Relevant measures include unemployment, productivity, participation ratestotal income and gross domestic product GDP. Labor Market The macroeconomic view of the labor market can be difficult to capture, but a few data points can give investors, economists and policymakers an idea of its health. The first is unemployment.
National Center for Health Statistics actual and Hurd b projections. In addition to declining labor force participation trends, life expectancies are also increasing. Table shows life expectancies and projections for white men and women under three different demographic scenarios these are described in Hurd, b.
In the last decade, the life expectancy for men has increased by 1 year. Depending on the projection used, even scheduled increases in the Social Security eligibility age, aimed at encouraging later retirement, will not keep up with the increasing life expectancies.
The elderly population is itself aging. Assessing Knowledge of Retirement Behavior. The National Academies Press.
Department of Labor As individuals age, the threat of poverty rises substantially. Inone-fifth of persons age 85 or older had income levels at or below the poverty threshold Radner, b. Because of these trends, the ratio of the retired population to the working population is expected to rise from 0.
The number of Social Security beneficiaries has also increased dramatically, as shown in Figure To remain solvent, the current Social Security system will have to impose an increasingly large tax burden on the shrinking working population in order to support the growing elderly population.
Page 70 Share Cite Suggested Citation: In addition, 57 percent of the elderly obtained more than half their income from Social Security; 24 percent obtained more than 90 percent from this source Hurd, a.
Almost 95 percent of elderly households reported receiving Social Security benefits Hurd, a; Congressional Budget Office, ; these benefits are an especially important component of income for households in the lower income brackets and are the largest single source of income for all but the highest income quintile of the elderly Reno, It is projected that for retirees in the bottom half of the income distribution in60 percent to 70 percent of retirement income will come from Social Security Kingson, As a result of pressures on the Social Security system and rising health care costs, concern that the income of the elderly will be inadequate has created debate over how to increase retirement income, accompanied by legislation aimed at effecting such an increase.
Because Social Security affects so much of the elderly population, it is the obvious place to start in discussing broad-based policy changes that influence retirement behavior and income. Previous research considering the effects of changes in Social Security policy on retirement and labor force participation includes Gustman and Steinmeier and Feldstein and Samwick As Table showed, it is clear that labor force participation rates decline precipitously among individuals that have reached the Social Security early and normal retirement ages 62 and 65, respectively.
Using aggregate time series data, Stewart provides further evidence of the influence of Social Security, demonstrating that ratios of primary insurance amount PIA to earnings closely mirror the nonparticipation rate of men ages 65 and older, as shown in Figure However, evidence in Bondar suggests that individuals with high pre-retirement earnings as estimated based on PIA amount are most likely to continue to work and earn high post-retirement earnings.
This is due partly to the societal norms under which the system was designed i. Page 71 Share Cite Suggested Citation: PIA is the primary insurance amount. In order to increase labor force participation and decrease the burden on the Social Security system, current Social Security policy dictates an increase in the normal retirement age from 65 to Those born in will be the last group with a normal retirement age of Those born in will be the first with a normal retirement age of Many believe that this increase is too gradual.
In addition, the level of benefit reduction at age 62 will gradually increase from 20 percent to 30 percent. The earnings test will be liberalized; it currently affects only individuals below age To try to reduce some of the perceived inadequacies of the Social Security system, an earnings-sharing proposal where the Social Security benefit is based on the earnings of the household, not just on individuals and a two-part payment system have also been suggested.
The latter is an attempt to meet the dual roles of the Social Security system—to provide a basic amount of coverage to all elderly not just wage earners and their spouses and to provide an additional payment proportional to wages. As mentioned earlier, additional proposals include caregiving and homemaker credits, but the current design of supporting wage earners in retirement based on revenues from current wage earners does not suggest an obvious answer to the question of who will pay for such credits.
Inthe benefit reduction rate was decreased for individuals 65 and over from one-half to one-third. Bondar studies individuals affected by the earnings test in Section Resource Market. Factors of Production. We now turn our attention to the demand and supply of resources also called inputs or factors.
Markets for labor have demand and supply curves, just like markets for goods. The law of demand applies in labor markets this way: A higher salary or wage —that is, a higher price in the labor market—leads to a decrease in the quantity of labor demanded by employers, while a lower salary or wage leads to an increase in the quantity of labor demanded.
Sometimes, despite the best efforts of the market, a heavy hand is needed to control supply. This lesson looks at how the government and the market can work to do just that. Featured OOH Occupation: Registered Nurses Registered nurses (RNs) provide and coordinate patient care, educate patients and the public about various health conditions, and provide advice and emotional support to patients and their family members.
May 04, · PURCHASING AND SUPPLY CHAIN MANAGEMENT. DEFINITIONS AND CLARIFICATION. PURCHASING. Purchasing is the act of buying the goods and services that a company needs to operate and/or manufacture products.
A labor force participation rate that is at or above its long-run trend is consistent with a labor market at or above full employment. In , the estimated rate is at its trend of %, suggesting that the labor market is at full employment.