Robert Cherry brings up a point not frequently enough mentioned in his post at RealClearPolicy:
Suppose that each new 20-year-old worker gets on a wage escalator with initial earnings equal to $15,000. On the wage escalator, all workers are continuously employed, receive a wage increase of $1,000 annually, and retire at age 70 making $65,000. If there are an equal number of workers at each age, the average wage for all workers will be $45,000 — which is also the average wage of each worker over his or her lifetime. When all of this is held constant, any changes to the average wage reflect changes to the well-being of individual workers too.
But in reality, all is not held constant. In recent years, Baby Boomers have been retiring, while many younger workers are finally finding full-time jobs as the recovery takes hold. This drags the average wage down.
Get it? When the young enter the labor force later, it reduces their lifetime income prospects. That in turn reduces their consumption, reduces the general level of economic activity, and reduces tax revenues, particularly in state and local governments which tend to depend heavily on various consumption taxes.
And the problem is not restricted to the young. Those who’ve been pushed out of the labor force in their 40s or 50s and found it impossible to return because of their age or their long-term unemployment are no longer on the “wage escalator”.
Worse still, most of the jobs that have been created over the last eight or nine years have no escalator and there’s substantial competition for the jobs that do have escalators from imported workers.
In addition, you have the issue of the baby boom generation, with their attendant life cycle spending function, now past it’s peak. And it’s size dominates the effects of the echo boom. Think about that if you are considering investing in, say, the furniture business. Or if you anticipate historical growth with attendant opportunities and incomes.
Whatever you might think of Harry Dent, he has generated some excellent and thought provoking data on demographic trends and their economic effects.
Who are you guys? Seems like you are on the outside looking in. From the inside looking out…Young guys can’t get jobs because the old guys can’t leave them. Pension funds have been abandoned by the Obama Admin. Everyone thinks He is owned by the unions. If He is, it’s only the leadership, He could care less about workers, about Central States Pension Fund, run for thirty years by the Government into ruin.
He apparently is the ONE we have been waiting for, and we are f**ked.
I can’t speak to the problems of Central States Pension Fund but I can remark on the various public employees’ pension funds in Illinois. The TRS and other funds were routinely raided, notably during the governorship of Rod Blagojevich, to satisfy other spending priorities. Those included the expansion of Medicaid, expanded services for seniors, and any number of other state and local programs, presumably including pay increases for public employees and elected officials.
The obvious has happened here. The funds aren’t solvent, state and local governments can’t afford to pay enough into the funds to make them solvent, and the basis on which pensions are calculated are higher than they should be.