Salient to Investors:

  • Ray Stone at Stone & McCarthy Research said the extent of labor-market slack may be less than Yellen purports. Stone’s favorite pay measure is table B-9 at the very end of the jobs report: an index that takes into account average hourly earnings, the length of the workweek and employment.
  • As the labor pool becomes weighted toward the extremes of retiring baby boomers and entry millennials, average earnings could be depressed for years, making them a less-useful predictive tool. The unemployment rate is dropping faster than central bankers predicted in part because of retiring baby boomers.
  • More than 76 million were born between 1946 and 1964, 82 million were born between 1981 and 2000, and 57 million were born between 1964 and 1981, the Generation X.
  • BLS estimates 25 to 34-year-olds will make up 22.5% of the workforce by 2022 versus 21.6% in 2012, while workers over 55 will rise to 25.6% from 20.9%. 45 to 54-year-olds will drop by 3.3% in the decade ending 2022.
  • Austin Nichols at the Urban Institute said policy makers forget that someone has to pay for that pig in the snake when the pig retires, and we are experiencing the leading edge of this. Nichols predicts that demographic changes should transform into an earnings booster in the future as the downward pressure on median wages is rapidly reversed into upward pressure.
  • Martha Deevy at Stanford said employees often strive for different things in their later career, so flexibility is probably more important than anything else.
  • A 2013 survey by Towers Watson predicted that 50% of workers will wait until after age 65 to retire, versus 34 percent in 2011. Shane Bartling at Towers Watson said the modern trend of partial retirements reflects workers choosing to move into lower-stress occupations.

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