Tags: Jan Hatzius | Goldman Sachs | jobs | retirement

Goldman's Hatzius: Decline in Joblessness to Slow With Retirement Rate

By    |   Friday, 13 February 2015 07:12 AM

Declines in the U.S. unemployment rate are likely to slow in the next few years because a smaller portion of workers will retire from the labor force, according to Goldman Sachs Group Inc.

“The unusually high rate of economically motivated early retirements in recent years has likely ‘cannibalized’ some retirements in future years,” Jan Hatzius, chief economist at Goldman Sachs Group Inc., said in a February 12 report obtained by MoneyNews. “The result is likely to be a slower pace of decline in the unemployment rate, even as job growth remains sturdy.”

Economists have been trying to explain why the labor force participation rate is at a 36-year low, and whether it’s a short-term trend that will change with economic cycles, or a long-term structural shift. Labor market weakness has been a major reason why the Federal Reserve has tried to stimulate the economy with record-low interest rates and quantitative easing.

The unemployment rate in January rose to 5.7 percent from 5.6 percent a month earlier as people re-entered the work force. Fewer people say they are not working because of discouragement, disability or going back to school.

Goldman Sachs estimates that the rate of people retiring early because they can’t find a job will decline in the next two to three years as the job market improves.

“The upward trend in the overall retirement rate is likely to slow somewhat further, and the impact of retirements on the aggregate participation rate is likely to become correspondingly less negative,” Hatzius said.

Meanwhile problems remain in the job market, despite the largely positive news for January. "America currently has 5 million vacancies waiting to be filled," said Mike Cassidy of The Fiscal Times. "So where are these 5 million jobs hiding?"

What we have is a "disconnect — persistent unemployment and underemployment despite lots of vacancies," he said.

It's largely a matter of the field in which you're searching for a job. "Goods-producing construction and manufacturing sectors are the worst places to be looking for work," Cassidy said.

"By contrast, high-skill, white-collar sectors are doing quite well. In finance, there's enough job openings for every job candidate." The difference is reflected in wages too, Cassidy said. "Once again, the winners are high-skill sectors, such as information and finance."

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Declines in the U.S. unemployment rate are likely to slow in the next few years because a smaller portion of workers will retire from the labor force, according to Goldman Sachs Group Inc.
Jan Hatzius, Goldman Sachs, jobs, retirement
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2015-12-13
Friday, 13 February 2015 07:12 AM
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