One of the areas of interest regarding the national economy is what role demographics are playing. When we look at the employment situation, what we find is that the media coverage of the monthly Bureau of Labor Statistics (BLS) employment report focuses primarily on the total number of jobs being created, the unemployment rate and wages. Within the monthly report is a large quantity of additional data and one of those data sets is information regarding employment by age category. If we want to gain some perspective on demographics as it relates to employment, this is the most logical place to start. What the data shows may surprise you.
The BLS provides a breakdown of employment by the following age categories:
Note: The 16-19 age group was not included since this is a group that typically is still in school and a very small part of the total employed.
Although there are differences of opinions as to where Generation X stops and the Millenials start, for the purposes of this article, Millenials will be classified as the first two age categories (20-24 and 25-34), Generation X as the next two age categories (35-44 and 45-54) and the Baby Boomers as the 55+ category.
Using that assumption, let us examine two different time frames to see how these three groups have fared.
The graph below illustrates the change in employment from the start of the recession until now.
What quickly jumps out from this graph is that cumulative growth in employment for the Baby Boomers never turned negative during the recession, while other age groups suffered a decline in employment during the recession.
This raised the question as to whether that trend was the same if you only looked at the trend since the recovery began. As the graph below illustrates, the answer is yes.
Once again, the disparity is dramatic with strong cumulative employment growth from the Baby Boomers and continued suffering from Generation X. This size of the change is different but the trend is the same. Even since the recovery began, Generation X has not returned to the employment levels that existed at the start of the recession. The Millenials have fared better with positive cumulative growth occurring since 2014.
What these graphs highlight is that age demographics truly mattered when it came to employment growth. Without having all of the background information that would help add insight into what was causing this, there are a few observations that can be made:
For those of us who are baby boomers but have not reached retirement age, the disturbing questions are:
No matter what the answer is, this trend will bear monitoring. Growth in employment is important but as the above information shows, it is also important to go behind the headlines of overall employment growth and understand who is seeing growth in employment since this may ultimately impact prospects for economic growth.
Steve Scranton is the Chief Investment Officer and Economist for Washington Trust Bank and is a CFA charter holder with over 30 years of investment experience with equities, tax-exempt and taxable fixed income securities. Steve actively participates on committees within the bank to help design strategies and policies related to client and bank owned investments. Steve also serves as the economist for the Bank and has been a featured speaker for both client and professional organization events throughout the Northwest.