Age Invaders

http://www.economist.com/news/briefing/21601248-generation-old-people-about-change-global-economy-they-will-not-all-do-so#mm_hash

In the article Age Invaders, the author describes some of the changes that are expected to take place in the global economy as the global population gets older. He also proposes some solutions that can help to combat some of the problems that this change is expected to bring.

The world's population is getting older. People are living longer, and our population growth is flattening because in most developed nations, people do not have as many children as they used to. This is concerning for several reasons. The first is a concern with the funding for Social Security. When people collect Social Security, they are not collecting on an investment, but rather on the tax dollars of the current workforce. If the workforce in the United States was growing and the average man or woman only lived a few years into their retirement as has happened until this point in history, this would not be a problem. However, the opposite is true, leading to valid concerns with the program. Additionally, the trend toward a higher percentage of elderly people without a huge rise in population size leads to a decreasing potential growth rate, which has serious negative implications on any economy. At least, this has been the traditional way of thinking about the aging population.

The author of this article makes some good points and paints the future as grey, as opposed to black and white. Traditionally, the retirement age has been thought to be age 65. This is not necessarily the case any longer, especially for people with highly skilled jobs. For these people, due in part to advances in technology, productivity increases with age due to the experience, managerial skills, and intrinsic motivation that they have gained from years in the workforce. Additionally, although our population may not be increasing, our workforce is. More women work today than ever before, and this percentage may continue to rise. And with immigration policy changes, our workforce can be further increased.

In addition to a reform of the immigration policies in the United States, the author puts forth another suggestion for improving the productivity of our workforce in order to prevent a reduction of the potential growth rate. He notes that, among people with blue collar jobs, retirement comes early. This is the case for several reasons. The first is that these type of physically demanding jobs become increasingly difficult as one gets older, and productivity decreases. The second is that, as these jobs are generally poorly paid, the opportunity cost of continuing to work as opposed to drawing from ones retirement fund (if they have one) or beginning to collect Social Security is very small. The solution that the author proposes is investing in these workers, teaching them the skills to be productive in other professions later in life. Doing this will both benefit the workers and strengthen the labor force in the United States in the years to come.