Only Retirement-Age Whites Gain Jobs Share
For Whom the Bell Tolls
Over two years ago Fed Chair Yellen suggested that retirees take part-time jobs to make ends meet. That looks to be essentially what has happened.
But for the prime-working-age population (25-54), the employment/population (E/P) ratio has declined for Whites, Asians and Hispanics, but increased for Blacks, since the November 2007 peak in employment. As a result, though the percentage employed is still lower for Blacks than for Whites, the gap is less than two-thirds of what it used to be nine years ago.
Since that high-water mark in employment, the experiences of different racial/ethnic groups has diverged by age group. In fact, for those below 45, the E/P ratio has fallen since 2007 for all age groups by race/ethnicity, except for Blacks in the under-25 and 35-44 age groups.
For workers in their prime working years, the most experienced – those in the 45-54 age group – have seen the E/P ratio fall since 2007 in the cases of Whites and Asians, while rising for Blacks and Hispanics.
But for those aged 55 and over, the E/P ratio has improved since 2007 for every group except Whites aged 55-64.
In fact, for Whites, the E/P ratio has declined since 2007 for all age groups but the oldest workers – those aged 65 and over – where higher percentages of all four racial/ethnic groups are now employed.
Let Them Eat Cake
This may not be entirely accidental, in view of Janet Yellen’s congressional testimony a couple of years ago. Referring to the Fed’s triennial Survey of Consumer Finances – which showed the inflation-adjusted median family income shrinking by one-eighth since 2004, Ms. Yellen expressed concern about “lower-income families without assets” that “can end up, very suddenly, off the road.” She therefore advised them to “take the small steps that over time can lead to the accumulation of considerable assets.” She did not, however, explain how they were to accumulate these assets, in light of falling incomes and zero interest rates.
As we pointed out over two years ago (U.S. Cyclical Outlook, September 2014), this uncomfortable disconnect between theory and reality also came out during her Senate confirmation hearings in the fall of 2013. Asked to “explain to the senior citizen who is just hoping that CD will earn some money” the impact of “a policy that says, for as far as the eye can see … keep interest rates low,” she replied: “I understand … that savers are hurt by this policy, [but] savers wear a lot of different hats … They may be retirees who are hoping to get part-time work in order to supplement their income.”
In essence, despite a zero interest rate policy that mainly helped the wealthy, struggling families with falling incomes were advised to take steps to accumulate “considerable assets,” with retirees taking part-time jobs to make ends meet. Let them eat cake, indeed.