Weak economic recovery has been a ‘boom for the grannies and a bust for the kids’

by Grace

An analysis of recent jobs figures at Investor.com reveals a disturbing development: the biggest beneficiaries from the economic recovery are Boomers, while everyone else is getting the shaft.

Among those 55-and-up, the employment-to-population ratio barely dipped even in the depth of recession and is now higher than at the end of 2007. The ratio among those 25-54 remains about 4 percentage points lower than before the recession started.

Older workers are staying on the job longer, in part to counter lackluster performance of retirement accounts and housing values.  Meanwhile, the high unemployment rates of Generation X and Millennials could help explain the rise of  young adults living with their parents.

Long-Term Trend

The trend of falling employment as a share of the 54-and-under population and rising employment among those 55 and up has been in force for more than a decade.

See this chart for the labor participation rates going back to 1948.

Walter Russell Mead on the politics of this generational job divide

… it’s ironic to say the least that a president swept into power on a tsunami of young voter support has presided over a boom for the grannies and a bust for the kids. Logically, President Obama should expect to do somewhat better among senior citizens and worse among young people than in his first campaign — but logic often goes one way and politics another.

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14 Comments to “Weak economic recovery has been a ‘boom for the grannies and a bust for the kids’”

  1. This trend will only get worse if social security, medicaid and medicare are “reformed”. The Boomers do not have enough to retire on, and I predict that this will be the next big crisis for our society, not student loan bubbles as everyone else seems to think. I am shocked at how little most people know about finances for the elderly. For example, most people do not realize that over a third of Medicaid goes not to the poor, but to the elderly for custodial care.

  2. “This trend will only get worse if social security, medicaid and medicare are “reformed”. The Boomers do not have enough to retire on, and I predict that this will be the next big crisis for our society, not student loan bubbles as everyone else seems to think.”

    You hear people all the time say that their plan is to work forever. I actually don’t fault them for that plan (unrealistic as it is, given the physical and mental frailty that aging brings). I worry more about the people who think they’re going to retire at 50 and who will get bored and run out of their money round about the time that nobody would hire them for any reasonably well-paid position.

  3. But these elderly on Medicaid are considered “poor” according to eligibility requirements. The issue as I see it is the government spending so much more on the elderly than on the young, with younger workers picking up the tab. Yup, crisis ahead unless real reform occurs.

  4. I *think* that the idea of being able to retire at 50 is becoming less common as people face reality.

  5. Yes, almost everyone tries to spend down to qualify for Medicaid; that’s pretty standard. Whole areas of financial planning are dedicated to that, because it has to be done the right way. Custodial care can be horrific, financially, physically, and emotionally.

  6. “Those are mainly middle class elderly who did the spend-down.”

    But given the expense of nursing homes, it wouldn’t take them that much longer to get to the right dollar amount for real.

    I’m kind of a personal finance geek, and one of the very frequent questions you hear on the radio is, “How do we hide grandma’s money before she goes to the nursing home?” That maneuver seems to have entered into the standard American personal finance repertoire, even though 1) it’s almost never a very large sum of money (particularly when split among half a dozen heirs) and 2) the feds are wise to this one, and will look back a number of years. You can’t just disappear grandma’s money and then pop her into a Medicaid-funded nursing home the next day. I guess the issue is that at a certain mid-range socioeconomic level, people just can’t even fathom the idea of spending any of their own family money at all on a nursing home, even if there is some money available.

    “I *think* that the idea of being able to retire at 50 is becoming less common as people face reality.”

    Some years back (pre-2008), a worker bee in-law (the one who is about to pay cash for a house), told me that he planned to retire around 40 and just relax on the beach. This was a very interesting case of lack of self-awareness, because this particular guy’s idea of a relaxing weekend involves more work than most people’s actual work weeks. Not working would probably kill him, and yet he’d formulated a plan of working very hard, saving very hard, and then just kicking back for the rest of his life. My feeling is that anyone who is capable of the sort of intensity necessary to retire at a very early age is probably incapable of living a beach bum lifestyle for any length of time.

  7. Hmm, I guess in being around my peers dealing with their aging parents I’ve gotten used to everyone knowing about the need to spend down to qualify for Medicaid. But it wouldn’t surprise me that lots of younger (Gen X & Y) folks are less aware of this issue since they may not have any personal reason to know.

  8. “But younger workers are going to pick up the tab regardless.”

    I guess those of us in the small government camp think the government has (and will) consistently spend more inefficiently than the private sector for comparable levels of custodial care, or of anything. Related to this, the looming deficit adds the burden of debt payment to any future costs of elderly care. So any past predictions of a Social Security/Medicare/Medicaid crisis are only magnified by more recent turn of events.

  9. “I really don’t think it has entered into the public consciousness at all. Maybe here in affluent Westchester, where we tend to pay more attention to personal finance.”

    The people I’ve heard ask the question are middle-middle class, generally from parts of the country where grandma’s home is not worth a small fortune. The people who ask about this know 1) that the feds pay for nursing home for people who don’t have money but 2) if you have money you will be expected to use a bunch of it to pay for the nursing home. That’s very well-known among people at the middle-middle class level. The math on this probably works out very differently in Westchester–a paid-off home could fund quite a lot of care.

  10. “I guess those of us in the small government camp think the government has (and will) consistently spend more inefficiently than the private sector for comparable levels of custodial care, or of anything.”

    Not to mention that “Medicaid-funded nursing home” is one of the scariest phrases in the English language (although “Medicaid-funded dentist” is pretty close).

  11. “The one positive outcome is that they might add programs back in a way that makes more sense than the current Medicare-Medicaid split.”

    For instance, a lot of people might be able to stay in their homes if they had occasional help at home. The all-or-nothing nature of the current choice between staying in the home (on your own dime) and going into the nursing home (with full funding) probably costs the taxpayer a lot of money. (That’s how it works, right?)

  12. “I predict that the Medicaid cuts will happen, and 10 years later, everyone will be desperately crying for help. Programs will then be added in.”

    I can see that, but I do wonder how the younger voting block will affect this. Will they say “yes, tax me to the hilt to pay for granny’s care” or will it be “no way, I’m barely able to pay for Johnny’s daycare as it is”. A booming economy would make everything easier.

  13. Because they will already be struggling with the costs for Granny. Or their parents will be. Or they will know someone who has gone bankrupt supporting Granny or who is trying to take care of Granny at home with no help because they can’t afford help.

  14. “I can see that, but I do wonder how the younger voting block will affect this. Will they say “yes, tax me to the hilt to pay for granny’s care” or will it be “no way, I’m barely able to pay for Johnny’s daycare as it is”.”

    The effect of federal programs is to equalize outcomes for elderly people with different numbers of children. Absent federal programs (and all things being equal with regard to income), a grandma who has seventeen descendants (like my grandma) is way ahead of a grandma who has three descendants. It is much easier for seventeen working-age descendants to pay for Social Security and Medicare for grandma than it is for three working-age descendants to pay for grandma’s support, so the feds divert money away from the first extended family to the second. Now, some people cannot adequately support and raise a larger family. However, I wonder if the feds shouldn’t be doing a better job of encouraging the production of more taxpayers? As the situation stands currently, there isn’t really any financial incentive for the middle class to do so.

    .

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