Ageism in the Workplace Affects Multiple Generations-- Time to Sound the Alarm Bells --

The Millennials' Trap

By taking workers who are older than 40 but younger than retirement age (67) out of the workforce, or even by just forcing their income to be significantly reduced, the major burden of maintaining the economy for the general population, over the next few decades, will fall on the "millennial" generation.

It looks like age discrimination in the workplace is finally getting more public exposure. The video clip below, taken from the CBS "This Morning" program, provides a glimpse to this incredibly important issue, currently affecting mostly workers who are 40 years old or older. Seemingly, only older workers are being directly affected at the present time; however as we examine the facts more closely, we can see that the dire side effects of age discrimination are going to dominate the economy of all generations of Americans equally badly. In addition, let us not forget that everyone gets older day-by-day and the process of aging is irreversible. It is clear that employers lay off older workers in order to reduce the cost of labor and not because such workers do not bring great value to the business.

(Click on the above image to play the embedded video clip in your browser)

Studies of company layoffs, conducted over that last few years indicate that among workers older than 40 years, women are further affected than men as they get laid off at an earlier age. The most insidious aspect of age-based layoffs is the skewed statistics of executive layoffs. While most workers as well as low and mid-level managers are subject to age-based layoffs, the "executive class" in most companies enjoys great on-the-job longevity and even reaps benefits from employee layoffs. Such executive benefits are realized in the form "efficiency bonuses" that executives receive, due to their initiation of "head cutting" actions...

The Equal Employment Opportunity Commission (EEOC), which is the Federal agency, in charge of enforcing anti-discrimination laws in employment, seems to be very weak in pursuing age-based discrimination cases. However, the real culprit is the U.S. Congress, controlled by highly paid "special interest" lobbyists who insured that laws protecting age-based discrimination would remain weak and very difficult to enforce. Though there were several attempts to revise the laws and update the compensation that can be awarded to proven victims of age-discrimination, a long succession of proposed Bills to revise the applicable laws have met their silent death in the U.S. Senate. The latest of these proposed Bills in Congress is H.R.6811 - Age Discrimination in Employment Parity Act of 2018. A similar U.S. Senate Bill S.443 - Protecting Older Workers Against Discrimination Act remains buried in committee...

Among other things, the compensation levels awarded to age-discrimination victims remained unchanged since 1967. Due to the significant inflation that the U.S. economy underwent since 1967, the compensation amounts set for victims by the existing laws look completely ridiculous by today's standards and have never been indexed or revised. Consequently, very few employment attorneys are willing to take on the case of age-discrimination victims, since the litigation costs would typically exceed the monetary recovery expected after successful litigation. The outcome of keeping the current laws very weak, outdated and unchanged, results in employers firing older employees en-mass and with almost complete impunity. Legal challenges are very rare and Government enforcement of the laws through the EEOC is a long and convoluted process. Without a "sheriff" in town, employers are left unchecked to violate civil rights of older workers at will.

World Leading Economies 2030 GDP Projections
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Considering the demographic trends of the U.S. population over the next 20 years, we are going to see tremendous unemployment and poverty replacing the relative prosperity that we see today. As more older employees are forced out of the workforce or delegated to take significantly lower paying jobs, the U.S. economy, which is predominantly controlled by consumer spending (see table below), is bound to sink to levels never seen before. Considering that there are credible predictions for China (and very likely, also India) replacing the U.S. as the world leading economies by 2030, we have very little time to prepare for the future.

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You do not need to be an economist to understand that unemployed or low-paid workers may not have extra money to spend and consequently consumer spending will be sharply curtailed. This growing portion of the population will also not be able to contribute much to government revenue in the form of tax payments to finance necessary public services. Consequently, it is not hard to predict that a regenerative process of sinking of the U.S. economy is bound to happen sooner or later, if employment policies that utilize age discrimination are going to be left unchecked due to legislative neglect. Demographic trends cannot be waved off or ignored in the same manner as climate change, obviously they are mankind made...

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By taking workers who are older than 40 but younger than retirement age (67) out of the workforce, or even by just forcing their income to be significantly reduced, the major burden of maintaining the economy for the general population, over the next few decades, will fall on the "millennial" generation.

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Millennials currently form about 35% of the U.S. workforce and many of them are already heavily burdened by student debt. Expecting millennials to pay the tax money required to support the needs of a significantly growing older population is not only an unfair concept, but it also works against the common sense of enabling older workers to continue earning money to cover their needs on their own, all while paying taxes on their earned income.

Age discrimination in employment is therefore a corrosive practice that affects not only older workers; it affects younger workers and their economic future prospects, just as much.

It is time to break the glass and push the alarm button now, before a major crisis is hitting us in the face. Call your U.S. representatives and tell them that the time has come to install fairness and common sense into the U.S. labor policies and protect our civil rights.

--Dr. Flywheel

Additional References:

• Ageism Kicks Off After Tech Pros Hit 36: Startup Founders
• 1 in 5 millennials with debt expect to die without ever paying it off
• 20% of millennials in debt expect to die without paying it off
• 7 demographic trends shaping the U.S. and the world in 2018
• IBM insists it's not deliberately axing older staff. Internal secret docs state otherwise...
• The Federal Government is Investigating Intel Corp. for Age Discrimination Violations

Idiot GovernmentOregon State Idea of Engineering Is Not Keeping Up With The Times

It is a well known phenomenon that groups of professionals and specialized trade workers create a guild, with the intention of limiting competition and serving their own financial interest. Guilds do their best to retain the status quo and deliberately mount obstacles in the way of newcomers trying to enter a specific field of employment. This phenomenon existed for the last few centuries and served to enrich guild members very well, many times by recruiting governments to their aid. However, it is not clear if society at large is a beneficiary of this protectionist and restrictive concept and if restricting competition is a worthy cause for maintaining a viable economy in this day and age.

I was amazed to read an article in Motherboard entitled:
Man Fined $500 for Crime of Writing 'I Am An Engineer' in an Email to the Government.

I suggest for all of you to read the original article (see link below) and draw your own conclusions.

In summary, Mats Järlström, a private citizen with electrical engineering education, has written a well formed letter to his State Government. The letter specified facts about the shortcomings of traffic lights operations, providing important actionable information. Instead of responding to the good intentioned letter and fixing the problem, the State of Oregon, chose to pick on this Good Samaritan and nail him with a $500 fine for an obscure law violation. The State of Oregon claimed that Mats violated the law by declaring that he is an engineer, while he is not registered with the State.

Clearly, the State of Oregon is protecting the special interest of the old guilds through its actions and you can bet on entrenched interests doing their best to keep this situation forever. In these times, when innovation and science are open for all and new disciplines of engineering are opening up, the State of Oregon, in its official policy, is doing its best to keep us tied to the horse and buggy days and perhaps to the revival of the fur trapping and timber logging economy. Ancient regulations that do not keep up with the times, do not advance the interests of Oregon economy and will not create new jobs.

There is a good reason for the multi-billion budget deficit that the State of Oregon is facing for the next bi-annual budget, in spite of the high personal tax rates that the state treasury is collecting. The reason is the high cost of government. Part of this cost is apparently being spent on protecting the entrenched guilds constituency and the out of date policies of the pre-industrial revolution. For all of you who declare yourselves as "software engineer", or "electronics engineer", or "biochemical engineer", beware! The State of Oregon is coming to get you.

Read the original Motherboard article at: https://motherboard.vice.com/en_us/article/man-fined-dollar500-for-crime-of-writing-i-am-an-engineer-in-an-email-to-the-government

All the best.

--Dr. Flywheel

Healthcare and Self-employment

Most of the world's developed countries have a government sponsored single payer medical insurance system, separating entitlement for medical services from employment. A single payer system allows for better distribution of population risk pools and facilitates better cost control of medications and medical services. Demographic studies show that in all the countries where a single payer, government sponsored medical insurance exists, population life expectancy has been constantly on the rise.

The only exception in the developed world in its approach to healthcare is the United States. Interestingly, life expectancy of the U.S. population is the lowest (31st. place) in the developed world, according to the latest World Health Organization survey (see: https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy). Further, a recent articles published in the Wall Street Journal claims that life expectancy for certain groups of the U.S. population is on the decline (see: Life Expectancy for White Americans Declines).

Unfortunately, the closest effort to controlling runaway medical costs, while serving the population healthcare needs, has been the Affordable Care Act (ACA), otherwise known as "Obama Care". Since the U.S. spends more than any other developed nation in the world on healthcare (17.3% of GDP in 2014) there is big money to be gained (or lost). Since these costs are expected to increase dramatically, as the Baby Boomer population is entering retirement age, congress must deal with cost controls or face bankrupting the U.S. economy in the next decade. Interestingly, Canada with its single-payer healthcare system is managing to spend almost half as much as the U.S., while maintaining a 12th place in population life expectancy vs. the U.S., which is in 31st place.

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In spite of poisonous rhetoric that was frequently blasted by politicians during the last U.S. elections cycle,  Government sponsored medical insurance coverage seems to be more popular than ever before, even at its currently less than perfect form. It is becoming clear that as the number of self-employed individuals who are too young to be covered for medical insurance under Medicare, is increasing, popularity of the Health Exchange is rising. Such individuals are not covered through a large employer risk pool and therefore are forced to pay the very high premiums that most insurance companies charge for their individual coverage plans. Demographic studies show that the "freelance" (self-employed) segment of the U.S. domestic workforce, is rapidly rising and is constantly being under-served. With the expectation of rising automation in the workplace, due to Robotics and Artificial Intelligence the number of workers joining the ranks of the self-employed will balloon over the next 10 years. What will Congress do to deal with this population?

A recent New York Times article covers the issues associated with the rising popularity of the Health Exchange. The article is entitled: Health Exchange Enrollment Jumps, Even as G.O.P. Pledges Repeal.

To quote the article:

About 6.4 million people have signed up for health insurance next year under the Affordable Care Act, the Obama administration said Wednesday, as people rushed to purchase plans regardless of Republican promises that the law will be repealed within months.

The 6.4 million number represents an increase of 400,000 over a similar point last year. This data may contradict the notion of a "popular national mandate" to dismantle the Affordable Care Act , in favor of a GOP replacement plan. The increase in popularity of ACA medical insurance, facilitated through the Health Exchange, becomes even more interesting in view of almost across the board 2017 premium rate hikes that were imposed by most medical insurance providers, throughout the Nation.

In another NY Times article, ROBERT H. FRANK who is an economics professor at the Johnson Graduate School of Management at Cornell University covers the reality associated with too much political meddling with the current working model of Obama-care. you can read all about it at the following link:
Want to Get Rid of Obamacare? Be Careful What You Wish For.

It is clear that the two dominant parties are going to fight over the implementation of healthcare policies. At 17.5% of the current  GDP, there is too much money in this basket for any lobbyist to ignore. Will the new administration and the GOP controlled Congress and Senate be able to implement a solution that will serve our national needs, the needs of the people? Is there truly a reasonable solution, other than a single-payer system that can fix the system?

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I highly recommend looking at the National Chart-book of Health Care Prices, published in 2016 by the Healthcare Cost Institute. The report shows the distribution across all individual states for specific medical treatment. This is a perfect example of "one nation divided under GOP"...

References:

• National Chartbook of Health Care Prices
• World Bank - Healthcare Expenditure Statistics
• By 2024, health spending will be nearly a fifth of the economy

Your comments are welcome. Please share with your friends and relatives, by clicking on the icon(s) of your favorite social network.

All the best and happy holidays!

--Dr. Flywheel

Wave of the Future -- Be Your Own Boss

In July 2013, Stanford University published a report regarding the economic effects of the U.S. workforce aging. Though the report does not directly address causality, it is not a new revelation that companies continue to eject employees who are paid at the upper-end of the pay-scale, in order to show more "beautiful" numbers on the quarterly reports, without regard to maintaining functionality or productivity. Cannibalization of the workforce is an easy way for corporate management to retain the stock value in times when their lack of insight and risk aversion seem to rule the day, and their resulting ability to demonstrate growth are close to nil.

The enormous gap between top management compensation and worker compensation entices company executives to focus on their bonuses and "golden parachute" exit plans by putting the business emphasis on short-term financial reports, frequently at the cost of risking the stability and long term future of the business. Too many times we see a publicly traded company that demonstrates long-term positive income stream, however lacks a daily claim for short-term growth, being considered a stock market failure.

The prediction of flat growth curve in world economy for the next decade and beyond has been discussed in many newspaper articles and books; therefore I will not cover this issue here. The common factor coming out of most report published on these subjects is that employers will not continue to offer generous benefits plans on top of increasingly higher salaries to their employees and most companies will resort to cost cutting measures including automation and reduced in-house employment.

For those of you who are willing to exercise free will and take some risk there is the avenue of self-employment. The charts below (taken from the Stanford Report) demonstrate that the future is leading us into this direction, whether we like it or not.

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The most striking information that I learned from the last two years of studying the subject, is that it looks like the U.S. and the rest of the developed nations are going to face a shortage of skilled labor force over the next decade or two, due to the massive retirement of the Baby Boomer generation. This irreversible demographic trend will present us with some upheaval, as well as a lot of new opportunities, for those who are willing to pursue them. I highly recommend reading the report composed by the Conference Board at this link: What Labor Shortages Mean for Your Business.

The maps below show how skilled labor demand, due to major demographic changes are going to affect the job market for continental U.S.

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Skill level and ability to put common sense into a complex business situation is typically better handled by older and more experienced workers. If company executives are getting rid of older employees in order to cut on payroll and employee benefit programs today, they may find themselves in trouble tomorrow.

The lack of long-term perspectives and practical experience gathered over the years, gives older employees a business advantage that cannot be easily matched by younger and inexperienced employees. This fact can be easily established when reviewing all recent job listings on the market--employers are looking for "experienced" employees, yet expect them to also be young, cheap, and peppy all at the same time. This "wishful thinking" approach will not stand the test of reality for very long. Employers will get what they pay for.

I contend that what this situation translates to is creation of new opportunities for experienced workers who are adept and highly productive and are wiling to forgo the typical corporate employee benefit plans in favor of high hourly wage and independence from any particular employer. In other words--highly compensated freelance work.

Click on the above to view TED Talk video, covering skilled labor shortages on YouTube

For those of you who are interested in reading the full Stanford report, it is available at: THE AGING US WORKFORCE -- A Chartbook of Demographic Shifts

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Your comments are welcome.

All the best.

--Dr. Flywheel

References:

• U.S. Department of Labor - Bureau of Labor Statistics
• The Stanford Report:  THE AGING US WORKFORCE -- A Chartbook of Demographic Shifts
• CBS News: Desperately seeking workers: The looming job crunch
• Marketplace: 15 years of labor shortages predicted for the U.S. economy
• Wall Street Journal: The U.S. Occupations at Greatest Risk of a Labor Shortage
• Deloitte: US manufacturing faces a two-million-worker shortage over the next decade