Friday, February 04, 2011

Explaining the Jobs Report

What explains the strange employment report released this morning by the Bureau of Labor Statistics? Employers added only 36,000 jobs in January, yet the unemployment rate fell from 9.4. to 9.0 percent. Could this be the reason: the baby-boom generation is grabbing hold of the lifeline of early Social Security benefits (available at age 62) and leaving the labor force behind.

Most older boomers (aged 55 or older) do not plan to retire until age 66 or older, according to the Retirement Confidence Survey. Only 19 percent say they will retire before age 65. But unemployed boomers may be changing their minds as they cope with an unyielding labor market. The fact is, many workers end up retiring before they planned--a substantial 41 percent, according to the RCI.

There are some indications that this is happening. The labor force participation rate (which includes both the employed and the unemployed) fell to 64.2 percent in January 2011, the lowest level since 1983. Even more telling, between 2009 and 2010, the number of people aged 55 or older in the labor force fell by 1 million despite the fact that the age group is still expanding with boomers.

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