Image Source: Pixabay

Due to age demographics, I expect employment in age groups 60 and over to decline by about 12.5 million. Let’s go over the math to see how I arrived at that number.

Population stats are from the BLS. Expected Employment Loss is a Mish calculation based on the Employment Population Ratio (the percentage of people working in each age group).

Population Levels in Retirement Age Groups

Starting in the late 1990s the population in older age groups began to surge. But the older one gets the less likely someone will remain employed.

Covid did not impact the employment population ratio much and since then numbers have largely recovered.

Employment Population Ratios from the BLS. Chart by Mish, February all years.

Population vs Employment Population Ratio in Retirement Age Groups

Key Numbers

• As 20.103 million in age group 55-59 transitions to 60-64, the percentage of people working declines from 72.0 percent to 56.6 percent.
• As 21.245 million in age group 60-64 transitions to 65-69, the percentage of people working declines from 56.6 percent to 32.5 percent.
• As 18.919 million in age group 65-69 transitions to 70-74, the percentage of people working declines from 32.5 percent to 19.0 percent.
• As 15.713 million in age group 70-74 transitions to 75+, the percentage of people working declines from 19.0 percent to 7.9 percent.

The lead chart shows the expected result of these demographic transitions.

Expected 5-Year Employment Losses

• 55-59 to 60-64 transition: 3.096 million
• 60-64 to 65-69 transition: 5.120 million
• 65-69 to 70-74 transition: 2.554 million
• 70-74 to 75+ transition: 1.744 million

Five-Year Total and Average

• Total: 12.514 million
• Average: 2.5 million per year for 5 years

The losses may not be uniform. A transition from age 64 to age 65 is more significant than a transition from age 60-61.

The BLS does not have more precise numbers of either population or the employment population numbers for each year.

If the aging is not uniform, those years in which more people turn age 65 will have more employment losses than other years.

What About the Unemployment Rate?

If all 12.5 million people stopped working and stopped looking for a job, the unemployment rate would barely change.

It is on this basis, knowing full well replacement workers will be hard to find, that I made bets against the consensus expected sharp rise in the employment rate. Even the Fed got this wrong.

The economy won’t shed 12.5 million workers all at once, but about 2.5 million per year is baked in the cake.

Replacement Workers

The number of workers 16-19 is 17.519 million (only 4 years instead of 5). I used 16-19 instead of 15-19 because that is the data the census department and BLS have. I would have used 15 it it was available.

They will transition from an employment population ratio of 29.8 to 65.5.

That’s a gain of 6.25 million offsetting about half of the boomer losses but at much lower levels of productivity.

Many in this age group will be in school at part-time jobs through age 22 or so. And many people age 62-70 will move from full to part-time jobs. This helps explain the discrepancy between jobs and employment.

Recession Duration in Months 

Recession Duration Key Points

• The 2020 recession only lasted 2 months.
• The 2008 recession lasted 18 months.

Expect Long and Shallow Recession

I see no use in averaging the above recession data. Instead, I expect the opposite of the 2020 recession. 

2020 was very short and unprecedented steep. The next recession will be the opposite.

Using Gross Domestic Income (GDI) instead of Gross Domestic Product (GDI), it’s not even clear we avoided a recession.

Real GDP and GDI in Billions of Dollars

Real GDP and GDI are two measures of the same thing. Income from sales and to workers should match output produced.

We have the widest divergence in history and GDI is below where it was a year ago. On a GDI basis, if the US avoided the recession I called for, we did so barely.

We do not yet have GDI numbers for 2023 Q4.

But part of the discrepancy is easily explained by QCEW.

How Much Did the BLS Overstate Job Expansion in 2023?

Based on QCEW data, the BLS may have overstated 2023 end of year jobs by 800,000.

QCEW stands for Quarterly Census of Employment and Wages. It is far more accurate but less timely than the monthly nonfarm payroll report.

Nonfarm payrolls and Employment Level from the BLS, QCEW data from the Philadelphia Fed.

For discussion, please see How Much Did the BLS Overstate Job Expansion in 2023?

Consumer Spending

Real and nominal advance retail sales. Real sales are inflation-adjusted by the CPI.

Q: Has the US Consumer Finally Waved the White Flag on Spending?

A: The answer to the question appears to be yes, starting October of 2023.

GDI, QCEW, and consumer spending all suggest a much weaker economy than is widely believed.

More By This Author: