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A Tan and a Job (Craig Douglass On Consumers)

3 min read

We’re having a reunion. Fifty years ago, I graduated from high school. And this fall, our class will be holding its 50-year reunion. I’ve started working out a little bit more. Hope if I get a healthful-looking summer tan it can last through early October. (Vanity of vanities. All is vanity.)

There is another reunion of sorts as we write this column. The unemployment rate in 1969 has been reunited with the unemployment rate of today: 3.6%. Some say “full employment.” Not so, if you’re a member of that 3.6% statistic and looking for work. The economic point is, however, today’s long-recovering economy has produced jobs, and people are working. Some are underemployed, no doubt. And some who are drawing paychecks are doing so from two jobs. Or maybe three. Those holding multiple jobs, as measured this past April, were estimated at 7.6 million of our able-bodied citizenry. The whole picture is important to see.

Another view was recently discussed in Business Insider, quoting Sri-Kumar Global Strategies, a California-based macroeconomic consulting firm. Perhaps contrarian, but nevertheless factual. Seems that one of the reasons the unemployment rate has continued to trend downward is the falling rate of labor-force participation. What labor-force participation measures is the so-called active labor force: those Americans in the working-age population (not counting students, military, the incarcerated and those self-reporting retirement) who are working or actively seeking employment. When the participation rate declines, it is measured as a contributing factor to the way the unemployment rate is calculated.

Funny numbers? Not really. The whole picture reveals, for instance, that the participation rate these days is significantly impacted by retiring baby boomers. With 10,000 boomers reaching the age of 65 every day, the labor-force participation rate should continue to shrink. The only mitigating factor is that folks are retiring later in life, not viewing 65 as a magic number.

Research reveals only a quarter of the working population reaching age 65 plan to retire. A like 25% say they will wait until at least age 70. And some 18% will don the Hawaiian shirt or floor-length muumuu between the ages of 66 and 69.

So what this all means is that if the labor force and participation rate had not contracted during the most recent months of falling unemployment, the rate would have come in at 4% or higher. Still a very good number. But not the lowest in 50 years.

I’m 67 and still working, with no plans to retire anytime soon, or anytime later, for that matter. That mindset, and financial necessity, apparently is unlike many in what is termed the prime working age of between 25 and 54. Seems since the Great Recession, which officially began in December 2007, a full percentage point of eligible workers in that age range have dropped out of the workforce. They lost their jobs after the near financial collapse of 2008 and never went back to work.

With unemployment continuing to be at undeniably low rates, the labor market is tight. Usually tight labor markets — more jobs than available or desirous workers — result in increased wage pressure as businesses increase salaries to attract the workers they want. And that contributes to inflation. But there is no wage pressure. There is no “feelable” inflation. The Federal Reserve’s annual inflation target is 2%. In January the annualized inflation rate was 1.6, 1.5 in February, 1.9 in March and, finally, 2% in April. Wages only grew last month by a little over 2.5%. Hardly runaway.

Guess we consumers should keep in mind when we talk about our “great economy,” and the impressive unemployment rate, which was 10% in October 2009, falling to 5% in January 2016, that more people have two jobs than ever before, and wages are creeping up, but slowly.

At the October high school reunion it’ll be interesting to see who is still working, who wants to be working and who has retired. (And who has a tan.) I’ll let you know.


Craig Douglass is executive director of the Regional Recycling & Waste Reduction District. Email him at Craig@CraigDouglass.com.
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