The music group Dire Straits has a song entitled, “Money For Nothing” and that appears to be what the airlines conjured up for last year and will repeat again this year in 2023. From NBCNews, “The days of ‘fun flying’ are long gone: How U.S. air travel became a nightmare” has a summary of some of the travel mayhem that occurred last year and poised to happen again this year. Here is a key quote from an airline CEO:
“The system simply can’t handle the volume today, much less the anticipated growth,” Kirby said. “There are a number of airlines who cannot fly their schedules. The customers are paying the price.”
NBCNews.com
And here is another key quote from the CEO of Emirates:
“The question on everybody’s lips is, ‘Where have they all gone?’” said Tim Clark, president of Emirates Airline, at an event this summer, as reported by The Wall Street Journal. “There are hundreds of millions of people that have disappeared from the labor market.”
NBCNews.com
We think we have an answer to Tim Clark’s question: “It’s the boomers stupid!” As we’ve noted over and over again, there are 10,000 boomers retiring in the United States every work day and by the end of it all in 2030 there will be 40 to 60 million people on social security and medicare enjoying the “good life” on government social programs while they put demands on everyone else in the labor force. There aren’t enough young people coming into the labor market to replace retiring boomers so we’re headed for more dysfunctional economic systems beyond airlines.
There are currently shortages of teachers, nurses, doctors, lawyers, engineers, and all sorts of manufacturing and other workers across the board and the problem gets worse day by day with no solution in site.
We have a new theory that the Fed is hiking interest rates sky high not to deal with inflation from the Covid pandemic but to deal with the coming inflation caused by massive labor shortages over the next few years.
Boomers are defined as those people born between 1945 thru 1964. Those born in 1945 are now 78 with an expected peak lifespan of 81 while the youngest born in 1964 will reach 59. According to US News, 31% of men and 27% of women sign up for social security at age 62. Considering that the youngest boomers are 59 this year then it follows that in 3 years (2026), the labor force can expect a further depletion of 31% of working men and 27% of working women to leave the work force. What impact will having 1/3 of men and women leave the workforce in 2026? We would expect massive labor wage inflation if labor becomes scarce. Boomers may be getting ‘money for nothing’ but everything will cost a whole lot more.
Any prudent investor that isn’t planning for this scenario will find themselves in their own dire straits so stay tuned, stay profitable and stay solvent….