muses of the moment

January 11, 2014

Employment Participation

Filed under: 401K and IRAs, DOW and S&P500, Economic Crisis, Housing Market, The Financial Crisis, Unemployment — totallygroovygirlfriday @ 10:47 am

Click here for a chart from zerohedge about the low employment participation rate. This chart has economic issues influencing it, but also demographic issues (baby boomers retire). And technology issues (improved productivity requiring fewer workers). And education issues (employment opportunities shift from industrial to informational age, but education is still in industrial age). groovygirl could go on. Just realize it is not just the economic depression that is feeding this chart, it has other influences. And because it has other influences, it will not be fixed by an improving economy. This is a paradigm shift.

Regardless of the cause: unemployed people whether they are on a fixed income in retirement or just have no or low paying jobs, they do not pay taxes, they do not buy things, they do not invest in large purchases (like houses), and they sell their stocks to live. They spend whatever money they have an essential living expenses. And if they are older, they spend money on healthcare. This is a feedback loop that will haunt us (and other first-world countries) well past the initial economic downturn.

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