Skip to comments.As the Boomers Head for the Barn
Posted on 05/15/2012 6:40:08 AM PDT by Kaslin
When the April figures on unemployment were released May 4, they were more than disappointing. They were deeply disturbing.
While the unemployment rate had fallen from 8.2 percent to 8.1 percent, 342,000 workers had stopped looking for work. They had just dropped out of the labor market.
Only 63.6 percent of the U.S. working age population is now in the labor force, the lowest level since December 1981.
During the Reagan, Bush I and Clinton years, participation in the labor force rose steadily to a record 67 percent. The plunge since has been almost uninterrupted.
Here is a major cause of the economic malaise of the 21st century, a condition over which a president has little control. A shrinking share of our population is carrying an ever-expanding army of dependents.
If this were a result of American women going home to have kids, that would be, as it was after World War II, a manifestation of national vigor and health.
But that is not the case here.
The number of Americans of working age not in the labor force grew in April from 87,897,000 to 88,419,000 -- by an astonishing 522,000. This is an immense army for the rest of society to carry.
Why are Americans dropping out?
Some have given up looking for jobs in towns they grew up in, because the jobs are gone and not coming back, and they don't want to leave. Some are rejecting the low-wage unskilled work being offered, because the alternative -- unemployment checks and federal and state welfare -- is not all that torturous.
With some, the work incentive was never implanted. With others, the option of moving back in with the parents is not all that terrible.
America, it seems, is becoming less like the country we grew up in, in its attitudes about work and idleness, and more like Europe.
Whatever its causes, this social and economic torpor that seems beyond the capacity of presidents to correct or cure is a dark cloud over the hopes of Barack Obama for a second term.
And yet another ominous cloud, no longer on the far horizon, is now directly above: the impending departure from the labor force of 70 million baby boomers in the next two decades.
According to the Statistical Abstract of the United States, from Jan. 1, 1930, to Dec. 31, 1935, there were 13 million births in the U.S. From January 1940 through December 1945, there were 16 million.
This was the Silent Generation, born in Depression and war. It never produced a president, and never will, unless Ron Paul catches fire pretty quickly. The Greatest Generation gave us six presidents, starting with JFK and ending with Bush I. Our three most recent presidents -- Bill Clinton, Bush II, Barack Obama -- are all baby boomers.
And here we come to the heart of our next economic crisis.
If one adds up all the children born between Jan. 1, 1946 and Jan. 1, 1965, the era of the great American baby boom, the total comes to 77 million babies born in the United States.
Why is this so significant now?
Because this year, 2012, the first wave of baby boomers, all those born in 1946, like Clinton and George W. Bush, will reach 66, and eligibility for full Social Security and Medicare benefits. The boomers, en masse, will start moving off payrolls onto pension rolls.
Let us assume the 77 million boomers are down to 72 million. This means that over the next 20 years, boomers will be retiring and reaching eligibility for Social Security and Medicare at a rate of 3.6 million a year, or 300,000 a month, or 10,000 every day.
Three hundred thousand a month leaving the labor force may help to explain its shrinkage. And as the boomers are the best-paid, best-educated generation we produced, the loss of their collective skills, abilities and tax contributions will be as heavy a blow to the nation as the funding of their Medicare and Social Security will be a burden to the taxpayers they leave behind in the labor force.
Since Roe v. Wade, abortions have carried off 53 million of the generations that were to replace the boomers. While those 53 million lost have been partially replaced by 40 million immigrants, legal and illegal, our recent immigrants have not exhibited the same income- or tax-producing capacity as boomers.
In 1965, LBJ announced his plan to convert our ordinary society into a Great Society. Since then, trillions have been spent.
The fruits of that immense investment? The illegitimacy rate, dropout rate, crime rate and incarceration rate have set new records, as the test scores of high school students have plummeted to new lows.
Our labor force is shrinking, the number of dependent U.S. adults is growing, our social programs are failing, and our best educated and most productive generation is retiring.
To borrow from Merle Haggard, "Are the good times really over for good?"
Most of these boomers have been paying SS tax since they were 16 with their first job. So the majority have paid into the system for over 40 years. What happened to all that money?
I’m going to need counseling after reading that. That is the most depressing thing I have read.
I’m glad there are no sharp objects around me. I’m almost compelled to stab myself in the eye at the thought of our future. At least then I can collect some dissability before the boomers suck it all out of the system. Right?
And that is the crux of the problem. I paid the maximum SS contributions for as long as I can remember. I also paid a pretty hefty tax bill each year. I checked out from all that in January because I got tired of helping to fund this government's redistribution and massive debt.
Not all that easy anymore, I'm afraid. You'll have to file a claim, get it denied outright, and then stay up late a few nights to get that number of the multiple disability lawyers on TV who'll sue on your behalf...might take one or two tries.
That is unless, of course, you are one of Holder's people, a hugely obese fat-ass, a foreigner, or some other protected victim class - then it's just a trip down to the SS office for a day.
BTW, the best disabilities are those that cannot be physically seen (stress, back problems, carpal whatever)...if you only do one eye, they'll say the other one is still good, ain't it?
Read some stuff by H.S. Dent. He says the same thing with much more detail. I am not saying they are right or wrong, it is just more detail and things to think about.
Many (not ALL) Boomers might find themselves to be disappointed after their lives of birth control, small families, working mother-dom and day care-ing their offspring, that there will not only be no gov’t and invested money and decreasing circulating workforce resources, but also a lack of family members able or even willing to take care of them in their old age.
Their disregard for others not in their own age group, and that includes their parents and grandparents, as well as their own young children, might come back to an added inintended payback.
A lot of boomers have saved little to nothing for retirement. For them staying in the work force after 65 may seem more attractive than subsisting on SS.
I know that is rhetorical.
So let's think about it differently. Inflation works as a multiplier of the malfeasant pyramid scheme.
If you take all 40 years of a Boomers contributions, the amount collected (there is no investment growth) generally does not cover the average payout for more than about 8 years (I think but correction may be in order). A Boomer in 1969 only made about $12,000 per year. A new Firebird only cost $5,000. Gross Social Security payouts per year will eclipse what many made in an entire year when they started paying into it.
Here is the double dip part, the scheme and the reason Social Security is doomed to fail. Not only is the workforce shrinking, and the number of employees paying taxes into Social Security (paying taxes at all) actually going down, but inflation is driving up the real cost of goods and services that are also adjusting what Social Security recipients recieve. Meanwhile, average salaries are still dropping along with the trickle of revenue (compared to what is needed) that is coming in.
There is little hope that social security has a future for the 40 and under crowd. But then again, are any of us still planning to retire before we die?
This is one situation where the federal government can be of great help.
By doing MUCH LESS.
Much less regulation, much less interference, much less paperwork, much less spending, much less taxation—but here is where it gets interesting.
Tax cuts can be targeted to wean the public off the largess of Social Security, Medicare, and even a lot of pension benefits.
It’s a simple idea, really.
The public loudly objects to the idea of “means testing” to receive benefits, because that is money they paid into “the system”, and they want it back. And, they’re right.
So the way around this is to offer those “of means” a better deal. If they are still earning taxable money, offer them tax breaks that are somewhat *larger* than the money they would have gotten from the government.
That is, you can *choose* to take your Social Security checks amounting to $1,000 a year (for example), OR, you can get tax breaks on your NEW income worth an *actual* $1,500. So, by NOT taking the government check, you actually get $500 MORE.
Incredibly fair, because if you don’t have income, and are dependent on that SS check for $1,000, you still get that money. *Your* choice.
But the end result is that a lot of pressure is taken off the SS system, without screwing anybody.
At the same time, doing tax cuts this way is a great stimulus to the economy. So instead of just one good effect, the economy gets two good effects.
Fairtax would light a fire under our economy and bring back trillions of dollars into our economy.
Want a growing economy? Would you like to grow our way out of debt? Would you like a chance to fund our wiped out retirement system?
Stop torturing the producers and creators of wealth. Don’t talk to me about paying tax twice. I don’t give a chit. If we want a future for our children, enacting the fair tax and repealing the 16th amendment provides a future for our children instead of 70% tax rates and slavery to the state.
Don’t whine about the rate being too high. If we get our house in order and regain sanity in spending and reducing our debt, we can cut the fairtax rate.
We’ll have to forbid lawyers from becoming politicians first. We’ll have to forbid pensions for our legislators that exceed the minimum wage. If they want a 3rd term, they get zero pay, zero compensation for expenses or travel.
Im going to need counseling after reading that. That is the most depressing thing I have read.
Im glad there are no sharp objects around me. Im almost compelled to stab myself in the eye at the thought of our future. At least then I can collect some dissability before the boomers suck it all out of the system. Right?
‘boomers’ paid it in to the system. Forced to do so by government, told it would be put in a trust fund for them.
Instead, government spent it.
Your congresspersons had wild spending spree’s. And when their wasn’t enough money left, they just spend wild amounts now, using the American credit card. Future generations.
As for disability. Haven’t you heard? That’s how the unemployment number is going down. Lose your unemployment benefits, we give you..........you guessed it, Disability benefits.
So keep blaming the ‘boomer’s’...........it’s good political spin.
Government is the problem.
SS is a tax, not a defined benefit. That is settled case law.
I am sure this was a rhetorical question and you probably know the answer... it was spent on the Great Society to buy demorat votes with your money, it was spent to prop up other spending programs, it was wasted to create a dependent class of pets for demorat power. Some blame all this largess and waste on the boomers themselves who rose to public office. THAT is a rather flimsy argument since the Boomers began with Clintoon... the die had been cast and the pattern set starting with Roosevelt and polished off by the Greatest Generation in the likes of Kennedy, Nixon, Carter and LBJ (b. 1908). You can thank tricky Dick for inflation when he took us off the gold standard. I hardly remember inflation mentioned before that. You can also thank him for the seeds of the 401 that Ronald Wilson Reagan polished off and gave the money changers a jackpot goldmine to feed of self-directed investor money and make money on both sides of the trade win or lose and then there are all those tasty management fees.
It was never enough to start with though my contributions over the last 40 years would provide the equivalent of about $36,000 a year plus about 3% inflation for a long long time at a constant 6% rate of return... if there were such a thing.
The money is not there though, it is all gone and will never be back. The system is dead, we are just hovering over a corpse waiting on an unwelcome declaration of death. It was spent and squandered and we our boomer generation neither saved enough nor produced enough offspring to make up the difference. Collectively, we are headed for work until death or can’t and the largest population of geriatric indigents the world has ever seen.
80 million boomers will sell to or will what wealth they have acquired to 50 million Gen-X who will be selling to and leading 75 million Gen-Y. Boomers are like a chicken going through a snake. A big bulge steadily being reduced to a pile of crap.
Many Boomers also could afford and desired larger and more expensive homes. As 10,000 a day turn another year older they are putting their homes up for sale. As the younger crowd fails to thrive they are not buying larger and more expensive homes. This is leaving the home markets glutted with those larger and more expensive homes. The problem is going to get worse every day. Toss in the fact that many younger people with money are gun shy about buying after this past three year housing market disaster and these homes are going to suffer even more.
Now - take this same line of thought through to the stock market. How much stock does this generation have tied up in their 401Ks and other accounts - what will happen to the price of those stocks as they go to liquidate it to enjoy their retirement years?
“A lot of boomers have saved little to nothing for retirement. For them staying in the work force after 65 may seem more attractive than subsisting on SS.”
Very few boomers, in the business world, we know, are able to fully retire after the economic meltdown. So they are drawing SS and working.
The only ones we know, who can afford to fully retire, are the teachers,firemen, policemen, and other city/county/state employees. Their retirement pay is excellent as well as their health benefits. I just posted a reply about “poor” retired teachers in Europe, S America, Asia and ? for a month or more on vacation. I don’t know any retirees from the private sector taking one month vacations.
18 posts and not one Pat is a Nazi post yet?
what is wrong with you guys?
they all went to TBL I know..pity
On top of fewer buyers for the McMansions and lesser dwellings that are too big now the property taxes go up to compensate for reduced income and sales taxes as the boomers produce less and spend less. If you realize that you don’t own your property now... brace yourself, it is going to get much worse.
I think it is going to get so much worse that I am seriously questioning ownership of anything but the barest of necessities. I was thinking of buying more land instead of being in what is left of the market but I wonder if taxes will make that prohibitive. I’m seeing more and more large parcels of land for sale. Traditional ranches aren’t making it anymore. Maybe foreigners will pay our taxes?
I am seeing more land for sale, too. Boomers are the owners. I don’t see the younger crowd buying large tracts of land. It is typically family farms and ranches being sold off as the older parents die.
It is now a blessing to have a home that will easily turn for what we have in it, which is paid off early and will translate house-for-house into a properly sized retirement property if we decide to move elsewhere.
There are too many people that are “house poor” due to an over emphasis on the primary residence as an “investment.”
The only thing we see is that when we retire, we probably will be in good enough health that our toys and hobbies take up too much space in our planned living space. The market needs more 1400 SF homes with detached seperate work/art sudios above three car garages and boat houses, LOL.
Every time I read something by you I think "ye forgot to wrap yer mummy" and pictures of ancient Egypt start coming to mind. =o)
“At least then I can collect some dissability before the boomers suck it all out of the system. Right?”
Way to buy into class warfare. The demographics of this has been clear for 40+ years. You can’t act surprised. Generations of government traitors are the ones that deserve your scorn. They cheated us all while making sure that they and their union cronies are set for life.
The difference is that foreign investors can buy US stocks thereby keeping the values up (not guaranteed, but it's possible), but the US FedGov can't levy SS payroll taxes on foreign workers.
So the pool of potential buyers of stock is equal to the population of the first world while the pool of SS payroll tax payers is limited to those earning wages in the US.
My apologies to those offended. I absolutely do not buy into the class warfare and do not blame boomers individually, certainly not fellow FReepers.
However, just as with crime Vs minority statistics, if we take the generational voting gaps and the huge block of voters that are in the Baby Boomer Generation over the last 40 years, statistically, the voting Boomers have had the numbers to significantly influence the election of politicians that pushed policies of dependents and deficit. They either started out as establishment politicians or slowly grew into those positions under the watch of American voters.
In 2001, my father 62, actually apologized to me for the way his "activist generation of Baby Boomers" (his words and he is a life long republican) had driven this country since the 60's when they started voting. I disregard from which generation a president came from because it was the citizens that elected them.
The blame for the whole unraveling of our constitutionally protected freedoms and economic stability is rooted in "progressive/liberal" ideology dating back to the New Deal. Until about 2007, Americans have been largely asleep at the wheel, apathetic. There seemed to be a brief awakening in the late 1970s early 80s. That gave us Reagan. But we seemed to hit snooze about the time Clinton was elected. Now that the house has been burning for almost 5 years, America seems bright-eyed and bushy-tailed. Unfortunately, we are now hoping to begrudgingly elect an establishment republican instead of a true conservative to start to fix the mess.
I don’t believe the Greatest Generation did very well to pass on the values, history, traditions and American Exceptionalism to their kids that they themselves significantly restored from the days of the Revolution.
The Greatest Generation pulled through the depression and volunteered to fight in WWII. They also voted for the politicians that pushed the New Deal, the source of many of our woes today.
I am making sure my kids are proud and knowledgeable Americans. My 10 year old knows the rich history of American values dating back to the Revolutionary war. She understands many of the details that spurred the Revolution and why the citizens were so upset with the King. She understands the good, bad and ugly about the civil war, war of 1812,...WWII, Cold War, Korea, Vietnam War, Gulf I, Afganistan, Gulf II, etc. My 5 year old knows who wrote our national anthem, where, when and why (He’s a work in progress).
I want my kids to love what America is supposed to stand for and where our roots and history has worked for and against us. I want them to be good Christians and successful participants and contributors to a freerer America using the talents God gave them and ethics we have instilled in them.
My hope is that they do not take for granted, as generations before them have, what individual freedom is and what it costs. We the People not voting, not following or participating in the governance of our nation is taking freedom for granted in my opinion. And that is primarily what has been are largest failing as citizens and owners of our government in the past 40 years.
And the kids don’t want what goes with it. Fences to mend, washouts to repair, pastures to drag, cut, bale and haul. All that stuff I’ve been missing for nearly 35 years chasing a buck and that is likely to go on ‘cause the bucks are worthless.
What was that guy wanting to pull 20,000 lbs on a bumper hitch that claims he makes truck beds and bumpers smoking yesterday? Guess he is desperate to do something. Sounds like divorce.
If a tree falls in the forest does it make a sound? I don’t know but it probably falls on a fence.
“I dont know but it probably falls on a fence.”
So true! I used to think Colorado was a wide open mountain range, but I found I can walk down hill for an hour or two in any direction and get to a house.
What happened to all that money?
It was taken from those who work for a living and given to those who vote for a living.
“Guess he is desperate to do something. Sounds like divorce.”
Sounded like something he was selling. Maybe he’s one of those guys making those oversized steel underground bunkers.
It seems to me that the last 15 or more years have focused on profits and not value. That is how the management has been motivated and that is why jobs went offshore... for profit.
Profit is not bad but it has not built the value of the stocks by underlying intrinsic value. That is why you invest, to build value.
Double taxation of profits in C corps does not employ capital efficiently or at all.
Stocks have risen because there were so many buyers who did not / do not understand value. Stocks have become merely a bet, an arbitrage and not a value driven proposition. Won’t buyers be looking for value growth?
Just a view point.
I'd love to buy large tracts of land. Either I can't afford it, or I have too long of commute in the areas I can afford the land. Back near my old home, I can get 100 acres and even a guesthouse for $150K. It's also in the middle of nowhere.
Same here. The mountains landlock us to the plains and anyting within a hour’s drive of work is expensive.
Large...tracts of land?
"Run away! Run away!!"
The struggle is against leftist idiocy across every demographic.
NO, they haven't. They have been in denial, sucking up the fable and quick to attack anyone who told them otherwise.
“Most of these boomers have been paying SS tax since they were 16 with their first job. So the majority have paid into the system for over 40 years. What happened to all that money?”
It went to the retirees of that time. SS has always been a pass-through system, money doesn’t accumulate anywhere.
“SS has always been a pass-through system....”
I’m sure you meant “ponzi scheme”....
Us boomers have targets on our backs. If gen ex’ers don’t kills us, obamacare will.
” You can thank tricky Dick for inflation when he took us off the gold standard. I hardly remember inflation mentioned before that. “
Inflation had already been a problem for at least a decade before Nixon closed the gold window in 1971. It just wasn’t as visible as it became after Nixon.
Inflation is why silver was removed from American coins after 1964 and silver certificates were removed from circulation. The value of the silver exceeded the face value of the money.
The root of the inflation was something called the Triffin Dilemma, a problem caused by the dollar’s role as world reserve currency. It would have been necessary to contract the American money supply to defend the value of the dollar, but neither Kennedy nor Johnson nor Nixon were willing to endure the hard recession that would follow.
One result of all this is that there was a dual price for gold during the 1960s, the official conversion price and the free market price. The French didn’t believe that this situation would last so they started demanding gold for their dollar holdings. This increased the pressure on the dollar and Nixon decided to ‘resolve’ the situation by breaking the last link of the dollar to gold. Ironically enough I think you will find Milton Friedman suggesting that Nixon do exactly that.
The 1970s is when inflation became visible domestically but it had been a problem for the dollar internationally for over a decade. The expansion of the supply of dollars to facilitate its role as world reserve currency after WWII was the cause.
“Onset during Bretton Woods Era
“Due to money flowing out of the country through the Marshall Plan, U.S. military budget and Americans buying foreign goods, the number of U.S. dollars in circulation began to exceed the amount of gold backing them up in 1959.
“By the autumn of 1960, an ounce of gold could be exchanged for $40 in London, even though the price in the U.S. was $35. This difference showed that investors knew the dollar was overvalued and that time was running out.
“There was a solution to the Triffin dilemma for the U.S.: reduce the number of dollars in circulation by cutting the deficit and raising interest rates to attract dollars back into the country. Both these tactics, however, would drag the U.S. economy into recession.
“To maintain the Bretton Woods system and exert control over the exchange rate of gold, the U.S. initiated the creation of the London Gold Pool and the General Agreements to Borrow (GAB) in 1961 which sustained the system until 1967 when runs on gold and the devaluation of the pound sterling were followed by the demise of the system.
“The Nixon Shock
“In August 1971, President Richard Nixon acknowledged the demise of the Bretton Woods system. He announced that the dollar could no longer be exchanged for gold, which soon became known as the Nixon shock. The “gold window” was closed.
“In order to maintain the Bretton Woods system, the U.S. had to do two things:
“1) run a balance of payments current account deficit to provide liquidity for the conversion of gold into U.S. dollars. With more U.S. dollars in the system the citizens began to speculate, thinking that the U.S. dollar was overvalued. This meant that the U.S. had less gold as people started converting the U.S. dollars to gold and taking it offshore. With less gold in the country there was even more speculation that the U.S. Dollar was overvalued.
“2)run a balance of payments current account surplus to maintain confidence in the U.S. dollar.
“Obviously, the U.S. was faced with a dilemma because it is not possible to run a balance of payments current account deficit and surplus at the same time.
I was just reminding my kids about how bad FDR was. All they hear is “how he ended the Depression” (FALSE - he extended it by 7 years) in school. I told them that I thought he was a great president too until I got older. And I could never understand as a kid why my dad hated FDR so much.
I told them I wish my dad had explained things back then. I wonder if he thought that my “innocent” mind shouldn’t be burdened with the adult world. I recall him watching a few minutes of “Hogan’s Heros” everyday as he passed through the den. Then he would shake his head with a chuckle and say “Oh those crazy guys”.
My kids? I pull up photos of the piles of bodies from the camps and videos of the Nazis shooting people in front of open trenches.
I told my kids that perhaps I have been too “real world” with them over the years. I don’t think so though - it isn’t like they mope around the house thinking about it. They do make things difficult for themselves in school sometimes for with their Conservative ideas. (Makes a father proud!).
I think the younger generations are becoming a bit more conservative - but they probably don’t have the numbers to sway things all on their own.
Ok but as I understand the pop numbers globally as well as nationally there doesn’t appear to be a first world replacement for the quantity involved ... Though I’m sure the plunge protection team will step in...
Yes, I recall that Friedman was on board with this and I have heard of the Triffin Dilemma. Still, in the graphs, inflation is not so manifest until after the decoupling.
Not to argue the situation with silver etc. All relevant. While Nixon may not have been the one to start the process I still contend he kicked the can over the cliff.
Your reference to contracting money supply just supports the whole premise that wrong things are done for the right political reasons for the advantage of someone. Nobody gets hard decisions do they?
Gramps is right. Many boomers aren’t able to retire because their 401Ks are now 201Ks.
However, many of us boomers saw Reagan try to fix SS, and were skeptical. We have been living as though SS and Medicare wouldn’t be here at present, and have lived our lives as though we could not rely on seeing one thin dime of our forced “investment”.
Gramps is, also, right about government union retirees. Their retirement packages aren’t sustainable.
Support Gov. Walker in his recall election. That is the second most important election this year.