12 ms·

For Economy, Aging Population Poses Double Whammy

63 points by Yhippa 10y ago

11thEarlOfMar 10y ago
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...".
ianai 10y ago
I can't help but wonder if once the baby boomers really have retired there will be many labor shortages.
- betaby 10y ago
  No. Because of automation and outsourcing.
brianvan5155 10y ago
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 10y ago
  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 10y ago
    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.
    - sremani 10y ago
      There is nothing to west of Oregon (technically pacific ocean), most of the 19th century is because of west-ward expansion. People can go to Montana and get homestead etc. Again, this is not beating up on people who are down on luck, My inspiration in life has been Helen Keller, who is blind, deaf and mute, she wrote damn fucking awesome books. You are trying to shoot the messenger, your argument is similar any thing that is worthy has already been discovered. Upward mobility is hard, it usually is and has been and historically there are only few times, when a raising tide rose all the boats, but there is a thing about tides, they raise and fall.
reasonattlm 10y ago
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 10y ago
  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.
elgabogringo 10y ago
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.
lazerpants 10y ago
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
cm2012 10y ago
This is why immigration, which skews very young, is vital.
- spriggan3 10y ago
  > 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 10y ago
    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
  - deleted 10y ago
    [deleted]
  - vkou 10y ago
    We barely solve problems 10 years in the future. Having a plan in place to put off a problem for 50 years would be very long-term thinking.
- tomp 10y ago
  Because there's obviously an infinite supply of young people on Earth.
  - cm2012 10y ago
    Enough for 50+ more years, easily.
karma_vaccum123 10y ago
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 10y ago
  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 10y ago
    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 10y ago
      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 10y ago
tombert 10y ago
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 10y ago
  Just type the title into google - a free version should be one of the top results.
  - hawski 10y ago
    Or click on the "web" link to the left of "| N comments" to do the same.
  - beachstartup 10y ago
    if even people on HN still don't know about this trick, i guess i'm not surprised it still works.
- PKop 10y ago
  How is this not known already by so many? 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.
  - gedy 10y ago
    Because it's a totally opaque and unclear UI pattern?
  - tombert 10y ago
    I'm sorry to upset you. I was unaware that this was a feature.
RobertoG 10y ago
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 10y ago
  > 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).
tonyedgecombe 10y ago
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 10y ago
  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 10y ago
    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 10y ago
      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 10y ago
        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/fed_individual_rate_history_nominal.pdf 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.
iheartmemcache 10y ago
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/WR1000/WR1063/RAND_WR1063.pdf https://www.rand.org/content/dam/rand/pubs/working_papers/WR...
6stringmerc 10y ago
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/imageroot/2016/07/03/job%20additions%20total%20by%20age_0.jpg 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...
- tcoppi 10y ago
  I'm amazed that this is the first halfway-reasonable post to come out of this discussion. The real story here is the demographic breakdown the western world is experiencing, and that Japan has been knee-deep in since the 90s. This has tons of implications, from expected 401k returns that are expected to fund our retirements, to the evidenced fact that older people are working longer, retiring later, and hence eating up a lot of the income and job gains made in the last decade.
  - 6stringmerc 10y ago
    Honestly it took me a long time to turn 'anger' into 'acceptance' and then into 'context' regarding this subject. I was raised in a very frugal home that spent good money on "good" things (ex: education, learning experiences, an Encyclopedia Set for Christmas one year), avoided really buying in to materialism (ex: driving older, paid off cars) and I appreciate how different this was from apparently a great deal of my peers. It's unfortunate. If I could go back and tell my parents to cool it with the "success is earned here in the US more often than not" line of motivation and be a little more realistic about power dynamics, I wouldn't have spent as much time trying to figure it out, to see things as they kind of sort of work. I'm not angry anymore, per se, just becoming a grumpy old man, as one is wont to do.
CodeSheikh 10y ago
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 10y ago
  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...
  - 10y ago

63 points by Yhippa 10y ago

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...".

ianai 10y ago

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

betaby 10y ago
No. Because of automation and outsourcing.

brianvan5155 10y ago

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 10y ago
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 10y ago
  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.
  - sremani 10y ago
    There is nothing to west of Oregon (technically pacific ocean), most of the 19th century is because of west-ward expansion. People can go to Montana and get homestead etc. Again, this is not beating up on people who are down on luck, My inspiration in life has been Helen Keller, who is blind, deaf and mute, she wrote damn fucking awesome books. You are trying to shoot the messenger, your argument is similar any thing that is worthy has already been discovered. Upward mobility is hard, it usually is and has been and historically there are only few times, when a raising tide rose all the boats, but there is a thing about tides, they raise and fall.

reasonattlm 10y ago

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 10y ago
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.

elgabogringo 10y ago

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.

lazerpants 10y ago

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

cm2012 10y ago

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

spriggan3 10y ago
> 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 10y ago
  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
- deleted 10y ago
  [deleted]
- vkou 10y ago
  We barely solve problems 10 years in the future. Having a plan in place to put off a problem for 50 years would be very long-term thinking.
tomp 10y ago
Because there's obviously an infinite supply of young people on Earth.
- cm2012 10y ago
  Enough for 50+ more years, easily.

karma_vaccum123 10y ago

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 10y ago
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 10y ago
  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 10y ago
    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 10y ago

tombert 10y ago

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 10y ago
Just type the title into google - a free version should be one of the top results.
- hawski 10y ago
  Or click on the "web" link to the left of "| N comments" to do the same.
- beachstartup 10y ago
  if even people on HN still don't know about this trick, i guess i'm not surprised it still works.
PKop 10y ago
How is this not known already by so many? 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.
- gedy 10y ago
  Because it's a totally opaque and unclear UI pattern?
- tombert 10y ago
  I'm sorry to upset you. I was unaware that this was a feature.

RobertoG 10y ago

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 10y ago
> 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).

tonyedgecombe 10y ago

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 10y ago
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 10y ago
  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 10y ago
    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 10y ago
      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/fed_individual_rate_history_nominal.pdf 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.

iheartmemcache 10y ago

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/WR1000/WR1063/RAND_WR1063.pdf https://www.rand.org/content/dam/rand/pubs/working_papers/WR...

6stringmerc 10y ago

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/imageroot/2016/07/03/job%20additions%20total%20by%20age_0.jpg 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...

tcoppi 10y ago
I'm amazed that this is the first halfway-reasonable post to come out of this discussion. The real story here is the demographic breakdown the western world is experiencing, and that Japan has been knee-deep in since the 90s. This has tons of implications, from expected 401k returns that are expected to fund our retirements, to the evidenced fact that older people are working longer, retiring later, and hence eating up a lot of the income and job gains made in the last decade.
- 6stringmerc 10y ago
  Honestly it took me a long time to turn 'anger' into 'acceptance' and then into 'context' regarding this subject. I was raised in a very frugal home that spent good money on "good" things (ex: education, learning experiences, an Encyclopedia Set for Christmas one year), avoided really buying in to materialism (ex: driving older, paid off cars) and I appreciate how different this was from apparently a great deal of my peers. It's unfortunate. If I could go back and tell my parents to cool it with the "success is earned here in the US more often than not" line of motivation and be a little more realistic about power dynamics, I wouldn't have spent as much time trying to figure it out, to see things as they kind of sort of work. I'm not angry anymore, per se, just becoming a grumpy old man, as one is wont to do.

CodeSheikh 10y ago

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 10y ago
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...
- 10y ago