O.k. one must adapt. Never trust someone whose views are unchangeable. It's an unhealthy attitude.
You see there's a flipside to this whole entitlement crisis, baby boomer retirement thing that doesn't get much press, but it's a mighty thing, oh yes a mighty thing.
Now if you graph out percentage changes in employment level stats, and average weekly wage stats you'll see that they pretty much follow each other. O.k. phah, no big surprise there, and I have to grant you that. Simple supply and demand in the marketplace, employment goes up workers are harder to come by, the wages, their cost, goes up. Fine this isn't econ 101. Still it's nice to see the stats hold up to the theory.
Now this doesn't mean that the application is consistent, in the "70's wages and employment and their relation were much more volatile. In the 90's less so. And then we had that noteworthy exception to the rule at the turn of the century when employment strengthened and wages dropped. That we can easily blame on globalisation, a popular idea perhaps amongst some, but I am not so readily sold, globalisation was hurtling onward in the 90's, and continues to do so, although the relationship between wages and employment seems to have been re-established. Could have been a lot of factors involved in that blip, including the simple shock to the consciousness from 911. Interesting thing that, if it was a factor, you know the old song, 'all we have to fear is fear itself', so bloody true. Look at the millions Russia lost in WWII, little Japan had two nuclear weapons dropped on it, but both survived, and remain influential world powers. It would seem the reactions to events can be more damaging than the events themselves. Did I digress? Crap you need to stop me when I do that...
So we've got the whole employment wages thing under our belt. Now here's the rub. If you look at census bureau estimates for age demographics, by five year increments, you see that the amount of four year olds is less than the amount of forty year olds. What does this mean? It means that when the boomers start to leave the workforce those that are entering it wont be of sufficient numbers to replace them, in fact if trends hold between 2020 and 2030 the workforce could lose around 4 million workers, or about 30,000 a month. So not only will it be hard to maintain the current labor level job creation may be near impossible. This will create enormous pressures on wages, the competition for workers will be simply crazy. You've got to bear in mind that when they currently say the economy created, lets say, 150,000 jobs they are gauging whether this is good or not by the amount of new workers entering the workforce. Because of the new workers the economy has always had to make new jobs. In the grand scheme of entitlement crisis this zero gain in the workforce means that more capital may flow from untaxed areas into taxed areas. Capital investment, corporate coffers, to wages, consumption, etc. It also means that as businesses compete for workers more potential retirees or people who choose not to work may be lured into the workforce. A double relief for the entitlement, (social security, medicare, medicaid), shortfall. Extra public revenues, decreased expenditures. Now you might say that those jobs will just go overseas, but you have to remember that most countries, including China, face the same demographics that the U.S. does. The only major economy I can think of with good demographics is India's. Now I am not suggesting that this will cure the shortfall, but it is a mighty thing to consider.
This will lead into other areas of the economy as well, which I wont belabor now, but it's a octopus alright. What is the psychological impact of an economy where any job growth creates wage pressures. Does this mean the only growth occurs from productivity gains? Can the Fed and policy makers adjust their perceptions of wage pressures to allow a re-distribution of wealth from share holders to wage earners, without smothering the effect as simply inflationary? Will share holders permit the re-distribution? What will labor shortfalls have on labor movements and immigration policy? What will resulting education investments in developing nations yield in terms of additions to the global workforce? A lot of potential dynamics at work there, but the shrinking of the workforce has the chance of being a bigger story than the amount of oldies stressing the system.