Only Old Workers Found Jobs In December

Two things stood out in the December jobs report: first, the magnitude of the monthly increase in payrolls, which at 312K was the highest in 10 months and second, the stark increase in annual wage growth. As Reuters' Jeoff Hall notes, 12 of the 15 major industry sectors (4 in goods-producing, 11 in service-providing) have 12-month growth rates in average hourly earnings that exceed the Fed's 2.0% inflation target (with exceptions being Transportation & Warehousing (+0.7%), Nondurable Gds Mfg (+0.9%), Other Services at +1.8%).

However, reading between the lines reveals another somewhat unpleasant signal and may explain the impressive wage growth: the bulk of jobs in December went to aged workers, those 55 and older, who increased by 183K (according to the Household Survey). Meanwhile, the prime age group, those aged 25-54, actually declined by 11K in December. And since it was the younger age cohorts that saw virtually no job growth in December - i.e., those workers who have the least wage negotiating leverage - it explains the impressive wage growth, but it is also a potentially troubling indicator as it confirms that employers are primarily focusing on hiring those workers who already have experience, instead of permitting younger entrants to join the labor force.

How does the data look on an annual basis, from December 2017 to December 2018: a little better, with the biggest age cohort, those 25-54 rising by 1.3 million, but it was once again the oldest workers, those 55 and older that have seen the bulk of job gains in the past year, confirming that younger Americans are having an increasingly harder time to find jobs when they are, well, competing with their parents, who have been unable to retire as a result of ten years of ZIRP which in turn crushed savings for an entire generation of (elderly) Americans, forcing them to stay in the job market well beyond their retirement age.

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