Krasting

EXCERPTS:

The most disappointing element of Friday’s NFP report was the drop in Work Force Participation (WFP). This important measure of the labor force fell to a 31 year low. A look at the details shows that things are even worse than the headline report. Consider this chart of WFP for two groups; workers 22-55 (white) and those 55+ (brown). The lines crossed in 2002. The negative gap has widened every year. It’s fallen off the chart the past three years.

 

This chart describes a real crisis for America. The long term consequences to the economic health of the country are tied up in this chart. All long-term macro economic analysis of the USA assumes that the current crop of younger workers will evolve to be a productive group for the rest of their lives.

 

Bernanke believes that a promise to keep interest rates pegged at zero until the latter part of the decade is what’s needed.

Over the next four years over 10Mn people (and their spouses) will reach retirement age. Many of those people will have this conversation:

Honey, we’ve saved some money for this day, but sadly we can’t get any return on what we saved, so we have to put off retirement, and work for another two years or more. Sorry.

 

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