For Economy, Aging Population Poses Double Whammy
wsj.com
wsj.com
http://www.zerohedge.com/sites/default/files/images/user5/im...
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...
It's funny to think that this was exactly what I was thinking when I'd been working for 10+ years in my early thirties looking for a house after they'd skyrocketed in value the previous few years. Inflation had eaten away at any savings I'd made, gas lines were a recent memory as well as several recessions one after the other. Oh, this was in the early 1980s.
I get it. I've got kids coming into this economy and I'm worried for them. I also get that there are a lot of people my age who really are self-centered a-holes and consistently vote to keep the pie moving up toward them.
What I think we need is massive infrastructure investment funded by both current taxes (to get the people with money to pay) and low cost debt (so the beneficiaries of the investsments can pay) to kick the hiring structure down to the people that can do those jobs.
Politically, to a large voting bloc - disenfranchised Millenials - I think it could pull some water (not to mention stir up encouragement from the older population that "those dang kids" are doing something good with their time). People would have to go where the work is, more than likely, but that's a trade-off. Unfortunately a great deal of the "low interest debt" seems to be funneling into equities and buy-backs, only worsening the transfer of wealth to investor classes rather than working classes, at a time when, really, it doesn't make sense to do that.
Your neighbors who took those zero interest rate loans and are living "the life" going on vacations and buying new cars... it's all a big show, and it looks grand from outside, but they're probably experiencing all kinds of stresses that you don't. These are the kinds of people who keep the psycho-pharma complex profitable.
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.
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.
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).
If a generation inherits a better world than they leave to their kids, I don't think they get to blame how hard it would have been to have done better. The buck's got to stop somewhere.
And having failed to do little but enrich themselves, at the very least your generation can stop talking about lazy and entitled the younger generation is. The hypocrisy is staggering.
Those nominated for the Supreme Court come from a short list of federal judges and other legal wonks. No average voter has any idea of the name of any of these people. Therefore, they cannot be said to be voting on a candidate based on their Supreme Court picks, except in the most liberal/conservative sense.
Case in point: Merrick Garland. He was on everyone's short list, including mentions by Republican leaders as a candidate who could be confirmed by the Senate. But the average voted hadn't heard his name before he was nominated by Obama.
It's really the political class that sold us out to privatization and globalization. That's where the buck stops. It happened regardless of who was voted in. Both parties were captured, and 3rd parties are not a realistic option in our system. We are /not really/ a democracy.
"Whoever is responsible, it's not me and my friends!"
> No average voter has any idea of the name of any of these people.
"I would like to not do any research, because taking responsibility is hard"
> the average voted hadn't heard his name before he was nominated by Obama.
Which is fine. The average voter knew (or should have known) what Obama stood for. What Bush stood for. What Clinton stood for. And so on. They could've then reasonably inferred what kind of judges they'd pick. And by looking at the age of SCOTUS judges, you have a good guess when replacements happens.
The only judge where you could've made the case is surprising given who nominated them is Scalia - he tipped a bit further on issues than Reagan.
Merrick is right in line with everything Obama ever stood for. Nobody is surprised that Obama would nominate a centrist with slight liberal leanings. The particular name might be unknown, but the choice isn't.
> It's really the political class that sold us out to privatization and globalization.
That political class didn't come into life fully formed. People voted for them, and shaped the direction of politics. And they're there because of money in politics. Which points us right back at the Supreme court, via Buckley vs. Valeo. (and Citizens United vs. FEC)
(Not to mention that many people liked the initial effects of globalization and privatization. It's not like nobody voted for NAFTA, e.g.)
To the extent that's true, its the result of major party primary elections and other processes and the decisions voters made in those (including the decision to stay out of them.)
I can understand that many people did not / would not show up, though. That's a problem...
Her/his point was, I think, that, even people in a democracy, have very little control over what policies are followed. And that you will see that happening to you, too.
> If any generation had the power to change things how things ended up today, it was yours. To pick one example: all the supreme court justices who presided over the Citizens United case were appointed during your prime years.
The laws overturned in Citizens United had only been on the books a scant few years, and those laws made exercises of free speech illegal.
Whether or not big money in politics is a problem, the Citizens United decision was decided in favor of free speech moreso than in favor of dark money, and it's quite likely that if you voted for the presidents who appointed the majority justices in citizens united that you also voted for the guy whose law was overturned by it. Ergo, casting it as a one-side versus the other form of complicity does not work.
That sounds like demonizing a whole anonymous group based on personal perceptions.
You specifically, unlikely.
Your generation brought in Reagan. Your generation (along with Gen X) pretty much has run the government since 2000. The great shift to the right was largely your doing and would never have been sustained if your generation wasn't what it was. :/
http://www.people-press.org/2015/04/30/a-different-look-at-g...
You brought the country so far to the right your generation actually flipped from R to D. It was truly quite the amazing transformation from relative sanity to batshit crazy. It completely obliterated balance in this country.
http://www.vox.com/2016/7/25/12256510/republican-party-trump...
> “Goldwater’s nomination in 1964 was a historical disaster for the conservative movement,” Roy tells me, “because for the ensuing decades, it identified Democrats as the party of civil rights and Republicans as the party opposed to civil rights.”
For better or worse, your generation and Gen X has to own the shift to the right in this country because you are largely the generations responsible for it. That rightward shift has gutted everything the Millenials depended on to climb economically from schools to infrastructure to rational tax policies.
Generation X was under 18 when Reagan was elected.
You speak to your friends, you do what you can within your life, you support justice and oppose actual evil (not sloganed evil). You respect respectful people of all politics. You play with your kids and hope for the best.
You need to realize it isn't personal against you.
If a majority of a group vote in favor of X, they bear some responsibility for it. Particularly when they don't rebuke it after the fact.
> People have a right to speak, and to vote for their direction. Sometimes people win, sometimes people lose. Sometimes things go really badly, but we can't all be President or members of Congress.
Obama and HRC were (economic policy wise) 60s Republicans. Modern Republicans are basically Reagan-derivatives.
https://www.washingtonpost.com/posteverything/wp/2015/11/05/...
> One moment in the third Republican presidential debate encapsulates everything terrible about baby boomers and the way they’ve pillaged the U.S. economy. It came from Sen. Marco Rubio of Florida, a Generation Xer, who offered the standard line — you can hear it from the mouth of almost any American politician today — on how to keep Medicare and Social Security solvent. Rubio defended the idea that future workers will need to retire later or receive fewer benefits from those safety-net programs than current retirees. “Everyone up here tonight that’s talking about reforms,” he stipulated, was “talking about reforms for future generations. Nothing has to change for current beneficiaries.”
I don't feel the need to be polite about it when elected politicians are comfortable stating their plan to "reform" the system is to screw me and people my age in favor of another group of people.
Actually, if Trump wins, they'll get blamed for Donald Trump. Each and every one of them. :)
I am very glad many older Americans can make it. Taking care of the non-working elderly Americans is mostly a chore that I see in both my day job and my family's own history.
One true benefit of being an older worker is you don't ever have to put up with any BS at your job. I work now at the most hated retailer and love it, but will quit the minute I stop liking it. I will move on to the next part time job. When I was in the tech scene I never had the choice to leave because the pay was too good. But as an older dude, the freedom from saying "Screw you employer" is better than power or prestige
The data tells us that almost all of the new jobs created since the recession have gone to those with at least a college education:
http://www.bloomberg.com/news/articles/2016-06-30/americans-...
There you can view your statement.
Can anyone point me to some well argued work that squares the above 2 sentences? I'm an immigrant to the U.S. myself, so I'm not anti-immigrant per se, it's just that some things have left me scratching my head.
A large number of workers are needed in the US to do low-wage tasks - pretty much so their employer can profit from their labor - and some of the issue is that illegal immigrants wouldn't be counted as part of the labor force (because they aren't supposed to be here), but in theory, they are displacing the opportunity for Citizens to do those jobs.
The issues are more complex than I describe, and they certainly will apply to skilled labor too (ex: nurses to care for an aging population). One of the major contentions is that companies, in reality, post jobs with requirements that are high (10+ years! X, Y, Z skills!) but offer a salary or compensation that is way, way below market value. This means that technically yes, the company can not find a qualified candidate to do the job, because they have targeted people who would be willing to do it for much less just to, well, have an opportunity to get into the US.
It is very backwards for the US to be "anti-immigration" as a general concept (it's the foundation of the nation!), so how the arguments get twisted make it hard to figure out in some ways. This explanation is simply my perspective using my observations and stuff I read, so it is not peer reviewed or anything like that!
Which is why I said "real unemployment." The official rate may be 6% but the real rate may be 20% (if we were to count the people who have given up and are now on welfare).
All our problems are laid at the door of land price ramping.
Anecdotally, I know an astounding number of people over 55 that still hold a mortgage. Hell, I've known people who retired with a mortgage.
So I'm guessing that in many cases they're a cashier because if they don't work they'll lose the house.
Heck no! Stop working, start dying.
The thing to do here is to sell the house and move to a lower COL area, like all the HN threads that mention SF housing advise.
Or for that matter, tell that to the person who already lives in Bumphuck, IN. My wife has high school friends in situations like that. There is no cheaper place to live, but that mortgage still needs to be paid.
IMO, a lot of this has to do with housing subsides keeping people near city's who don't need to be near city's. If your rent has not kept up with inflation for the last 20+ years then why move? You don't have any equity to liquidate and rent control is keeping the price stable so just stay.
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
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
subsequent HN comments https://news.ycombinator.com/item?id=10826836
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.
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.
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.
We may be agreeing, but I'm always a little worried when people vaguely argue for more infrastructure. We pursue such enormous and unproductive road-building in this country in the name of growth. Induced growth is a siren's song to our governments; they've already driven us onto the rocks, but it would at least be nice if we'd address the problem before we sink the country anymore with huge debts, public and private.
I love the SF/San Jose/Marin climate, but it's too crowded and too expensive to live there :-(
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?
In places where it's much more, buying is a bad idea (unless you're really committed to living there forever and are really committed to speculating that prices will only even go much higher there -- but that's taking on a huge risk, not decreasing it).
Remember, you can always just SAVE the money you would have put towards mortgage principal. Sure, with a mortgage after 30 years you have a house free and clear. But at the same price, a renter who saved the money that would have gone towards mortgage principal still ends up with a pile of money after 30 years -- a pile that is probably more diversified rather than being all in one single asset correlated to a single metro region's economy. I mean, who knows if the area I buy in will still be popular in 30 years?
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
But perhaps this is a different mentality between US and Germany.
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)
I've seen both (OK, they were not married, but in a commited relationship), where of course the latter case is more common.
Buying a home can be profitable, but it can also impact the career (e.g., tie one up in the wrong geography). Many landlords make this work by investing lots of time in it (and scaling it up to multiple properties).
A younger person working in tech will IMO be much better off investing this time into learning new things, networking. My 2c.
Was a thing. The 0% down have been thoroughly killed off by the financial crisis. I could agree with everything you said right up to 'easy', because it's incredibly hard. London is full of young renting professionals who aren't able to save enough to outrun house price inflation to even get a deposit together.
Except for all those folks who had to declare bankruptcy during the 2008 crash because their mortgage reset and the value of their house plummeted.
In the time of negative bond yields?
It doesn't actually change the quantity of economic output needed by old people whether their pension is private or public. Either it's routed through taxation or dividend payments, but the end result - diverted from accumulation/investment into consumption - must be the same.
Unless, of course, the move to push people into private pensions is so their value can be reduced without anyone in particular having to take responsibility for that. Philip Green passim.
Sure, living below your means is generally good advice; but my point was that as interest rates go down that affects the discount rate, and the amount of income required to achieve a particular nominal income in retirement increases dramatically.
(Also, there's quite a lot of people who are barely able to get over the first financial hurdle of paying rent, let alone buying a house, both of which are more important than pension saving. Being a renter even with a big pension is much worse than being a homeowner with a small pension.)
"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."
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
And it would push the top marginal tax rates to ~55-60% (40+15+state).
Or should we continue to allow the top income tiers to siphon from the economy while everyone else is slowly lowered into poverty?
http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
I'm not necessarily arguing against raising taxes, I'm pointing out that it would be a huge change in the program.
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).
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.
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.
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.
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).
I can't speak to the majority of pensions funds, but there are State funds that assume 8.5% returns while having 50-60% of the fund in bonds. Those are the Minnesota numbers, and they tend to be pretty good for a State. They're ~75% funded, and that makes them 19th best in the country. If you face the reality that their assumptions are insane, then you have the wrestle with more realistic projections of how much they've really funded.
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.
> can the real economy sustain the population...?
> Do we have the resources or not?
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/ - 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 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).
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.
Your idea was right, you just seem to confuse who these people you are talking about are.
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...
"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...".
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.
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.
It's a democracy, you know.
By the way, it is the boomer generation that coined the term "Never trust anyone over 30.". Ironic...
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.
< but the younger person deserves a chance at that opportunity. You had 40 something years to save and build for your better future.
Work harder and be better than the older person... Business is blind and choses the best.
< Please go retire to Florida or spend time with your grand kids or travel the world.
When you get to be 70 your body is failing and your sentence is a dream to the majority of older people. Most older people are like Fussell's Class, "Out Of Sighters." I suspect your comment was from one of a rich(er) perspective.
< Someone who is 70+ does not have the right to make a policy for a generation who is in 20s
There is a couple on my route that do not have kids. They are very active in their political party. They enjoy politics like others enjoy knitting, golf or reading. They are retired. I once said to them something to the effect, "Why do you care [about Obama and all the ills, etc..], you don't have a ticket into the future - you didn't have a child. It would be like my deceased childless uncle setting policy from his 1930's living room in New Jersey for me when I was born in the 60's." I reaized I was strong in my opinion, and they truly never gave it much thought. I will agree with you that the young people should set their destiny, not people my age. I have moved out of the way, so to speak. My opinions are less important than my son's and his generation. I think any reasonable parent would want that for their kids.
But I do see something I never recall when I was growing up in the "Heidi Bowl" and B&W to color transition days of life": A lot of people have a lot of money, and they seed their children with a very good start. At least half of the new howe owners on my route are under 30 children/couples who have been significantly helped.
So before you bash all the 70 year olds out there, they may be funding your spouse someday!
And yes my comments were mostly targeted at richer older people. Come live in Manhattan and see it for yourself what I am talking about. I dont want to spend my life in NYC or SF. I want to spend 10+ good years here to learn and contribute towards the industry and move out of here and give the resources to younger generation instead of hoarding on them. My perspective my comments they are all revolve around urban dwelling and not most of the older class living peacefully in suburban sprawls.
< people instead create parallel opportunities that would require less consumption of resources.
I get that. How?
< I want to spend 10+ good years here to learn and contribute towards the industry and move out of here and give the resources to younger generation instead of hoarding on them.
I get this too.. and actually, you are way ahead of me as compared to my "youth" I wanted to be CEO and thought it was going to be as easy as a proof in geometry which required no effort.
Aging is a funny thing. Viewed from afar it is understood by way of observation. Viewed from inside it is understood by reflection.
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
Ok.. but I would like to propose another theory, that could be complementary to this one, not necessary an alternative, from what I see around me.
Younger people are poorly paid, understand that they could lost their job next week, and, in general, have a, in my opinion, justified feeling of being exploited. In consequence, they don't give a damn about the good of the corporation, because, they understand that the corporation doesn't give a damn about them.
This isn't a new thing. the company I'm working for now made that mistake in the 1980's - we were forced to have our first layoffs and for 20 years after almost nobody was hired (our corporate culture is very much based on once you are hired you have a job for life if you want it)... Now there is a plan in place to ensure that a few young people are hired even in the bad years so that retirement doesn't cost too much.
Make up your mind. Who proofreads these things?
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.
- 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.
Sure, you can make money. Odds are, you won't, and if the information you have comes from NPR you almost certainly won't.
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.
Every. Single. Time. People keep saying this...
Just click the WEB link at the top!!!
Or Google the articles title, free from there.
Sometimes you need to be in cognito.