Let's do a quick thought experiment…
Imagine you've got two people in the workforce. Let's say one is 40 and the other 65.
When both are gainfully employed, the unemployment rate is 0%. We're enjoying full employment within the labor pool.
During the recession, the 40-year-old loses his job. With only two people in the labor pool, that means only half of the working age population that wants a job, has a job. Unemployment is at 50%. Ouch.
As the economy recovers, the 40-year-old once again finds work. However, he's earning less than he was before.
Great news, sort of. The economy is once again at 100% employment and everyone cheers that the unemployment numbers saw such a major jump, even though average income is down.
But…
A few months later, the 65-year old retires. His departure, however, doesn't create an unemployment level of 50%. Employment remains at 100%.
How's that possible?
While it's true that while the retiree is in the potential labor force, he's choosing not to participate by retiring. So the workforce has shrunk by one person, meaning that the remaining person is now the entire workforce. Seeing as he's gainfully employed, everything looks rosy!
Only, is it really? In our example, the economy will slow even though unemployment looks great.
Yes, I realize that I'm oversimplifying something much more complicated here. But my point (and warning) couldn't be any clearer…
As the boomers leave the economy by the millions, even if we replace them, the workforce won't grow substantially, and our economy will remain stuck in the ditch!
There is no way Trump will be able to achieve the 3% to 4% growth he's promising because workforce growth is declining as baby boomers shuffle into their retirement years in staggering numbers, more than offsetting the millennial generation entry for
