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US New Old 55+ generation makes major move back into the workforce

Consumer demand
By Paul Hodges on 14-Dec-2013

US jobs Dec13We had another excellent audience for Thursday’s ACS Chemistry and the Economy webinar.  We were swamped with questions both before and during the session, which kept moderator Bill Carroll and the blog on their toes right until the end.

The above chart came from the early part of the session, and focused on the two major changes that have taken place in US labor force participation rates over the past 65 years:

  • It shows the adult workforce in 2 groups – the Wealth Creators aged 25-54 (solid lines), and the New Old 55+ generation (dotted lines)
  • Total Wealth Creator participation rates (black) peaked around 2000 at 84%, having risen from 65% in 1948
  • The increase was driven by Boomer women (red), whose rate doubled to 60% from 30% over the period
  •  Men’s participation (blue) was by contrast on a slow decline from 90% to 72%

The key to the increased women’s rate, of course, was the decline in fertility rates that took place.  The blog will discuss this in more detail next week as its series on the economic impact of demographics continues .

Lower fertility rates meant women now had a choice as to whether they worked or not, particularly as legislation such as the 1963 Equal Pay Act began to create a more level playing field with men.  This created the phenomenon of dual income households for the first time in history.  In turn, this created major new markets for labour-saving appliances in the home, as women now had the income to afford these.

But now we can see a new trend developing as the US heads into the New Normal:

  • Women’s participation rates in the 55+ age group hardly changed between 1948-1995, averaging around 20%
  • Men’s rates, meanwhile, nearly halved from 71% to 38% over the same period
  • But since 1995, rates for both women and men have been rising steadily
  • More than 1 in 3 women New Old women are now working, and nearly 1 in 2 New Old men

This is partly due, of course, to the fact that the New Old have an extra decade or more of active life ahead of them, compared to earlier generations.  But it must also be due to the New Old’s need for incomes, as their pensions prove too small to sustain their living standards.

The New Old thus represent one of the great growth opportunities of the modern economy.  But too many companies still regard anyone over 55 as only needing walking sticks and packets of pills.  Those that break out of this outdated mindset will do very well indeed by supplying affordable products to meet the New Old’s real needs.