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No. of Recommendations: 2
In recent years, labor force participation among older Americans has picked up somewhat, but it is far too early to determine the underlying causes of this increase. Rising pressures on retirement incomes and a growing scarcity of experienced labor could induce further increases in the labor force participation of the elderly and near-elderly in the future. In addition, policies that specifically encourage greater labor force participation would also lessen the necessary adjustments to consumption. Workers nearing retirement have accumulated many years of valuable experience, so extending labor force participation by just a few years could have a sizable impact on economic output.

I read an article awhile back talking about the fact that the generation behind the boomers (Baby Dearth?) was going to be so much smaller than the Boomers that there weren't going to be enough people to fill the jobs being vacated by the Boomers, not including any jobs growth. The contention of the author was that the think-tanks that have realized this have been trying to get government to act, via increasing the age of SS eligibility, but the real problem has been corporations. Because the older, experienced workers make so much more than their younger counterparts, they continue to offer early retirement packages to older workers in an effort to cut expenses and improve the bottomline, resulting in positive stock price movements. He believes this is very short-sighted.

I'm seeing this in my company. A colleague told me the other day that a long-time employee was given her walking papers about a month ago. At this time, we have a Rule of 75, which applies to retirement medical - continued participation in the company health insurance after retirement. The Rule of 75 says if your age plus years of service (minimum 15 years) equals at least 75, you're eligible. During her out-processing she was told that this is being adjusted downward to Rule of 60. (We're supposed to find out about this later this year.) This looks like a way to get rid of older employees even earlier.

There's no pension - just a cash balance plan and 401k, so no other reason to stick around once you've reached the Rule hurdle.

I think once the bidding for the limited pool of educated, experienced employees begin, it's going to be the dot com income-inflation all over again.

3MM


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