Spencer Jakab suggested in a column behind a paywall in the Wall Street Journal that the United States might have a “wageless recovery” in the job market right now partly because of the damage low interest rates has done to older workers.
Reporters at the Wall Street Journal and other news organizations aimed at general audiences, and general business audiences, tend to write about low interest rates as if they were a free, low-risk way to make economies perk up quickly.
The prevailing view of moves to hold interest rates low is that the only noteworthy danger is the possibility that low rates could lead to an increase in price inflation.
Jakab dared to mention another concern: an estimate by Swiss Re (which is, of course, an insurer; fancy that) that Federal Reserve Board efforts to keep U.S. interest rates low may have cost U.S. savers about $470 billion in lost interest income from 2008 through 2013. “That burden falls disproportionately on older households,” Jakab writes.
He also points out that the labor-force participation rate for workers ages 55 and older has risen 3 percentage points in the past 10 years. In other words: Many older workers may be working because low interest rates took away some of their retirement money.