Professor Edmund Phelps, a Nobel Laureate in economics, likes to say that there is nothing “natural” about the so-called “natural rate of unemployment.” It’s a cultural matter, Phelps explains. If workers are more risk-averse, they will avoid switching jobs and risking periods of unemployment in between jobs.

That might help explain why wage growth has remained low despite the fall in the unemployment rate, to the consternation of the Federal Reserve. Asia Unhedged conducted a quick-and-dirty test of Phelps’ conjecture, and found some suggestive results. Older workers are generally more risk-averse. In fact, the labor force participation rate of Americans over the age of 55 increased all through the 2000’s while the overall labor force participation rate fell, mainly because Baby Boomers are healthy enough to work and don’t have enough savings to retire comfortably. The combination of an aging population and higher labor force participation by older Americans led to a pronounced aging of the American workforce.

In the past, wage growth for older workers and workers in their prime years was about equal. The Atlanta Federal Reserve’s wage tracker data looks at changes in pay for workers in the same occupations. After the financial crisis wage growth for workers in their prime years was noticeably higher than the total, evidently because the pay of older workers didn’t rise as fast. The rising age of the workforce could be thought of as a proxy for risk aversion, and this does appear to have had an impact on wage growth.

That would go some way to explaining lower-than-expected wage growth under conditions of high employment: There is a large contingent of older workers who can choose between retiring and continuing to work, which makes the labor force more elastic. This group of older workers, moreover, is more likely to stick to jobs despite a lower rate of wage growth. Less wage growth means less spending, and less spending is deflationary for some categories of consumer goods, for example, used cars, whose prices have fallen 11% since their peak three years ago.

There are of course other factors keeping inflation low, including technological change, the breakup of telephone monopoly pricing, the slowing rate of home price increases after the recovery from the 2008 crash, and so forth. All this suggests that the Federal Reserve’s 2% inflation target is practically unattainable and that the Phillips Curve is not a curve at all, but a flat line.