Myth Busted: Rising 'Not In Labor Force' Only Partly Due To Retiring Boomers; Since 2000, Many Are Gen X And Millenials

by: Christopher Hamilton

Conventional wisdom has it that the fast rise of the "not in labor force" since 2000 is due to 55+ year-old baby boomers moving into retirement. The answer to this question... sorta yes and sorta no.

First, what is "not in labor force"? The labor force is made up of the employed and the unemployed, 16 years old or older. The remainder - those who have no job and are not looking for one - are counted as "not in the labor force". The chart below shows the rising numbers of those not in the labor force and the acceleration since 2000.

The source of the accelerating growth in the "not in labor force" has shifted from 90%+ coming from among the 55+ year-olds (moving from the work force into retirement) to the current split of only 55% from among the 55+ versus 45% from the core 16-54 year-old cohort. The changing source of not in labor force is exactly opposite of the historical norm and opposite conventional wisdom. It is also an economic cancer as these millions from among the 16-54 are not building job skills, savings, or self sufficiency. They will not be home buyers nor drive economic activity. They will essentially be a lifelong societal burden.

First, (below) a review of the 25-54 year-old total population, total employees among the 25-54 year-olds, and full time jobs among the 25-54 year-old population (available since 2000).

  • '55-->'80... core population rose by 19 million and 22 million new jobs were created, or 1.16 jobs per the every new 25-54 year-old... obviously, immigration made some sense.
  • '80-->'00 population rose by 37 million and 35 million new jobs among them, or 95% of the new adults had jobs available.
  • '00-->'16 core population rose by 5 million and a decline of 600k jobs... plus a decline in full time jobs of 500k.

Next, the progression of 55+ year-old (below) population, total employment, and full time jobs among them.

  • '48-->'80 18 million more 55+ year olds vs. 5 million more jobs among them (27% of new elderly found net new jobs).
  • '80-->'00 11 million more elderly vs. 3 million new jobs among them (27%).
  • '00-->'16 33 million more elderly vs. 17 million new jobs (52%) among them (11 million found net new full time jobs).

A close-up since 2000... the 25-54 year-old population peaked in 2007 and has fallen slightly since (below). However, overall employment and full time jobs among this sector have each fallen by a half million.

And below, the 55+ population, jobs, and FT jobs are fast rising. The 55+ segment rose during all periods and represent the entire growth in full time employment since '00.

Over the next decade 2015-2025, the census estimates core population to rise by 5 million and a 19 million increase among 55+ year olds... and yet the trends of elderly continuing to work far longer and core population dropping out seem to be gaining speed. Just another concern to add to the very long list.