The Daddy Economy

Zero Hedge has been tracking labor force participation rates by age group since the 2008 recession.  One striking and unexplainable trend has been the decline of working age people (25-54) coupled with an actual rise in the 55 and over group.

Even the mighty ZH has been at a loss to explain this.  But now the Atlanta Fed takes a crack

The decrease in labor force participation among prime-age individuals has been driven mostly by the share who say they currently don’t want a job. As of December 2014, prime-age labor force participation was 2.4 percentage points below its prerecession average. Of that, 0.5 percentage point is accounted for by a higher share who indicate they currently want a job; 2 percentage points can be attributed to a higher share who say they currently don’t want a job.
Zero Hedge goes on to be highly critical of this assessment.

Nothing about the lack of job demand as mega corporations continue to lay workers off in droves instead of hiring, instead using every last dollar of free cash flow to buyback their own stock to boost executive compensation instead of growing their company and hire more workers.

Nothing about the collapse in small business formation – that driver of 80% of US employment – as firm exit rates are now greater than firm entry rates

Nothing about the inability to get a job in a world in which the rest of
the global is lapping the US in educational and labor skills.

Nothing about the US economy never having left the post-2008 depression where $4.5 trillion in Fed credit was created just to boost the S&P to all time highs and never making it to the actual economy (until the helicopters finally start paradropping of course)

Nothing about millions of aging, 55 and over, Americans refusing to retire or quit their job simply because they have no return on their savings to fall back on thank to the Fed’s ZIRP, thus keeping the labor pipeline clogged and preventing younger Americans from getting promoted and achieving better paying jobs.

Nothing about a Millennial generation encumbered with $1 trillion in debt, that is so terrified of its job prospects and having to pay down its debt, it choose instead to keep rolling and piling on to this debt by remaining in college indefinitely

Nothing about the perverted incentive structure of a welfare state that makes it more attractive to collect generous government handouts which end up punishing hard work.

None of that.

You see, it is because Americans “mostly don’t want a job.”

All legit points and there is undoubtedly a lot of people who want jobs but have given up due to the crappy economy.  And yet the Atlanta Fed may not be entirely off base…

Continue reading “The Daddy Economy”

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