
For Economy, Aging Population Poses Double Whammy - Yhippa
http://www.wsj.com/articles/for-economy-aging-population-poses-double-whammy-1470249965
======
6stringmerc
I don't think I'll ever get tired of posting the chart ZeroHedge put together
with BLS statistics showing that the 55+ cohort has, in practical terms,
monopolized the 'economic recovery' since 2008.

[http://www.zerohedge.com/sites/default/files/images/user5/im...](http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/03/job%20additions%20total%20by%20age_0.jpg)

Anecdotally I've seen more and more 60+ workers doing line-level gigs like
cashier or low-skill retail than ever. I think there's an undercurrent of
discrimination against youth, actually, in that the 55+ group will be
dependable and complacent because they _need_ to work and therefore _will show
up_ to work.

In the modern US economy, longevity in one firm or role is actually bad for a
young person's career! There are no pensions to earn. There are limited annual
raises that are lower than inflation. On and on and on.

I'd be a lot more sympathetic to the plight of the elderly in such a position
if they weren't, you know, basically kicking away the ladder they used to
climb to the top, spend the country broke, and then continue to vote
entitlements while passing a faux-future of success demanding everybody get a
Bachelor's to even be a Secretary answering phones. This whole system is so
broken pointing it out sounds extreme or mean, but it's just obvious to me
over these past 15+ years of working.

I just got my SS statement the other day, and was extremely proud to see that
every year I was eligible to work, even if I was going to school / college /
etc, I did work. Not a single year without an above the board job. I don't
think a lot of Millenials will be able to come anywhere near it, and I don't
think it's entirely their fault. End of my $0.02 that is really worth about
1/8 of that...

~~~
a3n
> spend the country broke

I'm 59. I don't remember doing that. (And _are_ we actually broke?) I do
remember voting. Everyone I voted for said one thing to me, and did what they
were told by their donors and the MIC.

I hope I live long enough to see what the currently upcoming generations get
blamed for in their old age.

~~~
bitchypat
I guess it depends on how you define broke. Is our debt greater than 100% GDP?
Yes is it. Is there any sort of plan to repay that debt in a lifetime? No, not
really. A lot of people would consider that broke.

Any time there is a budget deficit, there is borrowing. The borrowing is done
against future earnings by future taxpayers. Now it seems to me that if money
is borrowed and not paid entirely back within a generation, then those who
borrowed have essentially stolen wealth from their children and grandchildren.

~~~
dragonwriter
> Is our debt greater than 100% GDP? Yes is it.

That's (if the unit of analysis is "us", as in the country, rather than the
government itself) arguably loosely analogous to one piece of one's personal
debt exceeding 100% of annual income, and not at all the definition of being
broke.

> Is there any sort of plan to repay that debt in a lifetime? No, not really.

That's having long-term structural debt, which, again, is nothing like being
broke.

> A lot of people would consider that broke.

I don't really think that's true. The government is neither unable to pay its
current obligations (it occasionally approaches _choosing_ not to do so, but
is nowhere close to being _unable_ to do so).

------
brianvan5155
I really don't see 70+ year old people working staff jobs for 50 hours a week
with brutal commutes and skimpy PTO benefits, as is now the average for people
holding a single role for less than 5 years.

I can see labor ages skewing upward, though, if a bigger share of the
workforce adopts coworking, telecommuting and part-time/contract labor trends.
This would make things easier for a share of the workforce that wants to take
life a little easier than the average 30-year-old.

Recall that a union laborer with a pension plan can retire with a lifetime
fixed income at age 55... and historically this sort of arrangement applied to
a large share of the U.S. workforce (including many non-college-grads) not too
long ago. And the people who lived/worked under that arrangement were either
able to purchase cheap real estate that has since appreciated tremendously in
value, or they were able to send children to college and post-college
educations that secured high-paying professional incomes... or both... and
this slice of society is weighing heavily on the rest of the workforce via
high land prices, rent-seeking behavior, and anti-socialist politics. I think
remedying this situation would help society far more than a mild economic
boost due to retirement-age workers clinging to their jobs

~~~
sremani
Wait a minute my friend, people had it hard before WWII and people seem to be
overly positive about the two decades following WWII. People's life expectancy
has risen, so a pension plan would have to feed a person for a decade now, has
to feed them for two or more. Sorry to burst your bubble, but if you are in a
work force for 30 years its your responsibility to build a nest egg. Social
Security was supposed to be a safety net, not a retirement plan.

Both the Left and Right, has to stop glorifying the 50s and 60s, yes they gave
us 70s and stagflation and Regan.

PG has a wonderful column about refragmentation.
[http://paulgraham.com/re.html](http://paulgraham.com/re.html)

subsequent HN comments
[https://news.ycombinator.com/item?id=10826836](https://news.ycombinator.com/item?id=10826836)

~~~
brianvan5155
My comment didn't speak to the pre-WWII era, but going back to the nineteenth
century, the U.S. has always had a robust workforce more-often-than-not
offering opportunity for upward mobility for those motivated enough to take on
the work. What's significantly different now is that we have a much bigger
safety net for the retired, young, ill and disabled.

But what's also different is the very recent lack of upward mobility. People
born after the 70's are coming in behind their parents unless they inherit
land or equity holdings. Does a worker stop paying rent to a landlord in order
to build that "nest egg" as you admonish them to do so? It's hard to save for
retirement when the landlord keeps coming back every year with a $300/month
rent increase - because they can, because every landlord is doing it, and
because elected officials and courts give them cover to do so.

~~~
lettergram
That's actually why most financial advisers will tell you not to rent long
term if at all possible. Purchasing a home (on average) will cost you nothing
in the long term because you can refinance later in life or use it as an asset
for other investments.

Essentially, not a single dollar paid to a landlord comes back to you. At
least a percentage of every dollar will come back to you with a mortgage. Not
to mention if you buy a home, you'll often pay less than you would renting.
This makes perfect sense if you think about it, the landlord is trying to make
money.

Point being, buying a home is a "nest egg" which is why 0-5% down was and is a
thing.

If you don't like landlords move, and buy your own home. It's really that easy
and will benefit you in the long run.

~~~
brianvan5155
The average sales price of a home in my county is $2,000,000

The lowest county average sales price within a commuting hour of my workplace
is probably $700,000, to live somewhere fairly isolated and dead.

It would only be "that easy" if I made $150k a year. That is still a top-10%
salary in 2016, and yes my current salary is location-dependent, so I'm stuck
between a rock and a hard place on that. I would start planning for a purchase
10 years out, but my down-payment savings money pretty much flies out the
window toward debt and utilities. And most of the homes in my area sell in
instant cash deals anyway, down payments are a joke. (Thanks, anonymous LLCs
representing foreign wealth!)

I'm in a very particular situation with a lot of unusual disadvantages, but
I'm also a web dev working for a large consultancy in one of the big US
cities. Every one of my peers in the workplace is struggling with suburban
homebuying expectations; while every one of my urban social peers holding
less-prestigious jobs is almost certain to be working poor by age 50. The
grind is already happening. There needs to be more political support for
regulation and infrastructure projects that create the opportunity for
working-class home ownership investments. It sounds like you support this, and
your efforts are needed in politics too.

~~~
wolfgke
> The average sales price of a home in my county is $2,000,000

Why not buy a single apartment? Or buy and afterwards inhabit a house together
with a small group of friends so that the amount of money is shared between
the group?

~~~
brianvan5155
That IS for a single apartment

I'm married & the thought of doing a "house share" with other married couples
seems very cramped up & a recipe for disputes. This is aside the fact that
it's absurd that dual-working married couples would have to resort to this at
all, it's a completely unacceptable arrangement for most couples in the US at
this point. But nothing's off the table it seems

~~~
wolfgke
It's not uncommon in the more expensive German cities as Munich to do a flat
sharing even after you finished your studies. You often did a flat sharing
when you studied, so you often are already used to the situation. On the other
hand living space is too expensive to be able to afford (even renting) if you
don't have a really good paying job.

But perhaps this is a different mentality between US and Germany.

~~~
brianvan5155
Are you talking about married couples taking different bedrooms in one
apartment? Or single individuals (not living as couples) taking different
bedrooms in one apartment?

Yes, we do a lot of roommate shares here in the US; I lived in about 7 of them
through my 20's. But I didn't live with my wife in a room share. I'm now
married and I live with my wife, and we are effectively rent-sharers now.

It's still not enough to have a 20% cash savings rate, much of what would be
saved as cash instead pays debt (mostly college debt + debt originating from
emergencies/unemployment). But we almost certainly couldn't afford a local
property of any type, save a studio apartment on the outskirts of the city,
with a 20% savings rate over the next 5 years. And part of this has to do with
down-payment financing arrangements nearly always losing out to deals paid in
cash on-the-spot. (Indeed, there are people roaming the streets with certified
checks from $800,000 - $2,000,000 who are viewing new-to-market properties
daily)

~~~
wolfgke
> Are you talking about married couples taking different bedrooms in one
> apartment? Or single individuals (not living as couples) taking different
> bedrooms in one apartment?

I've seen both (OK, they were not married, but in a commited relationship),
where of course the latter case is more common.

------
tonyedgecombe
Read to the bottom and you find out what this article is really about:

"This all adds to the urgency of overhauling both the private and public
pension systems to encourage later retirement, by shifting benefits to favor
later retirement and reducing tax penalties on earnings for those who are
already collecting Social Security. The payoff: a more solvent pension system
and a more productive economy."

~~~
toomuchtodo
Wow, isn't that the submarine thesis. When the real solution is to remove the
cap on social security taxable wages on income.

EDIT:

TL;DR Removing the cap at ~$118K/year on social security taxes (any income
above that is not taxed for SS purposes) causes Social Security to become
immediately solvent in perpetuity.

But heh, the highway trust fund is broke too [1], so why would I expect
Congress to fix anything else related to tax collection for public services.

[1] [https://www.transportation.gov/highway-trust-fund-
ticker](https://www.transportation.gov/highway-trust-fund-ticker)

~~~
maxerickson
It would also represent a fundamental shift in the program, from social
insurance to wealth transfer. Raising the retirement age is an acknowledgement
that the actuarial data has changed.

And it would push the top marginal tax rates to ~55-60% (40+15+state).

~~~
toomuchtodo
Social welfare is social welfare. Taxes are at the lowest levels in (EDIT:
modern) history; they must (and should) go up to support the must vulnerable
citizens.

Or should we continue to allow the top income tiers to siphon from the economy
while everyone else is slowly lowered into poverty?

~~~
maxerickson
There were no federal income taxes in the US ~100 years ago. Prior to WWI,
they rarely exceeded 10%.

[http://taxfoundation.org/sites/taxfoundation.org/files/docs/...](http://taxfoundation.org/sites/taxfoundation.org/files/docs/fed_individual_rate_history_nominal.pdf)

I'm not necessarily arguing against raising taxes, I'm pointing out that it
would be a huge change in the program.

~~~
toomuchtodo
I believe we're in agreement then.

~~~
maxerickson
We seem to have some disagreement about what "in history" means.

I also probably wouldn't aim a massively scoped wealth transfer program at
enabling earlier retirement (admittedly you haven't stated a preference for
this wealth transfer over other sorts of wealth transfer, you've just stated
that it would make SS solvent).

~~~
toomuchtodo
> We seem to have some disagreement about what "in history" means.

It appears so; you're looking back 100 years. I'm looking back in modern times
(which I'd consider starting around World War 1).

> I also probably wouldn't aim a massively scoped wealth transfer program at
> enabling earlier retirement (admittedly you haven't stated a preference for
> this wealth transfer over other sorts of wealth transfer, you've just stated
> that it would make SS solvent).

62 is considered the earliest you can collect social security, with a steep
reduction in benefits for the remainder of the collection period. 65 is
standard. I don't consider 65 early retirement.

If you have a better idea than removing the SS tax cap, I'd love to hear it.
Reducing benefits are not an option when existing benefits are barely keeping
seniors out of poverty as it is.

~~~
maxerickson
You could avoid such digressions with the more accurate and roughly equally
pithy "in modern times".

As far as early retirement or not, it's another squabble over definitions. 50
years ago, the idea of social security was that people who survived into old
age would have some reliable income. So when you propose ignoring that what it
means to survive into old age has changed over time and propose using wealth
transfers, you aren't just talking about making social security solvent, you
are talking about fundamentally changing it.

There's nothing wrong with proposing such a change! But I think it makes sense
to point out what a significant change it would be.

~~~
bryondowd
My understanding is that life expectancy hasn't really changed much in
history, if you don't factor in infant death. The expected lifespan of someone
who has already survived long enough to join the workforce hasn't actually
changed much. So, for the purposes of SS, I would think that's not really an
issue.

As I understand it, the entire thing would only have stayed solvent if each
successive generation contributed significantly more than the previous one,
presumably due to population growth and economic growth.

I may be wrong, just the understanding I've developed from previous
discussions.

~~~
maxerickson
SSA publishes some stuff about it. Figures 2a and 2b are interesting to this
discussion:

[https://www.ssa.gov/oact/NOTES/as120/LifeTables_Body.html](https://www.ssa.gov/oact/NOTES/as120/LifeTables_Body.html)

The number of people living to 65 has increased and they live longer after
reaching that age.

Take a made up scenario: Say you plan on being able to pay 10 people for 10
years. Something like adding 1 person and 1 year smashes your budget
(100->121).

------
RobertoG
At the end of the day, the important thing should be, can the real economy
sustain the population (whatever they age)?

Do we have the resources or not?

I had that idea that the economy was a machine that we use for producing what
people needs. Not anymore. It's obvious that it's the other way around.

Even the tittle of the article is about how some people is a problem for the
economy.

\------

OK, I'm editing this comment, because reading the answers it's obvious that
I'm being misinterpreted. My point:

I was trying to criticize the framework that is sold to us continuously, where
the people is in the service of the economy (population poses a whammy),
instead of the economy at the service of the people, because, how can
population be a liability if the point of the economy is to serve the
population?

We lost our ways somewhere along the way.

~~~
Noseshine

        > can the real economy sustain the population...?
        > Do we have the resources or not?
    

It's strange to see that these comments are not exceptions but the norm. How
can you be serious? (Or are you?)

We have a productivity orders of magnitude higher than anyone could ever dream
of. A tiny fraction of the population is needed to produce the things
necessary for living - the vast majority of people are doing "non-essential"
work.

We may not be able to give everyone vacations abroad, a 2nd car, a road to
their isolated dwelling in the middle of nowhere. We sure are able to give
everyone the basics needed for live - _and then some_. With "we" I mean the
industrialized countries. Although, when it comes to feeding the world even
that may be doable in entirety, the problem there isn't production but
distribution, so a lot of it are local problems we cannot easily influence.

A big reason for the huge military spending is that politicians try their
hardest to keep the plants in their districts running - "for the jobs". We
have a hard time finding _work_ for a lot of people, and - just looking at
[http://dilbert.com/](http://dilbert.com/) \- those who have a job are by no
means all doing useful work, not even close. If we drastically reduce
advertising, for example - by definition most of it a luxury, stuff that
people need doesn't need to be advertised, just make it available - we un-
employ a large amount of people not just in marketing but also producing the
stuff people don't really need. But yes, let's ask with real concern, "how can
our economy _possibly_ take care of all those people?". Yeah, I really don't
know, it's such a mystery.

And the argument in other comments "everybody should start saving early, if
they don't it's their own fault. Let's roll with that for a moment.

Let's assume _all_ people are reasonable and start saving for retirement
early. For this assumption we need to disregard the large number of people who
are unable to save anything (all their own fault).

If _everybody_ starts saving early and saves enough for retirement, what is
the difference between that and letting the _government_ do it for them (the
basic, minimum level)?

The difference is that you can't blame someone "it's your fault" any more,
which seems to be a convenient excuse and distraction. It's not like
_anything_ in the economy works any better just because you force people to
make decisions for which the vast majority is not qualified to do. Which is
actually fine! Why on earth does everybody have to be in the business of
business-forecasting (where to invest)? And if you say "use index fund", well,
if it's so automatic then the government can just do it for you, if there is
nothing gained by involving the people because they don't actually get to make
investment decisions. Which is fine - humans have invented something called
specialization, and to a _very_ high degree. It's absurd that everybody should
be "financially literate" to a degree that they manage their own retirement
account. (And again: If the argument here is to use something simple as a
savings account or index funds I repeat that then there's even less of a point
of forcing people to do it.)

Not to mention that on the level of _the economy_ you cannot save for the
future. Not unless "saving" means things like not taking minerals out of the
ground now so that they can be taken later. Everything else is a circle, and
an ever changing one. What people eat and where they live in 50 years cannot
be "saved" now - how does that look like, we keep areas for agriculture
"frozen" to be unfrozen in 50 years for those living then?

That "you must save" argument conflates business thinking with economic
thinking, which take place on completely different levels. From a business
perspective you have input and output and from where to where you don't care
about, and yes you can "save". But on the level of the economy you see the
_whole picture_ , where every input is an output and vice versa, and "saving"
simply means shifting the stream of activity and goods in the economy between
consumption and investment (which in this context means actually building
stuff, not "financial investment", making money wit money).

And, slightly related, it's good when a business saves a few million dollars.
When the economy "saves" it means less economic activity. When we don't build
that #### that costs 5 billion - and don't do anything else with the same
resources - it means there will be 5 billion less in income for businesses and
people. So not doing #### is fine when there are better alternatives, it's not
so good when there aren't.

In this context I recommend "The Secret History of Silicon Valley" \- sounds
ominous, but it's just a regular presentation of the Computer History Museum
in Mountain View (believe me, it's so worth it!):
[https://www.youtube.com/watch?v=ZTC_RxWN_xo](https://www.youtube.com/watch?v=ZTC_RxWN_xo)
The TL;DR for the video: SV was made possible by HUGE amounts of very free
spending of _the US government_ on R&D during WW II. Private capital only came
later, with that base established. And the best thing: _They spent money they
did not have_ (US debt made a very big jump during WWII).

~~~
RobertoG
Not sure who are you answering to..

I will try again (a last time).

If the GDP per capita is bigger that 40 years ago, it's obvious that we have
the resource to sustain the population.

What I was trying to express, unsuccessfully it seems, is that the economy
should work for all the members of society, specially when there are more than
enough resources.

Also, I was trying to criticize the framework that is sold to us continuously,
where the people is in the service of the economy, instead of the opposite.

------
iheartmemcache
Ah primary sources, my good men (edit: and of course women, though I used the
phrase in the gender neutral, genitive case) - here's the actual paper[1] (31
pages). RAND is a think-tank, not quite Koch's Americans for Prosperity or the
Cato Institute but caveat lector, and all.

Here are some brief assertions claimed:

 _> > Our analysis leverages this substantial variation in the rate at which
states are aging to estimate the effect of aging on the rate of state growth
in per capita Gross Domestic Product (GDP) ... "_

One has to reject the null hypothesis that the aging out demographic are even
related in part. (I could just as easily hypothesize that most of these
retirees are those who were economically positioned to work until that late
age and those who were comfortable enough to retire beforehand did so (if you
buy the assumption that those who were highly-salaried throughout their career
generated a proportional amount of value to said salary. I don't claim this,
but it's an easy refutation.))

Page 6 is just aggregate analysis of population trends amongst certain ages
binned by state, using Wyoming as their prime example. I'm not sure how much
of the GDP/GNP Wyoming contributes to as a percent but I'd wager the trend is
not indicative of the U.S. economy on the whole (in fact, you really can't
make generalizations like this paper is trying to do correlating age against
value lost -- whether it's in institutional knowledge delivered from master to
apprentice in trade or actual quantifiable value. {Started skimming here due
to the weak arguments.}

They use the US census as their data source in section III (Empirical
Strategy), which, again, isn't granular enough to make any sort of trend
assertion with a high confidence factor.

Section IV (Results) doesn't even try to normalize economic growth against any
other market metric, domestic or international. {Stopped reading entirely at
that point and went back to reading journal articles based on reproducible
results rather than vague social theory and whatever these overpaid analysts
remember from their 100 level stats class. Sigma summation, greek symbols and
subscript don't make you seem smart, unless of course you're typesetting in
TeX ;))}

[1]
[https://www.rand.org/content/dam/rand/pubs/working_papers/WR...](https://www.rand.org/content/dam/rand/pubs/working_papers/WR1000/WR1063/RAND_WR1063.pdf)

------
11thEarlOfMar
So on the one hand:

"they found that everyone became less productive in an aging state."

On the other hand:

"Older workers may be slower to adapt to new technology. If laid off from a
dying industry, their experience may be irrelevant to a new one. Older workers
are more likely to suffer from injury or illness and less likely to have a
college degree."

From the research, it would appear that the balance is in favor of including
the aging workers in the work force.

I'd postulate that, as much as teaching younger workers 'tricks of the trade',
older workers also may steer efforts around mistakes. "We tried that before
and it didn't work because...".

------
reasonattlm
All the more reason to be investing more than a pittance in the development of
rejuvenation biotechnologies. So very close to realization, yet widely
ignored.

Actually, it seems crazy to me that the economic argument gets more play than
the humanitarian argument. People, including the old, seem happy to consign
the aged to suffering and death, but that aging and age-related disease
impacts the economy gets a larger fraction of them up in arms.

~~~
Noseshine
I thought so for along time, but now, growing older myself, I wonder if that
would have a really bad impact and create even more static societies with
people fighting even harder for no change because they might lose something.
Not just in business and families, also in science, that old saying about new
ideas only taking old when the _people_ holding the old ones die still holds
true since we have not changed (same brains) since it was first said.

------
CodeSheikh
Tbh there needs to be a better and respectful transition for old people.
Someone who is 60+ and demands to be employed in a job that a younger person
can do than I am sorry to say this but the younger person deserves a chance at
that opportunity. You had 40 something years to save and build for your better
future. It would be unfair to argue that "no the younger 20 something person
has many more years to come to save and pave for his/her future". What most
people seem to ignore is that 25-35 years in ones life are the prime and
career pivoting years for people, make or break kind of years.

The similar problem is with the old people stubbornly not leaving government
and policy making jobs. Someone who is 70+ does not have the right to make a
policy for a generation who is in 20s and such policy can be (potentially
ie.g. climate change policies) badly implemented for years to come. Why 70
something are even allowed to run for an office, heck currently both
presidential candidates are touching their 70s. Please go retire to Florida or
spend time with your grand kids or travel the world.

Also, there is a large number of well off old population living in dense urban
cities. Take Manhattan borough in NYC for example. The city is very unique and
always bursting with opportunities. Say a twenty something moves to NYC after
college to work for an ad agency or a famous designer or a start-up but
limited funds force her to live in eastern Brooklyn just to make ends meet.
She spends and waste 2+ hours everyday on useless commutes. If the rent would
have been cheaper and more affordable in the Manhattan borough then more young
people can live nearby to the opportunities and make better use of their time.
At the end of the day it is the game of money. Whoever has more money is
always in the lead, where the young ones don't get fair opportunities in order
to get ahead in this game. Unless daddy and mommy loans you their city condo
(which many do).

Also, well off old people do not (frequently) invest in order to create
opportunities for younger generation. We don't hate you, we just want you to
adhere to natural, sociological and economical cycles.

~~~
pcrh
Why does someone who is 30 yrs old have a right to make policy for one who is
70, but not vice versa?

It's a democracy, you know.

By the way, it is the boomer generation that coined the term "Never trust
anyone over 30.". Ironic...

~~~
6stringmerc
Because when the now 30 year old was 0-18 they didn't have any say in the
economic policy or leadership decisions.

Expecting an expiration is fair turnabout. There are some 17 year olds who
work (I did) and maybe should've been able to vote. There are some 70 year
olds who shouldn't be doing either right now I think. Just postulation.

------
lazerpants
Full text:

Planning to retire in the next few years? Please reconsider: The economy needs
you more than you know.

Economists have long expected an aging population to hamper growth for the
simple reason that it means a smaller labor force. But new research has
identified a potentially more powerful impact: Rapid retirements deprive
companies of critical experience and knowledge, which undermines productivity
across the entire economy. Demographics may thus be a critical factor in why
the current economic expansion, which began as the first baby boomers
qualified for Social Security, is the weakest on record.

The findings are contained in a new paper by Nicole Maestas of Harvard
University and Kathleen Mullen and David Powell of the Rand Corp., a think
tank. Because the 50 states are aging at different rates, they were able to
tease out the impact of aging on economic growth. Their conclusion: On
average, every 10% increase in the share of state's population over the age of
60 reduced per capita growth in gross domestic product by 5.5%.

This came through two effects. First, as more workers retire, the labor force
grows more slowly. This, they reckon, explains one-third of the 5.5% growth
hit.

But the bigger effect was through reduced productivity--that is, output per
hour--of the remaining workers. The authors found that this couldn't be
explained by emigration, mortality or an influx of younger, inexperienced
workers. Rather, they found that everyone became less productive in an aging
state.

So what explains this impact?

The authors note: "An older worker's experience increases not only his own
productivity but also the productivity of those who work with him." All else
equal, experienced workers are more productive. One study found that
productivity peaks at age 50, when productivity is 60% higher than for the
average 20 year old.

A journeyman carpenter doesn't just work faster than an apprentice; he also
helps the apprentice learn the tricks of the trade. New doctors diagnose
patients more accurately under the tutelage of experienced practitioners. A
rookie salesman learns the territory faster in the company of longtime
veteran.

Of course, aging can also cut in the opposite direction. Older workers may be
slower to adapt to new technology. If laid off from a dying industry, their
experience may be irrelevant to a new one. Older workers are more likely to
suffer from injury or illness and less likely to have a college degree.

But these disadvantages have shrunk: The average 60 year old in the 2000s was
as healthy as the average 55 year old in the 1970s, and in many occupations,
cognitive skill matters more than physical stamina.

Since college enrollment began climbing steadily in the 1980s, older workers
today are increasingly likely to have a degree.

So how much has aging hurt overall growth? In the past five years, the labor
force grew just 0.6% per year, half the rate of a decade earlier, much of it
due to retiring boomers. Meanwhile, productivity grew just 0.5% per year, the
second-weakest such stretch since the 1950s. The productivity slowdown is a
puzzle. Businesses appear reluctant to invest due to financing constraints, a
dim sales outlook or a paucity of exciting new innovations. The new research
suggests retirements could be part of the story. By applying their state-level
findings to the whole country, the authors estimate that aging will reduce
growth by 1.2 percentage points between 2010 and 2020, with two-thirds of the
effect attributable to reduced productivity.

This could also explain the weakness of wages. When experienced workers
retire, their younger, less-productive replacements earn less. Hourly wages
are up just 2.6% in the past year, but up 3.6% when adjusted for the shifting
demographic makeup of the workforce, according to the Federal Reserve Bank of
Atlanta.

To be sure, the precise magnitude can be debated; most countries, regardless
of demographic profile, have suffered a productivity slump. Nonetheless,
anecdotal evidence is supportive. Many employers say they aren't short of
skills but experience.

"As your employees who have been working in manufacturing start to retire,
you're not just losing people, but that knowledge and experience is walking
out the door," says Jenny Stupica of SSP Fittings Corp., a Twinsburg, Ohio
supplier of hydraulic fittings who chairs a regional network for matching
manufacturing workers and employers. She said people with basic skills and
aptitude for math and mechanical learning can be trained to do manufacturing
work, but what her company really missed was experience.

This all adds to the urgency of overhauling both the private and public
pension systems to encourage later retirement, by shifting benefits to favor
later retirement and reducing tax penalties on earnings for those who are
already collecting Social Security. The payoff: a more solvent pension system
and a more productive economy.

Write to Greg Ip at greg.ip@wsj.com

Credit: By Greg Ip

~~~
clifanatic
> Older workers are ... less likely to have a college degree. ... older
> workers today are increasingly likely to have a degree.

Make up your mind. Who proofreads these things?

~~~
ghaff
In context, it makes perfect sense even if the wording could have been better.
It says that older workers are less likely to have a degree but that the
difference has shrunk with older workers today more likely to have a degree
than in the past.

------
ianai
I can't help but wonder if once the baby boomers really have retired there
will be many labor shortages.

~~~
betaby
No. Because of automation and outsourcing.

------
cm2012
This is why immigration, which skews very young, is vital.

~~~
spriggan3
> This is why immigration, which skews very young, is vital.

Immigrants are also retirees to take care of in the future. You can replace a
whole population with immigrants from the third world you'll still have to the
same problem 50 years later. Mass immigration is a short sided policy than
doesn't fix any long term issue.

~~~
pcrh
Actually, the survival curve of the population is "squaring" [1]. That means
that even while the average age of the population is increasing, the age of
the oldest is not increasing at the same rate. The consequence is that the
recent increase in the ratio of younger to older people will not continue to
increase at the same rate, and will plateau. This also means that increased
immigration will increase the current ratio of younger to older but not
increase the relative burden of the old later on.

[1] [https://i.imgur.com/ONRm4Ep.png](https://i.imgur.com/ONRm4Ep.png)

------
elgabogringo
As to the points in the article: Correlation does not equal causation. Now to
two major points it conveniently left out.

\- First, the overall labor participation rate is at 40 year lows, so there is
no labor shortage. In fact, the rate for those 55+ has gone up and is at 50
year highs.

\- The biggest danger from an aging population is how to fund our entitlements
Medicare & SS.

The reason for a weak recovery and stagnant wages are pretty obvious and
completely avoided by this study and article - which I think was purposeful.

------
karma_vaccum123
Most 45 years olds could not survive for one year on their current 401k
balances; they waited too long to start investing...or they invest too little.
As a result, many will seek to work long after they would have traditionally
retired. Eventually, they will drive down wages as they seek healthcare
coverage as their primary compensation. The young will suffer as they cannot
afford to compete with the old, and youth unemployment will continue to
skyrocket

~~~
virmundi
While I realize the power of compound interest is real, those at 45 can get
into commodities trading in IRAs. ETNs allow people to short or long a
commodity. Paying attention to the tax forms helps reduce end of year non
business related expenses. I personally prefer this for 25% allocation to high
risk because these markets are more rational. You can tell why oil will go
lower. You might not get it perfect, but you can ride both ways by listening
to NPR. This can speed up the interest compounding because you can ride both
sides.

~~~
asddddd
I've spent a decent chunk of time trading volatile assets, and this is really
bad advice.

Sure, you can make money. Odds are, you won't, and if the information you have
comes from NPR you almost certainly won't.

~~~
virmundi
For shorting oil over a month or two, it's fine. The market doesn't get much
more information than what we have on the news. Oil tends to move with
violence. That's covered in the news. Gas inventories and oil glut is covered
too. You do have to dig a bit for rig counts. My larger point is that
commodities seem to be much more intuitive. That's up there with "invest in
what you know." Besides the advice said only allocate 25% to high risk.

~~~
nradov
Congratulations on getting lucky for a while but this is terrible advice. Sure
everyone knows that violence impacts oil prices. But all the other oil traders
have access to the same news that you do. There is no reason to expect that
you can predict the future better than them more than 50% of the time.

~~~
virmundi
But that applies to everything. The commodity markets are more reasonable.
When trading an etn you don't have to take on the contract risk directly. You
still have to worry about contango, but not the contract.

Did I predict the blowout in February? No. But I could tell it was going to
keep going down. Right now it's a bit hard to guess given the doldrums. Still
it's far easier to have a rational position that stocks on general.

~~~
nradov
No, all publicly traded markets are now equally "reasonable". Arbitrageurs
have traded away all of the differences. Don't confuse luck with skill; anyone
can get lucky for a while...

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tombert
I don't really want to be "that guy", but can there by some marker or
something indicating that this is behind a paywall?

~~~
vivekd
Just type the title into google - a free version should be one of the top
results.

~~~
hawski
Or click on the "web" link to the left of "| N comments" to do the same.

