Making sense of trends and data

Demographics and jobs

Published 9.15.2016
The prime working age population is increasing again; it had been falling since the Great Recession.

The prime working age population peaked in 2007, and bottomed at the end of 2012. As of August 2016, there are still fewer people in the 25 to 54 age group than in 2007!

However the prime working age (25 to 54) will probably hit a new peak in a couple of months.


(Emphasis in the quote added.)

This means the world is not ending, and that Millennials are entering the workforce. Millennials outnumber Boomers, though the boomers births are not evenly distributed through the years of their generation. Instead there is a "birth bulge" shortly after World War II. Hence the Boomer generation is a bit like a pig passing through a python. US Social services (Social Security, Medicare) are having a hard time handling the huge bulge in demand (despite generations to prepare) just as the python struggles to digest the pig stuck in its throat.

Here is why it’s important to pay attention to the actual facts rather than analysis, the big increase in the working population in the 70s and 80s was due to women entering the workforce rather than staying home. To the extent that more Millennial mothers (may??) stay home rather than work would artificially depress the prime worker numbers. At least, that’s the view here.

Bill McBride doesn’t buy the “end is nigh” because growth isn’t at 3%, because he thinks demographic shifts explain some of the decline.

Boomers are retiring, and retirees buy less stuff. Millennials are only just beginning to reach the point of purchasing major items to build a life— and many of them are still either buried under college debt or still recovering from the effects of the Recession.

Patrick Cox has a much bleaker view, believing that Millennials are screwed.

Because immigration has fallen, US birth rates are below replacement level, which is 2.1 per family. Current birth rates result in 1.8 kids per family. Cox thinks the way out is biochemistry advances… I think that if boomers and Gen Xers keep killing themselves at a young age, that will take care of some of it.

However, in this piece, the birth rate trend he plots basically shows that after the baby boom the birth rate has been following a gently sine wave around a lower (back to the old average?) Don’t know, his graph starts in 1950. Older people use more healthcare, especially at the very end of life. The ACA tried to address this, and that’s where the “death panel” smear came from.

Demographics can’t explain everything, in particular, the boomers passing through the housing market did NOT have the predicted effect. Instead, builders adapted and built fewer houses. Sales didn’t collapse because more people were able to buy a home. that was the point of the credit expansion, at least until Wall Street derivative writers got involved. Housing ownership climbed from 65 to 69%, which is huge in absolute numbers.

Millennials are starting to buy, and they are bigger overall than the Boomers. The Boomers still own homes in large numbers.

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