It’s Wednesday and a few items have piqued my interest in the last few days. I’ve been asked to comment on the Bank of Japan’s announcement yesterday to expand the scope of yield curve control for 10-year JGB yields. Some siege (meaning aggressive pressure or intimidation in English) claimed the decision was a sign that private bond investors had finally won and was the final nail in the coffin of Modern Monetary Theory (MMT). If the sender is a cartoonist, they’re hilarious. Otherwise, it expresses reluctance to face reality. It’s called yield curve control for a reason. Anyway, I think I’ll analyze this decision for my readers tomorrow. But today, I saw two numbers that demonstrate the impact of Covid and inflation on two different labor markets. In Australia, as older workers have flooded the labor force in recent years, they are now calling it the “great unretired” – allegedly happening because of “more favorable workplace conditions”. I think more than that. On the other side of the world in chilly Britain, the impact of Covid (“exacerbated”) appears to be partly responsible for the “exodus of more than 500,000 UK workers”, meaning the ability to grow is now more limited. These are interesting trends to ponder.
The so-called big non-retirement
The “Melbourne Age” published a report today (December 21, 2022)—— ‘The Great Not to Retire’ Accelerates as Unemployment Hit Record Low – Essentially thinks:
Historically low unemployment and more flexible work arrangements since the pandemic have pushed tens of thousands of seniors back into the workforce, a trend that one economist dubs “the great unretirement.”
The article says:
In the three years to October 2022, almost half a million people entered the Australian labor force. But amid closed borders and limited supply of foreign workers, there has been an extraordinary shift in demographics, with four in 10 new workers joining the workforce. 55 years old.
In fact, between January 2020 and October 2022, 430,900 people in Australia have entered the labor force.
The following age segments are relevant:
1. 15-24 years old: -97,600.
2. 25-34 years old: -39,700.
3. 35-44 years old: 260,700 people.
4. 45-54 years old: 97,600 people.
5. 55-59 years old: 13,000.
6. 60-64 years old: 76,700 people.
7. Over 65 years old: 120,100 people.
8. Over 55 years old: 209,900
Therefore, from January 2020 to October 2022, the population over the age of 55 accounted for 430,900 people, and the actual proportion was 48.7%, which is much higher than that stated in the article.
The table below shows the share of employment change by age group between January 2020 and October 2022, and also shows the share of the labor force by age group as of October 2022.
Comparing the two shares for each group gives us an idea of the proportion of each group’s employment gain relative to their overall “weight” in the labor force.
The status of teens has improved, but those in the next three age groups – 20-24, 25-34 and 35-44 – have regressed badly.
Older prime workers (45-54) get jobs in proportion to their labor share (approximately), while the 55-59 age group regresses
What has really shifted is the over-60 group, which accounts for 26.6% of new (net) jobs created since the pandemic began, but only 11.3% of the workforce.
This is the trend the article refers to.
| age cohort | labor share | October 2020-2022 |
| 15-19 | 6.2 | 15.0 |
| 20-24 | 9.1 | -7.1 |
| 25-34 | 22.3 | 3.5 |
| 35-44 | 22.5 | 39.0 |
| 45-54 | 19.8 | 18.1 |
| 55-59 | 8.3 | 4.9 |
| 60-64 years old | 6.4 | 11.2 |
| 65+ | 4.9 | 15.4 |
The first graph shows employment shares by age from January 1980 to October 2022.
There have been some fairly noticeable changes in that time, and trends dubbed “recent” have actually been around for years, including an increase in participation by older workers and a decline in participation by younger workers.
I did not control for these graphs of population aging – which would cause these changes – but not the main effect.
We are currently conducting analyzes to break down the factors driving these trends, including adjusting for changes in the age composition of the workforce as it ages.
Remember, when the mainstream media cited the increase in the share of part-time jobs since the 1970s as evidence of women’s increased flexibility and ability to achieve so-called work-life balance, the reality is quite different. Temporary workers, increased job insecurity, Growth of precarious classes and the underemployed.
Same story here.
Workers and households are being severely squeezed by stagnant wage growth, rising cost of living pressures and declining public services (privatized healthcare – reduced bulk charges; rising public transport fares, etc.).
Many workers approaching retirement age or already retired suffered heavy losses during the global financial crisis, losing heavily in market-based pension funds and being forced back into the labor force due to a shortage of funds to fund their retirement .
On the other hand, employers face a dilemma when borders close in 2020 to prevent Covid-19 vaccinations in the population.
To keep growing, they have to find workers — because before the pandemic, they relied heavily on low-wage short-term visa labor from abroad.
With available worker turnover and relatively high rates of unemployment and underemployment, employers can pick and choose who they want.
Now, with the number of foreign workers yet to return and unemployment relatively low, employers must overcome their age bias and hire anyone they can.
That presents an opportunity for older workers trying to stay ahead of cost-of-living pressures, among other things.
But wait until the working-age population returns to pre-pandemic growth rates.
Then prejudice will kick back and ageism will once again put those older workers at a disadvantage in the face of increased numbers of foreign workers.
But Britain’s older workers are getting off the hook
UK Guardian article (20 December 2022) – Labor exodus of more than 500,000 ‘puts UK economy at risk’ – Demonstrating the ‘hidden’ costs of keeping Covid infection rates flowing through society.
The GBD staff thought they were smart enough to tell us all that we don’t understand the science, and they made it clearer that we just need to fence the elderly and vulnerable to get Covid out of those groups.
They never told us how this sequestration would be practical — for example, who would feed the residents of aged care homes.
Oh, and paramedics can quarantine too.
What about their children, partners and friends?
oh um.
and the rest of it.
But allowing Covid to spread throughout the population has seen long-term problems in so-called non-vulnerable groups, even if their initial infections were relatively mild.
That’s why I support (and support) the government’s extreme caution with Covid.
We still don’t know what the disease does to people, and evidence is mounting that it has unpredictable adverse effects in a very small number of people.
The Guardian article reports on a House of Lords analysis of the sharp rise in idling among workers in the UK.
Unlike older workers in Australia who disproportionately increase their participation and work, the article reports:
…Early retirement among the 50- to 64-year-old group was the largest contributor to the 565,000 increase in the number of economically inactive people since the start of the pandemic.
They identified the drivers of this trend as:
1. “Rising prevalence among working-age adults…”
2. “Changes in immigration structure post-Brexit…”
3. “UK’s aging population…”
The Office for National Statistics has published a report (19 December 2022) – Returning to the workplace – Motivations and barriers for people aged 50 and over, UK: August 2022 – investigation:
…the age group 50 to 65 who have left or lost their jobs since the start of the coronavirus (COVID-19) pandemic and are considering returning to work in the future.
It found:
1. “Sixty-one percent of those considering returning home were between the ages of 50 and 59; of those not considering returning, 33 percent were between the ages of 50 and 59.”
2. “Among adults considering returning, those who reported a mental or physical health condition or illness were more likely than those who did not report the coronavirus (COVID-19) pandemic as a reason for leaving a previous job (21 %) (11%).”
3. “Those who considered returning were less likely to afford unexpected but necessary expenses (61%), or to own their home outright ( 57%).”
4. “Money is an important motivator for returning people of all ages, especially for younger cohorts aged 50 to 54 (69%), those who do not feel they have the ability to find work (68%) or those who are paying off a loan or mortgage people (68%).”
So austerity is also at play in the UK, but the end result is not the same as what happened in Australia.
We need to investigate what causes these differences.
That said, another research question joined my queue.
Music – Ryo Fukui
Here’s what I’ve been listening to this morning at work.
In the 1960s and 70s, as Japan began to recover from World War II, it also experienced a certain cultural development in art and music.
A wide variety of local and hybrid music forms emerged and flourished.
It’s a similar shift to what happened in the west with the advent of R&B, jazz fusion, funk, and more.
Jazz in all its forms has indeed flourished in Osaka, although the city has given way to Tokyo as Japan’s jazz center.
One of the great jazz pianists in Japan is— Ryo Fukui – Died in 2016.
He is from Sapporo (Hokkaido) and made a name for himself at the city’s famous “Showboat” club, which he owns with his wife.
I first met him in the 1970s when he released his first album – landscape (1976) – This is a live recording at the Yamaha Hall in Sapporo.
It was a cult album at the time (meaning it was overlooked in America), but has grown in popularity in recent years.
The song we’re playing today is called—— horizon – on his second album – dream come true – Released in 1977.
Over the years, I have often returned to this album.
It was subsequently reissued (2018) as more and more people discovered the magic of his playing.
His band at the time was excellent:
1. Ryo Fukui – Piano.
2. Satoshi Denpo – double bass.
3. Yoshinori Fukui – Drum – Ryo’s brother.
Enough for today!
(c) Copyright 2022 William Mitchell. all rights reserved.
