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    Thoughts from the Frontline

    Boomers Are Breaking the Deal

    August 25, 2012

    Choose your language

    There is something missing from this thing we are calling a recovery. For most in the US it does not feel like a recovery, and for good reason: the jobs aren’t there. But for some groups it is a recovery, and more. And that reveals an even bigger problem. Today, in a summer-shortened Thoughts from the Frontline, we look at the trends in employment as well as take note of a signpost we passed on the way to finding out that we can’t pay for all the future entitlements we have been promised. It’s a short letter but hopefully thought-provoking. At the end, I note a webinar and a few speeches I’ll be giving in the near future.

    How Are You Going to Keep Them Down on the Farm?

    Last spring, I mentioned I was working on a book on employment with Bill Dunkelberg, the Chief Economist for the National Federation of Independent Businesses. We were hoping to get it out by this fall. In the process of researching the topic, I began to see some new patterns in the employment trends that suggest we may be going through a generational…

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    Alan Harris

    Aug. 31, 2012, 6:58 a.m.

    I gave up the computing business 25yrs ago to become a plumber. Best move I ever made. I LOVE my job, it pays well and challenges me every day (plus I save a fortune on my own house maintenance !) It makes me feel like a super hero ” Stand back ma’am….leave that vicious leak to me!! Oh youre my hero (my husbands totally useless at this stuff, not a REAL man like you…..do take this money, she says and smiles warmly as I gallop off to save the next damsel in distress.
    No impromptu meetings or working late (unless I choose,... at double rates of course. No co-worker issues or office politics (just parking tickets).
    My fondest memories of my father are from our time in the garage changing the brake pads or whatever. It was shared time with a practical, challenging, team work and family bonding purpose. Is there a better, more life enhancing education than that?

    Bill Hacke

    Aug. 31, 2012, 12:07 a.m.

    From the article:
      As of 2012-06 the civilian labor force was 155,163,000.
      As of 2012-06 there were 111,145,000 in the private workforce.

    What is the definition of civilian labor force and private workforce ?
    Is the difference the people employed by the government ?

    Jason Badger

    Aug. 30, 2012, 8:51 a.m.

    Mr. Mauldin, I wonder if you are familiar with MMT, and its implications as regards Social Security; please refer to http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

    If so, please comment on same.

    Frank P Casula

    Aug. 28, 2012, 5:20 p.m.

    The question becomes for economists, and fiscal policy creators is can we build a model, considering where we are now which is ‘not’ based on growth.

    Growth is something that we took for granted for generations. Now that the population of the planet is reaching tipping points and will likely slow and/or shrink visa vie population: G20 Economies which have build their foundations on growth, have no plan B. We live on a ball. The ball is not going to get any bigger and it’s not reasonable to consider that it will. Populations will wax and wane in long shifts. This is one of those and will likely take 50 - 1oo years to walk through.

    What if we shifted to a model which did not rely on growth. What does that model look like and what taxation and fiscal policy model works to de-leverage debt (the current mess), maintain the generational shift which is inevitable, and sustain a level of infra structure, security, and standard of living.

    That’s my challenge: It’s fine to look at the possible outcomes our history introduces. That’s an intellectual protraction and can provide valuable lessons. But the real question John is: What is the vision to re engineer the economies of the great nations on the planet, to support the shift and keep the ball moving forward not backward. Is there such a model. If not; Let’s invent one….we need it now!

    Stuart Harnden

    Aug. 28, 2012, 5:09 p.m.

    I have to take issue with John, in a nice way, that boomers are breaking the deal.  It’s the U.S. Government who has broken the deal.  They have raided the Social Security Trust Fund so that it’s nothing but a cabinet full of I.O.U.‘s, and Congress has for decades, refused to address the issue and make the required changes.  The government caused the financial bust in housing, and the Treasury Department and Federal Reserve have meddled to the point that there is no recovery, and with zero interest rates, retirees who have saved diligently, paid off their own mortgages, put their kids through school, etc., are left with two big assets that are producing no income (housing and savings). The government, going back to the late 80’s and early 90’s, has continuously fudged the methodology and numbers for figuring inflation, after spending decades indexing everything that moved to inflation, and now can’t pay any kind of cost of living raises, so retirees not only don’t get ahead or stay even, we’re falling backwards.

    Boomers have no more desire to stay in the work force than the unemployed taking home $800 a week do.  They’re doing it because they have to, and to some degree, because the younger generation refuses to.  Forty years of due diligence and planning has for many, been neutralized by those in government.

    Stuart Harnden, Bedford, New Hampshire

    Candice Donahue

    Aug. 28, 2012, 4:30 p.m.

    Interesting twist on the younger people coming out of college with technical degrees.  My nephew is majoring in petroleum engineering, a field my father was in.  Back in the day, you learned and got more valuable as an employee by spending years in the field getting experience.  Now it seems, due to the pervasive use of technology to discover oil and gas reservoirs and monitor the direction of the drilling and the chemical composition of the drilling fluid, that the brand new recruits are getting opportunities you’d think would be resrved for the 40-60 year old employees.  So it really depends on the industry.  Computers and immediate access to data and information has really leveled the playing field among workers of different ages/generations.

    Medea Bern

    Aug. 27, 2012, 12:17 p.m.

    College is in large measure remedial.  That explains the need for grad school.  Mechanics make $130 an hour-no more changing your own points and plugs, yet high schools have little or no vocational training for the kids who could perform these useful and much-needed tasks.  Society is bass-ackward in its insistence that a college education is necessary to sustain a family-my mechanic is doing just fine, thank you, and rather than having hundreds or thousands of kids wasting time at community college learning math-again-we should be investing in vocational training.  We could use all the dollars we’ve been funneling to U of Phoenix and DeVry.  Just saying…

    Mark Behringer

    Aug. 27, 2012, 8:25 a.m.

    Thanks John,

    Unlike most of what comes into my Inbox, your articles always give me something solid to think about.  This one was no exception.

    Jerome Barry

    Aug. 27, 2012, 7:24 a.m.

    This is valuable information which leaves out half the options.  It isn’t Post-Graduate Professional Degrees OR Unemployment and Poverty, but rather Valuable Skills-Knowledge OR Unemployment and Poverty.

    A 22-year old welder in the widely dispersed fracking areas of the country earns as much as 50-year-old engineer in the high-tech industries.
    The problem is, the highly skilled workers in the oil patch are predominantly the 50+ year-olds who’ve feasted in every boom and famined in every bust since Carter.  Just as the old machinists at John Deere and other heavy industries, the old roughnecks in the oil patch, and the old engineers filling the semiconductor shops where I am, these employers who need the most highly skilled workers simply don’t believe they can find worthy apprentices among the Tweeting youth of America today.

    Outta Names999

    Aug. 26, 2012, 6:54 p.m.

    Mauldin, you’re starting to catch on. But stop blaming the boomers.  It does no good to blame them. We’re not going anywhere. It’s the money supply.  What we need is more cash in the economy because the baby boomers aren’t ready to retire and yet their children are ready to enter the work force to the tune of 3 to 4 million a year. There simply isn’t enough money in the economy to pay both generations. Assume half the kids graduate from college. That’s 1.5 million per year who will need to be paid say 40k with an actual cost with overhead of about double that. That’s 120 billion a year - every year for 17 years. About $2 trillion just to get them employed in their first job after college. The same thing happened in the 70’s when the boomers entered the work force and the Vietnam War ended. So ti can be done.

    Where do we go to get the money? Well either the corporations can hire everybody or we go to war. Two wars. Now of course we already just fought two wars but the fact is, we faced the wrong opponents. We should have declared war on our friends, not our enemies. Iraq doesn’t have enough oil. We should have conquered our friends the Saudis instead because they have all the oil. There isn’t enough money in Afghanistan to piss in a pot. Instead, we should have waged war against our friends the British because they have all the gold.

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