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February 15, 2012

Unemployed Youth Being Crowded Out by Older Workers: Thanks Federal Reserve!

Thanks to the exceptionally low interest rate policy of the Federal Reserve, workers age 55 and over are finding it more difficult to retire. This is because in some cases they are finding the returns on their fixed assets to be two or three times less than what they were before the recession.

So, is this older generation crowding out the younger?

While this chart is informative, it actually isn't very helpful. Trends of employment for the 16 to 19 and the 20 to 24 age groups have changed with more people going to college, living at home, etc. However, the age 25 to 34 group is more consistently expected to be working. Therefore, we've created another chart of the unemployment rate gap between the age 25 to 34 group and the age 55 and over group.

The gap in unemployment between the 25 to 34 age group and the 55 and over age group is at a 20 year high. While this may seem like a possible short term trend, it has long term consequences. It is generally accepted by economists that the age 25 to 34 group is going to work longer in order to have an affordable retirement. How much more is this impacted if this generation group has more difficulty finding employment?

With Social (in)Security and employment (in)security, how much more do we need to ask of our younger generations?

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