Pass the Prunes; We’ve Got To Go

“A growing segment of the aging population will work . . . to blunt the effect of undeniably adverse demographics . . . .”—By Sanford Rose

Dolors & Sense

By Sanford Rose

KISSIMMEE Florida—(Weekly Hubris)—5/26/2014— We are the old—of increasing girth and decreasing shank.

We’re supposed to slow down the economy by 1) quitting the work force, and 2) decreasing the pool of available savings.

And if we don’t do 1) and 2), we lower growth by 3) slowing the rate of productivity improvement.

All that follows from the conventional wisdom.

Oldies are supposed to stop working and stop saving (their rainy day is now).

They’re also alleged to be relatively inflexible, so even if they stay in the labor force and continue to save, they’re not supposed to be able to accept new ways of working very readily.

The resulting combination of fewer workers, higher interest rates (stemming from those lower savings), and weaker productivity growth (stemming, in part, from that resistance to innovation) equates to slower overall economic advance.

This view of the future may indeed be broadly accurate, although much depends on responses to the expected shortage of labor (an odd thought for the millions of currently unemployed), including possible changes in our immigration policies.

But the problems are perhaps overstated.

The startling fact is that about one in five Americans over the age of 65 now stays on the job.

That compares with only one in eight at the beginning of the century.

Retirement is increasingly for the lesser-skilled, whose job satisfaction is generally low.

The greater the level of skill and education, the greater is the reluctance to quit the labor force.

So those oldies who remain in harness are disproportionately skilled and productive, and, concomitantly, very well compensated.

In all likelihood, they will continue saving a large chunk of their hefty pay, especially since both employer and government sources of pension income are drying up,.

Thus, a growing segment of an aging population will work (pun intended) to blunt the effect of undeniably adverse demographics on labor supplies, interest rates, and productivity advance.

Yes, indeed, pass the prunes—for that regularity, but also for our accustomed regularity of job attendance.