Being young increases your odds of being unemployed in the US: 40 percent of unemployed workers are Millennials. The long-term impact of young unemployment.
Young Americans continue to carry a heavy burden brought on by the Great Recession. A recent analysis conducted on US Census data found that 40 percent of unemployed workers are Millennials. Many young workers are simply trying to start their careers and each year that passes is a year where retirement planning is delayed, savings are put on the shelf, and the machinery of spending is put on ice. Young Americans are a key spending demographic. Many will look to purchase their first home. Many are out in the market to purchase cars. Vacations and spending are common characteristics of this group assuming they have the money to spend. Unfortunately with such a large portion of our unemployed coming from the young, we are seeing new demographic trends hitting the market. The housing market is seeing a smaller number of first time home buyers in spite of very low mortgage interest rates. Many are saddled with back breaking levels of student debt and default rates are highest among this debt class. In the US, being young increases your odds of being unemployed.
Part-time working nation: The number of people working part-time for economic reasons jumped by 275,000 in the latest month of data. 6.1 million Americans not in the labor but want a job now.
The jobs report always comes out like a Black Box of economic data. While we added 288,000 jobs on the surface, digging deeper into the report we find that part-time work for economic reasons increased by 275,000 in the same month. Year-over-year inflation is eating away at purchasing power. The employment report was actually weak but on the surface one of the stronger reports we have had since the Great Recession ended. What is more troubling however, is the report is showing that the nation is settling into a comfortable zone where low wage jobs are becoming a more common part of economy. What also isn’t mentioned is that we have over 6.1 million Americans not in the labor force but that want a job right now. We’ve discussed the “not in the labor force†category before but this subset is very specific and shows that finding a job in the economy today isn’t all that easy, especially one that pays a livable wage. The stock market of course makes a record while other indicators like food stamp usage remain near peaks as well. Working part-time is becoming a much bigger part of our workforce.
Opting out of the workforce: Federal disability payments and the rise of those not in the labor force. Since 2000, those on federal disability insurance are up 66 percent while population is up 13 percent.
The number of Americans receiving federal disability payments has doubled in recent decades. One reason for this is the aging of our workforce and the reality that with older age, more health problems occur. This only explains part of it. There is evidence that 40 to 60 percent of the recent rise has to do with structural issues where those in low wage employment sectors simply opt out of the labor force via federal disability payments. It shouldn’t be shocking when you realize that the typical American worker takes home about $27,000 per year. For example, in 2000 we had about 6.6 million Americans on disability insurance. Today it is close to 11 million, a rise of 66 percent while the population increased roughly 13 percent. Something more than old age is contributing to this massive jump in federal disability payments. With a large low wage employment sector, you simply have more people opting to not work instead of earning a very low wage. The estimates of 40 to 60 percent seem to be right given the major discrepancy between population growth and the rise of those on disability insurance. Unfortunately this is a trend that is appearing with our “not in the labor force†growth over the last decade. Many are simply opting out of the workforce.
Old, broke, and financially unprepared for retirement: Many older Americans are simply unprepared for the costs associated with retirement.
America is graying out. The massive cohort of baby boomers are now entering retirement age at a rate of close to 10,000 per day, or roughly 300,000 per month. Many are fully unprepared for the challenges associated with retiring and living a life where work income becomes a smaller source of support. The workforce during the last decade has added many lower wage jobs and this has added to the challenges of adequately saving for retirement. Saving takes work, patience, and enough disposable income to stash away. The facts are simply disturbing here. Most Americans entering retirement will rely on Social Security as their primary source of income. Since Social Security payouts come from current workers, those young lower paid workers are going to face a growing burden. This is all documented yet many Americans are entering old age fully unprepared for the economic challenges they will face. Healthcare costs are soaring but so are food costs, energy prices, and housing costs and all of these will be eaten away if your fixed income does not keep up.