I saw two articles this week that seem to offer dueling views on the economy, and what it means for Baby Boomers and our children.
In "The Baby Bump" from the New York Times, two former members of the Obama administration, Kenneth S. Baer and Jeffrey B. Liebman, argue that there's really no good reason to worry about the federal budget deficit and the nation's high unemployment rate.
The reason the government is spending so much money, they point out, is not because Congress has gone on an out-of-control spending spree, as some have charged. It's because of a demographic shift.
|The unemployment rate has started to go back down|
The authors also say the high unemployment rate is a temporary problem that will correct itself over time. The economy is currently generating about 150,000 jobs a month. According to critics that's not enough to employ all the new high school and college graduates entering the workforce. The critics point to the falling labor participation rate, and say the only reason the unemployment rate is going down is because so many people are discouraged and have given up looking for work.
But the authors claim that 200,000 Baby Boomers are retiring every month -- and it's all those retirees, not discouraged workers, who account for the falling labor participation rate. They figure that 200,000 replacement jobs, plus 150,000 new jobs, offer plenty of opportunities for newcomers to the employment rolls.
|But the labor participation rate has not improved|
Regardless, just try to tell any of this to young people, says Robert Samuelson in his Washington Post article "Is the Economy Creating a Lost Generation?" His analysis shows that for young people jobs are scarce, and those that are available pay low wages with few benefits. The result is some 20% of young workers are underemployed -- either officially unemployed, working part time, or so discouraged they've stopped looking for a job.
Furthermore, the stagnant job market blocks the traditional path to better jobs and higher pay. Historically, young people moved up the economic ladder by changing jobs, learning new skills, developing their business network. But today, with jobs so scarce, those who are employed are clinging to their old jobs. They're too scared to jump at new opportunities, the time-honored way to increase pay and responsibility.
As a result, fewer young people are getting married, buying houses and starting families. In 2011, the birth rate dropped to its lowest level since numbers started being reliably recorded in 1920. The expected fertility rate (the number of children born to a woman in her lifetime) has now fallen for four years in a row, down to 1.9 (the replacement rate is 2.1).
|And young people are left behind|
And that's assuming we fix the fiscal cliff, reform the tax code, avoid future energy shocks, and do not suffer another recession.
I don't know whether to believe Baer and Liebman from the Times, or Samuelson from the Post. But all this is somewhat disconcerting to me. I'm no longer looking for a job myself. But as someone who was forced out of the labor pool prematurely, as someone who is officially counted as retired but is really just underemployed, what I really wonder is: If those young people don't start making more money, who's going to pay my Medicare and Social Security?