Monday, November 26, 2018

Those "Not in Labor Force" Will Surge Over The Next Decade

There are presently about 96 million Americans whom are 16+ years old and considered to be "not in the labor force" (those neither working nor actively looking for work).  Those "not in labor force" has increased by over 17 million since 2008, while those employed has increased by 11 million, and those employed full time has increased by nearly 8 million.  But these will be remembered as the good times compared to what is coming.

The chart below tracks the total non-farm payroll, those employed full time, and those "not in labor force".


To simplify this, I break out the periods, detailing jobs growth (total and full time) vs. "not in labor force" side by side (below)...the accelerating growth among not in labor force is plain.

The obvious reason for this growth in "not in labor force" is boomers living far longer but not continuing to work.  The chart below shows the change per period of "not in labor force" vs. change in those aged 15 to 64yrs/old and 65+yrs/old.  The surging elderly population and receding working age population tracks the surge in "not in labor force".  But this is nothing compared to what is coming in the next decade...far right column below.

As the vast majority of population growth will be among the 65-74yr/old and the 75+yr/old populations...noting their minimal labor force participation is critical (labor force participation by age groups called out in ovals below).  Only 27% of 65 to 74yr/olds participate in the labor force, and just 8% among the 75+yr/olds (compare this to about 80% of those aged 25 to 54yrs/old).

The chart below details that the majority of US population growth over the next decade will be among 65+yr/olds.  This means 9 out of 10 newly added 75+yr/olds will be added to the "not in labor force"...and ditto for 7 out of 10 of 65 to 74yr/olds.  From 2019 through 2028, this is over 14 million 65+yr/olds moving into the "not in labor force" while just 3 million of this cadre will be among the labor force!  Of course, typically at least 20% of the working age population does not work, as well...so quick math says that at least 16 million will be joining the "not in labor force" over the next decade...while likely just 6 million will be available to join the labor force (detailed in link...HERE).
Few will read this and even fewer will spend the time to understand and/or contemplate the implications of the charted data...but the math is about as simple as it gets.  Invest accordingly.