Authored by Chris Hamilton via Econimica blog,
Math is generally not a bull-shitter. It can be twisted and tortured by statistics and convoluted by formula’s, but in general simple math is about as honest as one can get. So in late 2017, when the Bureau of Labor Statistics suggested that employment would grow by 11.5 million over the next decade (2016-2026), I thought I’d do the math to see for myself to see if this was possible. I recently wrote an article why further growth in US employment was mathematically unlikely (HERE) and why economic growth under Trump would be nothing but illusory (HERE), but it took me a while to get around to specifically refuting the BLS. But in short, math says there’s not a chance the BLS is right. But why?
For comparisons sake, let’s go back to the 1990 through 1999 period and simply count population growth by age segment plus the participation rate of each age segment (found on the BLS site, HERE…in truth, I hold the participation rates constant as per 2016 but which slightly understates previous workforce growth). We see that the 15+ year old US population grew by 22.1 million, and multiplying each age segment by their participation rates, the potential workforce grew by 13.6 million.
Looking at the next decade (2019 through 2028), the 15+ year old population will grow slightly less than the peak growth period above (about 900 thousand fewer) but the distribution of that growth changes everything, from a potential workforce standpoint. 17.6 million of the total 21.2 million will be 65+ years old with almost half the total population growth among the 75+ year olds, a group that at present has an 8.4% participation rate, compared to the 81.3% participation rate of 25 to 54 year olds or 71% among the broad 15 to 64 year old cadre. The BLS estimates that 75+ year old participation rate will edge up to 10.8% by 2026. But the like % increases among the 65 to 74 year olds are simply a potential of a couple hundred thousand difference over a decade…a mere rounding error.
Below, annual 15+ year old population growth, broken down by age segments, 1951 through 2028. Peak total growth double peaked in 1975 at 2.9 million annually and again in 1999. As of 2018, the like population growth is 2.1 million. But as the boxes below the totals detail, the groupings doing all the growing has radically changed.
Taking the above chart but based on current participation rates, below. That is the annual growth in the potential workforce…and the impact is massive. The demographic driven deceleration in the quantity of potential employees since 1999 should be pretty obvious. And the growth in employees represents the growth in consumers for cars, homes, etc. etc. No more growth in employees, no more growth in economic activity.
So, when I show that we are essentially at peak employment to population ratios for the 25 to 54 and 55 to 64 year old cohorts and structural changes likely meaning the 15 to 24 year olds are at or near peak employment as well…then the growth of employment that is the growth of consumption is essentially done. Probably time to consider what happens next!?!
For those curious how global in nature this is, “Global Economy On Precipice of Secular Decline…Detailed via Shifting Population, Demographics, Income, and Energy Consumption”…HERE.
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