Enjoy it, because however hard it is to remember this painful truth, all booms come to an end. But how long the boom continues will depend not on the decisions of Gordon Brown, nor even those of Eddie George. It will depend on our willingness to work.
If that sounds cryptic, consider America. The US boom is more advanced than ours. Not only did the growth phase start earlier, employment has grown much more rapidly: there are about 17 per cent more Americans in jobs now than there were 10 years ago, whereas here there are only about 6 per cent more people in work. Yet there is little inflation in the States, as anyone planning a holiday there this year will discover. This is partly a function of exchange rates: the present sterling exchange rate makes the US seem astonishingly cheap. But it is also a function of restrained growth in wages: the US has seen a boom in employment without seeing a boom in pay rates. As a result the boom has been able to continue for far longer without being choked off by higher inflation.
This is a story that has attracted far too little attention over here, where people tend to sneer at "McJobs" - the fact that some at least of the new jobs created in the States have been low-wage ones. But actually the ability of the US to generate jobs has profound implications for us. Not only is there the prize of unemployment running below 5 per cent- it is down to 4.8 per cent in the US - terrific though that would be. There is the arguably bigger prize of long-term sustainable growth, so that unemployment would remain pretty low for (who knows?) a generation or more.
In America two things seem to have happened. One is migration. The pool of labour seeking jobs has been boosted by migrants, of whom the largest single source has been Latin America. That is something special about the geographical location of the US, with that long permeable border with Mexico. Special, too, is its tradition of being a haven for immigrants. But it is not just that. Perhaps more relevant to the UK is the way the long boom has pulled back into employment people who would normally find it hard to get work: in particular the early retired, the under qualified, and the discouraged - the people who had given up even looking for work because they felt there was no point.
As a result, though the number of people of normal working age in the US is growing by only 1 per cent a year, the workforce is growing at 1.5 per cent a year. But the really astonishing thing is the number of "oldies" who are back in jobs. Anyone who goes to the States will notice this - older people running check-outs at stores and check-ins at airports - but for once the figures back up the anecdotes. Since the beginning of last year the number of men aged between 55 and 64 in the labour force has jumped by 2 percentage points. Grey power is rescuing the American economy.
Companies are targeting older workers, including, sometimes, people whom they earlier laid off. Some of these jobs may be at lower wages than in the past, but not all grey jobs are poorly paid. In one area, computer programming, there has been a surge in demand for older programmers to help fix the "millennium bug", the fact that many computers cannot cope with the year 2000. It seems that a lot of mainframe programs still in use are written in languages like COBOL, which the young denizens of Silicon Valley don't understand.
This phenomenon has profound implications for the UK. We are an even older society than the US, measured by the proportion of people over 65. We have also seen a similar trend in job losses among the 55-64 age group. So we have an even greater opportunity to keep the economy moving by pulling back the retired and the early retired into the labour-force. Up to now that has not really been a problem, for while individual companies are reporting difficulty in finding qualified labour, we have not experienced a general labour shortage. Indeed we still think in terms of unemployment as an endemic problem that will take years to solve. For some groups of people that may well be true. But in terms of the overall proportion of jobless, we are lagging behind the US by only about a year. Allow for the distortions in the way we count unemployment, and maybe the lag is a bit longer, but the direction is quite clear. So over the next year or so there is a tantalising opportunity: if we can entice more older workers back into jobs, we can carry on the expansion. And if we cannot, growth will be choked off.
There is a further bonus. The more that older people can be encouraged to take on some form of work, the more manageable the burden on the pension system, both private and public. Indeed the only way in which our ageing societies can hope to increase the overall standard of living over the next generation will be to find imaginative ways of encouraging older people who want and are able to work to do so. That will require flexibility from employers. And it will require older workers accepting the idea of being "retro-fitted" with new skills. Meanwhile, John Glenn has to make his next space trip at the age of 75, and there is the computer bug to fix ....Reuse content