Myths of an Aging Workforce

Practical Economics

Myths of an Aging Workforce

The financial pressure to retire later is strong. The job market is woeful for younger workers. But that doesn't mean baby-boomers are hogging the jobs.

The list of ills still weighing down the U.S. economy is long. Employers have retrenched since 2007, and the nation's unemployment rate is at 8.6%, 30 months after the recession officially ended. Wage gains are paltry for anxious workplace survivors. Income inequality has widened dramatically in a nation where equality of opportunity ranks among the central tenets in history. The mood is fearful and the anger raw on talk radio, the Internet, and in the political arena, from the Tea Party to Occupy Wall Street to Capitol Hill.

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As if that weren't enough, it now appears that intergenerational conflict has been added to the list of grievances. Aging baby-boomers are reluctant to quit their jobs. They've gotten the message that the safest retirement plan is to keep earning an income during the years when an earlier generation of workers said goodbye to their colleagues. The graying of the workforce limits the number of job slots available to young adults and also blocks the promotion pipeline.

The numbers seem to support this argument. For example, the labor force participation rate -- the percentage of the working-age population in the workforce -- for those 65 and over reached 18.2% in November -- up 11.6 % from the beginning of the last recession in December 2007. The participation rate for the 55 and older demographic rose during the same period by 3.6%, to 40.3%. In sharp contrast, the participation rate of 25-to-54-year-olds is down 2.17%. The decline for 16-to-24-year-olds in the labor force is 6.3%.


There's no question the financial pressure to retire later is strong. There's also no doubt that the job market is inhospitable to younger workers, including newly minted college graduates.

Just doing what makes sense

Yet the incendiary notion of an intergenerational conflict over scarce jobs doesn't withstand scrutiny. "From a public policy point of view, it's wrong to blame older folks who are healthy and still working, especially when Social Security and Medicare benefits are under threat, and fewer employers are providing retiree health benefits," says Joseph Quinn, an economist at Boston College and an expert on retirement. "The inference is that the older workers are being selfish, whereas in fact those who can and do work a little longer are being sensible. It's the job of the macroeconomy to create jobs for people who want them."

Quinn is spot on. The basic narrative of the current job market is how bad it is for everyone -- young, middle-aged and older, male and female, college-educated and less-educated. Of course, some groups are doing better than others -- college graduates versus high school dropouts, for example. Yet every group has a legitimate grievance about work. Instead of highlighting intergenerational conflict, it makes more sense to focus on a shared experience among the generations.


Blame the economy

The current job tension between younger and older workers is the consequence of a poorly performing economy. Job lock isn't a permanent condition. For example, a March 2011 survey by Met Life found that one in three employees surveyed hoped to be working somewhere else within the next 12 months. Even more striking, a November survey by Civic Ventures, a San Francisco-based think tank, found some 25 million Americans between the ages of 44 and 70 saying they want to start their own business or create a nonprofit venture over the following five to ten years.

"The baby-boomers aren't going to retire," says David Stillman, co-founder of BridgeWorks, a consulting firm specializing in generational issues in the workplace. "But when the gloom lifts, we could see a mass exodus of baby-boomers who have kept their mouths shut but are eager to leave their employer. I predict we'll see boomers go into nonprofits and start-ups, places where they can make a difference."

Experience also warns against facile theories about job conflicts. For those readers with memories forged during the '70s and '80s, remember how commonplace it was to blame the growing number of women entering the workforce for blocking opportunities for men? It was wrong then, and some two decades later the idea has been laid to rest.


Similarly, in the early '90s the popular job conflict to fret over was between immigrants and native-born Americans. Yet economists have carefully documented that from high-flying Silicon Valley to rejuvenated urban neighborhoods, newcomers increased the size of the U.S. economic pie rather than reducing it.

There are many things disturbingly wrong with the economy. Generational warfare for a limited number of job slots shouldn't be and won't be one of the concerns -- at least not when the economy is healthy again. So, to use a baby-boomer saying, older workers should "keep on keeping on." Hopefully, at a job that offers meaning and flexibility, as well as a paycheck.