The sheer size of the Baby Boomer population undermines the perception of economic growth.
As Boomers retire, the number of hours worked diminishes. There are not enough younger workers to replace the retiring Boomers.
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If you measure improvement by the number of hours worked per capita, you don’t see much improvement. If you look at age-adjusted hours worked per capita, you see an improvement of 40%, or four percentage points, over the last three years.
The employment-population ratio masks this improvement.
University of Chicago economics professor Casey Mulligan says economists use the employment-population ratio to show that the economy has made little progress.
Even before the recession, the ratio was expected to fall as the Boomer population reached retirement age between 2008 and 2015.
For a full recovery to occur, the employment-population ratio would have to reach 61. Before the recession, 63% of people over age 16 were employed. By Q4 of 2009, that percentage dropped to 58.4.
It has yet to recover. But recover may not hinge on who wins the presidential election.
Mortgage assistance, three increases in the minimum wage, and greater flexibility for food stamp participation, all enacted over the past four to eight years, have put pressure on the labor market.
Those political changes along with the Boomer demographics mean that a full recovery
may be beyond the scope of any president.
Such a seismic demographic shift may also mean that the employment infrastructure is changing and traditional measures may be becoming misleading and ineffective.