Lots of work but fewer want it as participation rate shrinks: Don Pittis

Unless there's a miracle medical breakthrough, themillennial generation will soon be able to stop worrying about baby boomers plugging up the job market and living in the nicest homes.

According to The Economist magazine, "Peak Death" for boomers will strike in about 2034.

"It will be very sad," said The Economist in its cheekystyle."But for house-hunters it will be a help."

While U.S. statistics show older people increasingly hang onto their houses as they age, the boomer effect on the job market will come much sooner and is already impacting North American employment.

Exit boomers

Friday's job's numbers for the month of January will provide the latestupdate.But data from Statistics Canada already shows that the gradual exit of those boomers from the labour force over the last ten years is having an impact on the economy that has never been seen before.

While this long goodbye has been predicted and feared for decades by demographers, there are some things about the numbers that were not foreseen andare harder to explain, saidEtienne Lal,who teaches laboureconomics at the Universit du Qubec Montral.

"Both in the U.S. and in Canada, the labour forceparticipation rate has been falling over the past ten years, but the underlying reasons are quite different," said Lal, a specialist in how labour markets change over time.

While Britain, the U.S. and Canada all experienced a baby boom as soldiers came back from the Second World Warand started families, the size of that demographic bulge is subtly different in the three countries. For instance, "peak death" for Canada may come a bit later than for the U.K. asmentioned in The Economist. Canadians generally live longer.

Also in Canada, theadoption of the birth control pillfive years after the U.S. means the boom here lasted longer.

According to the way Statistics Canada makes its calculations, the notion of participation is based on the number of peopleavailable for work out of the total population 15 years old and above.

Work till you drop

During the decades that Canadian statisticians have been collecting the data, the participation rate has varied in a relatively narrow range between about62 and 68 per cent, usually depending on the economic cycle. Recession and rising unemployment meant falling participation.

Things like disability or extreme age,extreme wealth or even laziness have always kept a certain percentage of the population out of the workforce.

There are examples of people who work until they drop, but that is unusual. So as the baby boom bulge works through the population like a hamster swallowed by a snake, it is completely reasonable for the labour participation rate to sink

The surprising thing, saidLal,is that the decline inparticipation by workers 55 and over is not happening nearly as fast as statisticians had expected.

Better educated, healthier and in demand due to a skills shortages, in the last 20years participation by the oldest group has risen from 25 per cent to 40per cent.

So if only part of the decline can be described by aging, where have all the other workers gone? In Canada, one hasto look a the other end of the age spectrum. The missing 0.4 per cent havedisappeared from the groupunder age 25

"Among those who are non-students, the labour participation rate has been flat over thepast ten years," saidLal."So what is going on is decreasing labour participation by students."

For Canada, that's like money in the bank for the economy because they will eventually come out with high-level skills. The story south of the border is much worse.

Male deaths of despair

"The thing that is very different between the two countries is changes in labour forces participation among prime age workers," saidLal,referring to the 25-54 age group."In Canada, this has remained roughly constant over the past 10 to 20years."

According to David Macdonald, senior economist at the Canadian Centre for Policy Alternatives one reason may be the much higher levels of education among younger Canadian prime age workers.

"Certainly, education levels for the most recent generations are extraordinarily high, the highest in the world," he said.

There have also been many more well paid jobs in the resource sector as a percentage of the Canadianpopulation.

Another difference, saidMacdonald, may be the low minimum wagein many parts of the U.S. that fail to convince the long-term unemployed to look for work or to keep working once employed.

Tammy Schirle, director of the Centre for Economic Research and Policy Analysis at Wilfrid LaurierUniversity, saidCanadamay yet face some of the same problems as the U.S.

She saidprime age male participation rates have been flat. She worries workerswith lower education, such as those recently pushed out of the oil industry, may follow the trend seen in the U.S.

The saving grace for keeping employment strong in Canada'score age group, and among aging boomers? Women, she said.

"What you see as a general trend is that women's participation rate had a very steep incline," saidSchirle, studying a graph beginning in the 1970s.

"They continued to increase from the 1990s until now, " she said. "They have been rising steadily."

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