Forget Class-Warfare; It's Age-Warfare We Should Worry About

Tyler Durden's picture

As class-warfare implicitly breaks out - trumpeted by our political leaders - it seems that there is another, much more relevant, trend that is occurring that strikes at the heart of our nation. With Friday's jobs number still fresh in our minds, Citi's Steve Englander takes a look at one small slice of the demographics subject and found a rather concerning and little discussed fact. Employment-to-population ratios among older individuals have gone up in recent years, in contrast to the so-called prime-aged 25-54 cohort, where employment-to-population is much lower than earlier. It seems the real divide in this nation is not between rich and poor but old and young - as the 55-plus (and even more 65-plus) are forced to stay in the workplace as retirement remains a dream (thanks to ZIRP and Keynesianism's excess crises from boom-to-bust leave median wealth well down - even if the rich are 'ok').


Via Steve Englander of CitiFX,

Figure 1 shows the percentage point change in the employment to population for the three age groups since 2007.


One characteristic which is striking is that the employment-to-population ratios for older people based very quickly after the financial crisis hit. In fact, it barely moved in 2007-09 among the 55+ age group. The trend in the 25-54 age group is more sideways than up so far.  (As a side comment, it suggests that the drop in the overall employment-to-population probably has a modest demographic component since the lower participation rate of the elderly is being offset by the additional jobs they are finding.)


It is hard to tell what is driving this upturn in older worker participation. We suspect it is a combination of:

  1. pure demographics – older people are healthier than in the past;
  2. structural retirement issues – it is hard to retire at 65 (or younger) and beyond 80 when the gross national savings rate averages around 15% and the net national savings rate around 3% (and negative since Q4 2008!);
  3. the wealth effect – even if QE3 has propped up asset prices, personal wealth is still far off where it was at the beginning of 2008.


For the USD the increase in older people’s employment is probably a modest positive rather than a negative. Compare two situations:

  • a) early retirement and consumption out of wealth and;
  • b) later retirement and consumption out of production rather than wealth.


The imbalance between national consumption and production (often called absorption) is lower in the second case than the first. If the trend to spend out of income rather than wealth continues, the US current account balance would tend to fall. That said, the actual USD impact thus far is probably modest since the actual shifts are small. A sharper increase in participation rates among the elderly could contribute a stronger USD effect.


The second conclusion is that this may be another avenue by which QE weakens the USD. A big positive impact of QE is via the wealth affect because QE forces lower the discount factor that is applied to any stream of returns. If this pure wealth effect supports consumption because individuals who feel richer consume a portion of their wealth, we have exactly the opposite effect – more consumption but no additional production. This would increase external funding needs. Once could also argue that the lowering interest  rates also discourages the inflow of capital, so successful QE will very likely be a USD negative, even if the weaker USD is not the explicit intention of the Fed.(As a last concern, there is the dependence of this wealth on a low discount factor rather than faster topline growth, but we will leave this aside for now.)

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
hedgeless_horseman's picture



And we would have gotten away with it too, if it wasn't for you meddling kids!

Gene Parmesan's picture

I still don't get what the issue is. It seems like a modest proposal to me.

malikai's picture

Age is a class. A class just like any other.

Anyway, as long as the proles are fighting amongst themselves, the owners are happy.

Now, carry on.

hedgeless_horseman's picture



We have known the solution since 1976...

P.A. System: Capricorn 15's. Born 2244. Enter the Carousel. This is the time of renewal.
[Crowd applauds]
P.A. System: Be strong and you will be renewed. Identify.
[Capricorn 15's show flashing crystals]

nufio's picture

the chart is % point increase/decrease. This looks like a statistical ploy to make a point. In absolute number the > 55 would not compare to the other tight range of 25-55.

The way i read it is that all jobs are disappearing except for the ones that need a lot of experience that is not seeing much change. 

The Alarmist's picture

The trend has another angle ... the older workers have better knowledge, skills, abilities, and work habits, and have been beaten down to the point where the unit costs for their labor (which used to be a key reason to kick the oldsters out of the workforce) are being driven down to levels competitive with the lesser skilled, poor work habit youngsters.

bank guy in Brussels's picture

Yes, over-55 labour does have better work habits and reliability ...

But we do need a bit of a nap every day to be in top form

Time for siesta, amigos, back to work shortly!

Aegelis's picture

"You tell everybody. Listen to me, Hatcher. You've gotta tell them! Soylent Green is..."

LMAOLORI's picture



They will find ways to get rid of the old people

Get Ready For Obamacare's Medical Rationing

AGuy's picture

"They will find ways to get rid of the old people"

Or perhaps they will find ways to enslave the younger people to pay for older peoples entitlements. Consider the median aging of  politicans, Few or none are under 30. Also consider which age group votes religiously (hint: older people) and which age group has the lowest voter turn out (hint: younger workers). Which age group has big lobbiest working for them (older workers: AARP, Big Pharma, Unions), Which big lobbiest groups are looking out for younger workers? (hint: None)

Medical Rationing? Lets take a look. Grandma has AARP and Big pharma looking out for her interests. On the other hand, Younger workers that can't afford health insurance, don't have any entitements, and don't have any lobbiest are more likely to be on the receiving end of rationing, not grandma . Put simply, the Old will keep getting older, and the young will die young!


sessinpo's picture

The article's title is incorrect. The warfare is always economic. Age has nothing to do with it. To put it another way, if the lower ages were doing well and had lots of cash, they wouldn't give a crap what their elders were doing. But the younger generations are not and thus, fighting for the same mediocre jobs.

The fact that more older Americans are having to work beyond 65 is a symptom of a failed economy whereas people thought there was a "liberal" social safety net.

And now I await attacks from liberals on my comment and that is fine. I will stand my ground as I have in the past and my point will become more evident as as SS and Medicare become bankrupt. Social liberal programs are pyramid schemes and thus eventually always go bankrupt. You can give me all your emotional ethic points but facts are facts.

Chuck Walla's picture

Us old folks can afford better rifles, too. SO watch yer ass.


iDealMeat's picture

We're going to continue passing the debt on to the next gen..  The least we could do is nullify all patents so they can "rebuild" and earn something in the process..

or..  nullify the debt..

Gene Parmesan's picture

Sorry - I think my 'modest proposal' comment may have been a little too subtle.

LawsofPhysics's picture

Do you really need to "nullify" something that was created out of fraud and cannot be repaid?  

There are many successful families that came before you and yours, they want their rent (money for nothing), now pay up.

Turns out, humans are no smarter than yeast after all.

iDealMeat's picture

I agree the whole thing is a ponzerific fraud.  But, all consumers are compliant in perpetuating it through participation (Thanks to the magic of Fractional Reserve Banking). And we have no choice, or alternative..


Nullifying all Patents (and I mean ALL of them)  is an equitable reset.. 

Urban Redneck's picture

if you destroy the incentive to innovate there will be no innovation except the minimum driven by necessity

iDealMeat's picture

Necessity is the mother of all innovation.


GAAPpreNixon's picture

Turns out humans are no smarter than yeast after all

Yep. Is that you, Giordano Bruno avatar Futilitist?


GAAPpreNixon's picture

Those "meddling kids" not having jobs is the perfect storm for a population with the motive and energy to create a revolution. The fed REALLY stepped on their dork with this one. The 25-45 crowd MUST be employed or the safety of elite assets along with government backed structures like universities are compromised.

The fed, acting as the lackey of predatory capitalism (actually nanny state socialism for the elite - too big to fail bullshit) has effectively destoyed the positive motivations in the young born of belief in a meritocracy requiring advanced education, a home mortgage and submission to corporate "rules" of ethics free attitude towards predation. 

The young, their dreams of getting on the greed bandwagon fully dashed, now resolve to bring down a system that is anti-human (or simply anti-them). The positive belief in all the institutions that nurture the predatory and cruel system are so ingrained that it takes several years to remove them from the values of the young. BUT, the young, having been brainwashed for less time and having received nothing good from the system the older cohorts worship, will take the system by surprise with their synchronous rejection of it.

Once a young population is alienated from a system, the system falls, PERIOD. Hubris among the elite has, in the past, prevented timely action to avert a period of massive upheaval.

Bernanke has about a year or so to stop the presses, allow interest rates to rise, home prices to tank until they reach GAAP affordable levels of 2.5 times average annual NET income for average home total price and fund a massive war profiteering free renewable energy infrastucture public works project as big or bigger than the interstate highway building in the 1950s to save his and his elite friend's  ASS.

Are you listening, Mr. Bernanke? Or will it take your son's medical knowledge to explain to you that your foresight is somewhat impaired by having your head somewhere between your descending colon and rectum?

"But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime."

Frederic Bastiat, 1850

RacerX's picture

25-54 is a heck of a wide age range.

Alpo for Granny's picture

Bring it you young whippersnappers! Don't think I haven't been stacking lead along with my canned delicasies!!

americanspirit's picture

You rock Granny - BTW the word whippersnapper refers to the nearly universal behavior of two year old boys who go around continually snapping their little whippers. Just thought I would add to the dignity of this discussion.

Cognitive Dissonance's picture

Prime age for commercialism to capture their minds.

<Or is that 1-5?>

Skateboarder's picture

I was raised without TV from 1-5. Deep down in the depths of my mental structures, I know in comfort that there exists no mention of brands or corporations, or of desire to consume unnecessarily. My grandpa made sure of it.

The Alarmist's picture

How did you turn into an adult who can write complete sentences without the benefit of Big Bird?

aheady's picture

What happened after that?

Skateboarder's picture

@ Alarmist too.

I started reading the World Book by age 6, Encylopedia Britannica, Jules Verne, and all the classics that children tend to like. Moved on to Crichton after that - I love well-researched almost-real Scifi.

The writing skills came with hard work - taking notice of my own sentence strucutre, usage of certain words, etc. Essentially, I taught myself everything I know. As a late Gen-Xer / early Gen-Yer, there are no bounds to my appreciation for having been one of the last waves of children to grow up without any internet at all.

I know I'm not old enough to say it, but "kids these days..." hahahah.

RacerX's picture

Might be showing my own age here, but I remember when Christmas stuff in the stores didnt' come out until after Thanksgiving.

goat's picture

Verne Vinge is ths shiznit.  IMO the best Sci-Fi out there now.  "A Deepness in the Sky" and "A Fire Upon the Deep" will reward you immensely. 


Can I get a witness brothas and sistas?!?

americanspirit's picture

Good for you Skateboarder - and your grandpa. I'm probably your grandpa's age - didn't see a TV till was 15, grew up listening to radio and reading. Gotta admit though - some of those jingles stuck in the mind pretty well. I still wonder where the yellow went.

darteaus's picture

Surely no politician would exploit the situation where a diverse working population is taxed at higher and higher rates to support a middle class lifestyle for an aged white population.

Dr. Richard Head's picture

The good news is that once the system cracks the purchasing value of the white hair's Social Security and Medicare, they still will not be healthy enough to deal with police batons in their face.  /sarc

Alan "The Maestro" Greenspan - "We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power."

Promises, promises.

Bicycle Repairman's picture

Yes, playing the "age card" for TPTB is not enough.  Let's have the "race card" as well.  Anyone want to counter with a comment on welfare now?

Wait.  Women live longer, but this doesn't fit any current political paradigm for "gender warfare".

sessinpo's picture

'Surely no politician would exploit the situation where a diverse working population is taxed at higher and higher rates to support a middle class lifestyle for an aged white population."


You almost have it correct. You exploit a diverse population (working or not) and tax the middle class to higher earners to support the lower class. Statistics support this trend.


Now just imagine policies that take away welfare subsidies and force people to work, even at minimun wage, and work their way up to better economic conditions. Sure, some will fall through the cracks. But the vast majority would see great improvement. But that would require people to be independent and strong - a pure fantasy and certainly nothing either of the main parties really want.

Cognitive Dissonance's picture

Damn those demographics. Damn then to hell.

BTW is there an upper age limit to student loans? Cus I don't have the money or income (NINJA?) to retire and I have no marketable skills.

<More to the point, do I assume my student loans die with me?>

-1Delta's picture

Speaking of demographics..... i am sure they will (1) get social security and (2) the are 100% in their 401ks buying equities today.....and i am sure grad school will fix our debt problem (like we need an another  accedemic bernake)

FED will buy student loans next i guess

toady's picture

I know, right?

These demographics don't reflect my reality. 300 55 year old plus people I used to work with have all been laid off in the last few years. Maybe I'm an outlier? I guess a lot of them are greeters at Walmart now.

More likely I'm just out of touch... I don't know many 24-54 year olds, even though I'm 48

Another point; this points at the boomer divide. All the 50+ people that are still working are boomers!

bank guy in Brussels's picture

That is one hilarious South Park clip you link there ... American English at its finest

They took our jobs! «  ... They turk arrr jaarbbs! ... »

MilleniumJane's picture

@ Toady:  I think you're right.  Personally, I am seeing some ageism against older people.  The ones who are 50+ and out of work are really having a rough time finding any employment.  At least 50% of the people who have applied for an open position at my work are over the age of 50.  This is a shit job too, in the warehouse, 8+ hours on your feet and very physical.  I can see why the Boomers are white knuckling the jobs they have and not leaving their current positions.  One Boomer woman I worked with applied for dozens of jobs over the course of 2 1/2 years before finding a position elsewhere.  What I choose to see in this article is that these are desperate times for everyone who are not in the top tiers of income level.  It doesn't matter if you're young and old.   

The Alarmist's picture

No, CD ... no upper limit.  But make sure you go to one of those cheap community colleges so you can pocket as much of your loans as possible.

Cognitive Dissonance's picture

Hell.....I need a place to live. I'm living on campus and going co-ed. :)

<Let's see how Mrs Cog feels about that.>

americanspirit's picture

Damned interesting point CD - I'm almost 72. wonder if I could get a student loan in cash, buy me some silver, ignore the demands for repayment, and then die on the bastards after living off my silver for a few more years. Think I'll check with Univ of Phoenix. Maybe enroll in a few advanced scatology courses.


A Lunatic's picture

25-54 no longer wish to participate in this ponzi scam.

Free range humans, bitchez..........

otto skorzeny's picture

we could serve them up with some fava beans and a nice chianti but those old bastard are sort of chewy