"Low-Quality" Work Dampening Boomers' Retirement Prospects. NewsWire

NEWSWIRE: 1/7/19

• A new analysis shows that nearly 8 million Americans age 55+ are either unemployed or stuck in “low-quality” jobs, which tend to be low-paying positions devoid of benefits. Disguised by the buoyant recent jobs numbers, elderly underemployment denies older Americans the safety net they need as they approach retirement. (The Wall Street Journal)
• NH: At first glance, these worries seem misplaced. The unemployment rate among Americans age 55+ is at a near-record low (2.9%). The labor force participation rate of seniors has been surging over the past decade: Altogether, there are over one million Americans age 65+ who are working today who would not have been working at the LFP rates of twenty years ago (see: "Are Retiring Boomers Suppressing Wage Growth?"). And average annual real wage growth among senior workers since 2007 (3.5%) has been vastly higher than wage growth among younger workers (under 1.0%). So what's all this Boomer bellyaching?
• We need to look more closely. In fact, a lot more Americans age 55+ are working today because Boomers are in greater financial need than the last two generations to reach this phase of life. What's more, those individuals who are in greatest need (least skilled, least educated, poorest health) are the least able to remain employed; conversely, the high-end professionals in their 60s and 70s are the ones who are putting off retirement the longest. That's why the average senior wage has been rising so fast. It's a selection effect. In other words, yes, a lot more Boomers are working, but those who most need the income are not the ones working more. Instead, they are retiring early on DI, scraping by on nothing, or taking any hourly job available (see: "Why Are Seniors Flipping Burgers?").
• So what explains the Boomers' great financial need? So many forces. Middle-management downsizing. Shallower wage trajectories and rising wage inequality. Lower lifetime savings rates. The disappearance of DB pension coverage. Failure to enroll in or roll over voluntary pensions (like 401(k)s). Eroding Social Security benefit formulas. Less health care coverage. Higher health care costs. Higher rates of chronic and emotional illness (see: "Boomer Malaise" and "All the Lonely People"). Higher divorce rates. More expenses incurred on behalf of their kids, especially for education. Much greater indebtedness. And an explosion in personal bankruptcy rates (See: "The Old and the Bankrupt"). With each passing year, btw, this problem will become more acute as we see late-wave Boomers hit their early 60s--and early-wave Xers hit their early 50s.

• A survey of Democratic leaders in Iowa, the starting line for 2020, revealed strong support for the idea of a young standard-bearer—but no consensus on a frontrunner. Asked to comment on contenders like Bernie Sanders and Joe Biden, the Democratic chairwoman of one county said flatly: “They’re all too old. It’s not white bread America anymore; we’ve got to get with the program.” (The Wall Street Journal)

• NH: The bimodal age distribution of Democratic House members (see: "The 2018 Midterms: A Tale of Two Americas") attests to the generational challenge facing the Democratic Party. In the House of Representatives, Democrats are disproportionately either early-wave Boomers and late-wave Silent (age 65 to 85) or young adults (under age 40, mainly Millennials). In the House, you have the peers of House Speaker Nancy Pelosi, Party Whip Steny Hoyer, and Financial Services Chairman Maxine Waters (average age: 80). And, on the younger extreme, you have the new surge of 19 newly elected Democratic House members (mostly women) age 40 and under. (See chart in "Does the Democratic Party Need a Facelift?")
• Among presidential aspirants, this pattern is matched by an unusually dense crowd of possible 70-plus candidates (Joe Biden, Bernie Sanders, Jerry Brown, and Elizabeth Warren) and another dense crowd of Millennial enthusiasts mostly too young to run. Filling the vacuum in between are several high-profile, first-wave Xers (Cory Booker, Kirsten Gillibrand, and Kamala Harris). But my bet is that the party will either go all the way old (with Sanders or Warren) or all the way young, with last-wave Xers like Beto O'Rourke or charismatic up-from-nowhere young congressmen like Joe Kennedy III or Seth Moulton. Stay tuned.
• A new crop of apps enable consumers to choose their next movie, TV show, or purchase based on user recommendations. Such apps are a perfect fit for Millennials, who have long sought out advice from their peers in the form of Amazon and Yelp reviews. (Cassandra Report)
• NH: In an online world in which anyone can say anything for free, how do you find a review that isn't phony, doctored, or paid for? In other words, how do you find an opinion you can trust? Slate calls this the "cheap talk problem." Companies are implementing expensive AI filters and reviewer credentialing to try to solve it. But maybe the best answer is to find a way to limit the universe of reviewers to real people who are actually "on your graph" (as Mark Zuckerberg would say). That's the purpose of these nifty new apps: The Spoke, Likewise, and Masse. Milllennials are more likely to read and be swayed by reviews than older generations. Maybe this way they'll be more likely to trust them as well. (See: "Star Searching.")
• An investigative report documents the collaboration between Chinese tech giant ZTE and the Venezuelan government on the latter’s new nationwide “total tech” system. Venezuela’s widespread rollout of a smart national ID card (which critics fear will be abused by the Maduro regime as a means of social control) would not have been possible without China’s total tech vision and know-how. (Reuters)
• NH: Big Data? Meet George Orwell. The name of the identity system is "the fatherland card" ("carnet de la patria"). What's even creepier than the "Social Credit System" China is developing for its own citizens (see "The Rise of 'Total Tech'") are China's efforts to export it abroad to friends and allies. When we think about China's global financing initiatives like Belt-and-Road, we have to remember that they serve many purposes. They generate export demand for China's capacity-burdened infrastructure firms (including state-owned ZTE). They create political dependence when the debt can't be repaid, a strategy sometimes known as "debt-trap diplomacy." They bribe strongmen by giving them personal backdoor access to the money. And, yes, they fortify these strongmen--we're talking here about the Venezuelan caudillo Nicolás Maduro--by giving them the technology to secure and reinforce their rule.
• Op-ed columnist Jennifer Rubin mourns the passing of the G.I. Generation, which lost several prominent members in 2018. Rubin suggests that we all live by the moral code of the G.I.s: “Don’t whine, be curious, serve others, and [remember that] ‘it’s not all about you.’” (The Washington Post)
• Air France is considering shuttering Joon, its trendy, Millennial-geared airline. The failed experiment is evidence that when it comes to Millennial branding, substance and cost-savings (Joon is pricier than other budget airlines) are more important than flash. (Vox)
• NH: We had mixed feelings when we first reviewed this initiative (see: "Air France Targets Millennials"). And Air France's failure to bring prices down to the level of discount airlines pretty much ensured its failure. Marketers should keep in mind that most Millennials do not perceive a deep cultural divide between themselves and their parents' generation. They share similar tastes in clothes, music, and movies--and indeed a rising share of Millennial young adults see or talk to their parents daily. So a pure "lifestyle" pitch predicated on generational alienation has limited potential. Such an approach had much better potential with Boomers when they were young, as witnessed by Braniff International Airlines' generally successful effort to launch a "cool" air service back in 1967 ("the end of the plain plane"). It helped that airlines at that time were not allowed to compete on price. But more importantly, that was a different generation. And a different time.

• A new Spotify program enables aspiring artists to upload music directly onto the platform without the involvement of a third-party label. The program simultaneously liberates small-time artists and concentrates more power in the hands of the streaming giant, which now gets a larger share of the royalties as a de facto label itself. (Bloomberg Businessweek)

• NH: As we wrote in "The Battle of the Streaming Services," the outlook for Spotify is challenging. Threatened by giants who are ramping up their own streaming services (Apple, Google, and soon perhaps Facebook), Spotify is struggling to expand market share, generate a profit, and maintain multiples in a price-conscious, commodified industry. One competitive edge that it enjoys is close relationships with thousands of young and emerging artists. As we predicted, Spotify is now trying to exploit that edge. The problem? It will be years before this approach can hope to generate revenues that compete with the established artists already owned by the big labels. Spotify may not have that kind of time.
• The British Army’s latest recruitment campaign plays off of Millennial stereotypes, praising the compassion and confidence of “snowflakes” and “selfie addicts.” The campaign, which emphasizes belonging and the drive to make a difference, is one we can get behind, though it’s being met with dismay by some older veterans who consider it way too warm and fuzzy. (The Washington Post)
• NH: The campaign is generally on target. More than "choices" or "adventure" or "a career"--to cite appeals that worked well for earlier generations of youth--Millennials above all want to know that they're needed. And these ads address that theme pretty well. But they could have junked the whole snarky "snowflakes" and "selfie" language. That approach is a big turnoff for older generations, and it does nothing to attract Millennials themselves. 

• Business Schooled, a new podcast from Reddit co-founder Alexis Ohanian, profiles Gen-X and Boomer entrepreneurs. In true Millennial fashion, he seeks advice and life lessons from older business owners (including his dad)—who, as he recognizes, get less media attention than the Zuckerbergs of the world but are actually starting more businesses. (Quartz)

• NH: We have often pointed out that business formation rates over the last fifteen years have actually fallen for Americans under age 35 even while they have risen for older age brackets. (See: "Declining Business Dynamism: A Visual Guide" and successive reports by the Kauffman Foundation.) Ohanian, himself a Millennial, understands this. Which is why he wants his peers to listen more to Xers and Boomers discussing their own experiences. That is not to say that he always agrees with older generations. A true Millennial, he castigates Xers and Boomers for demanding that you work yourself into the ground and destroy your life in your effort to create a new business. He calls this "hustle porn." He insists you can start a successful business while leading a balanced life.
• McDonald’s recently hosted a 6 AM rave in Los Angeles—complete with live music and free breakfast sandwiches. It was the quintessential Millennial event: an alcohol-free early-morning dance party sponsored by a big corporation that cost nothing to attend. (Eater)
• NH: According to Daybreaker, this is nothing less than a global youth movement, currently on offer in over sixteen cities. No coffee, no alcohol, no drugs. Just wake up at dawn, gather together at a club, and have fun dancing before checking in at work. You get some exercise. You reset your circadian clock. You meet new people. And you start your day feeling just a bit better about life. 

DID YOU KNOW?

Job-Seekers Behaving Badly. The buoyant job market has benefited workers and the economy at large. But it has been a drag for one group in particular: recruiters. In today’s historically tight labor market, job-seekers now have all the leverage. Recruiters, who earn a commission for every job opening they fill, have borne the costs of this market shift. These professionals report escalating levels of bad behavior displayed by job-seekers—ignoring e-mails, blowing off interviews without notice, and even “ghosting,” or vanishing without a trace in the middle of the application process (or even after being hired). Of course, there are two sides to the story. Some argue that this market shift serves as just punishment for employers who use pressure tactics to land job candidates. Gabrielle Papa, who walked away from an interview with a company that illegally asked for her salary history, says, “I felt very empowered that I knew I could walk away from something that made me feel uncomfortable.” In any case, given the rising odds of a U.S. recession sometime soon, this leverage shift could soon reverse.