According to the Pew Research Center, about 10,000 baby boomers -- those born between 1946 and 1964 -- have been turning 65 each day for nearly three years now. No doubt many of those are celebrating that milestone by retiring from their jobs, but others are continuing to work -- either through choice or need.
On the face of it, that seems like a heck of a lot of new jobs should be opening up, yet unemployment sits well above the 7% mark. Worse yet, young people have uncomfortably high unemployment rates: 21.4% for those 16 to 19 years old, and 12.9% for those aged 20 to 24. For those aged 55 and over, however, the jobless rate is a mere 5.3%.
This discrepancy looks even more glaring when recent studies report that almost half of recent college graduates are working at jobs for which they are grossly overqualified -- jobs that that don't even require a college degree. Conversely, the middle-aged crowd exhibits a high level of enthusiasm for their work, with nine out of 10 respondents aged 50-plus telling Associated Press pollsters that they are satisfied with their jobs. The AP notes that, overall, older workers typically feel happier in their work than younger workers do.
Are retirement-aged workers staying in the workforce longer, thereby keeping good-paying, satisfying jobs out of the grasp of younger wage earners? It's a complicated question, but even though older people are working longer, that isn't necessarily the reason younger workers are being left high and dry, in terms of employment.
A changing economic landscape is extending work lives
For some, increased human longevity is part of the reason the're working past their planned retirement date. As the population ages, the Social Security Administration has been steadily increasing the age at which retirees may access full benefits. For example, while people born in 1937 or earlier may retire and collect their full allowance at age 65, those born in 1960 or later will have to wait a full two years more for the same benefit.
More importantly, the financial crisis took its toll on older workers' retirement portfolios, in addition to taking a bite out of home values. A recent survey of employed persons aged 50 and over showed that the average retirement age of 57 prior to the downturn has been pushed up by five years to age 62 following the recession. Over 80% of respondents thought they would have to continue to work, in some capacity, after their retirement.
Another issue concerns the skill level of these experienced workers. In many states -- particularly in the Northeast -- the percentage of skilled workers 45 and older tops 60%. Nationally, nearly 19% of skilled tradespeople are between 55 and 64. This makes them very valuable to employers, who are beginning to institute incentive programs to encourage older employees to stay on beyond retirement age.
Does this trend impact younger workers?
The foregoing would seem to indicate that fewer skilled, decent-paying jobs are becoming vacant as new workers come into the workforce, squeezing out new, younger employees, but that doesn't seem to be the case. A study administered last year by the Pew Charitable Trusts shows that the "lump-of-labor" theory, which posits that delayed retirement by the baby boomer generation would "crowd out" new workers, doesn't hold water.
In actuality, the Pew Study found evidence that every time baby boomers' employment rate increased by 1% during the latest recession, young workers' hourly pay rose 0.28%. Taking the longer view, the study looked at data from 1977 to 2011 and came up with similar findings: The same 1% rise in boomers' employment spurred a 0.10% drop in youth unemployment, a 0.21% increase in younger workers' employment, and a 0.13% boost in their weekly work hours.
So while the young are having trouble lowering their unemployment rate, their troubles can't be linked directly to the baby boomers. A couple of issues are worth noting, however. One is that companies are loath to train workers once they are hired and prefer to either keep workers that are already trained or hire only those that they feel can hit the ground running.
The other is that colleges may not be preparing young workers adequately for the workplace, something that employers have been griping about for some time. Considering the rate of unemployment and underemployment plaguing the young these days, I believe that they would be likely to concur.
Premium stock picks for a carefree retirement
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.