- In the past year, 51% of the change in total employment in Canada occurred in the 55+ age group. This phenomenon was even more striking in the United States, where it reached 67.7%.
- Claiming that changes in the number of jobs in an age cohort are the result of job creation may be questionable. Indeed, if the number of individuals on the threshold of a cohort is extremely numerous, changes in employment may largely reflect the migration of jobs from one cohort to another, due to demographic changes rather than actual job creation.
- In order to obtain a better picture of the situation in the labour market by age cohort, it is preferable to examine changes in employment rates, which allows controlling for population growth. What emerges from this exercise is that changes in employment rates by age cohort since 2007 have been uneven both in the United States and in Canada, at the expense of younger people.
- However, unlike the United States, the increase in the employment rate in the past year in Canada has been much more evenly balanced across the different age cohorts, thus contradicting the impression that older workers are the ones presently benefitting most from job creation.
Statistics agencies in Canada and the United States report each month on changes in employment by age group. In its latest Labour Force Survey Report, Statistics Canada stated that “among people aged 55 and over, employment increased for the second consecutive month, up 32,000 in February”. This represented 63% of all jobs created. In the United States, the Bureau of Labor Statistics (BLS) announced that no fewer than 53K or 31.2% of the 170K jobs created went to the 55+ age group, which accounted for no more than 22% of all jobs. The data for February is not exceptional in that, month after month, the older cohorts are the ones that seem to be benefitting most from job creation in this labour market recovery.
In this Weekly Economic Letter, we will begin by assessing to what extent labour market changes by age group are useful in economic analysis. Then, we will show that it is preferable to use employment rates instead of change in number of jobs to evaluate how the labour market is evolving within the different age cohorts.
Given that compensation tends to increase with experience, there is reason to believe that an improvement in the labour market situation for older workers might translate into higher aggregate earnings at the macroeconomic level. In this regard, the average weekly earnings of full-time workers 55-64 years old in the United States are 98.5% greater than those of their counterparts 16-24 years old (Chart 1). The difference with workers in the 25-34 year old group is substantial, and comprises 27.8%. For 35-44 and 45-54 age groups, the differences are respectively 4.4% and 3.9% with the 55-64 age group.
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