More “Graying” of the Workforce
An earlier post (Progress or Problem—July 5, 2019) observed that an increasing number of Americans are continuing to be gainfully employed past the age of 65. That essay debated whether this development represented a positive or negative situation. A recent article in the Wall Street Journal points out that this trend is not limited to the United States. It illustrated that several countries in western Europe as well as Japan are also experiencing the same trend.
Here are two tables that point out that this demographic trend is fairly common in some of the countries of the Organization of Economic Cooperation and Development (OECD).
Labor Force Participation Workers Aged 55-64
Labor Force Participation Workers Aged 65+
Many economists feel these trends are a positive, if not an imperative for these countries. All have populations that on average, have skewed older and are experiencing declining rates of economic growth. The OECD reports that the increased over age 55 labor force participation rates since 2001 in these countries equates to a combined 18.8 million workers, a 5.5% boost to their labor supply. It allows an extension of the current business expansion, even as the unemployment rate hits generational lows.
The trends also help public finances as active workers continue to pay taxes and rely less on pension systems. Germany’s public pension reserves have increased from 2 billion euros in 2005 to nearly 38 billion euros in 2018. Many of the other countries are struggling to adequately fund their accrued pension liabilities and can use help from any and all sources.
So while some will claim that these employment patterns indicate problems, many others will counter that the concerns are misplaced. Modern medicine and nutrition have increased our collective life expectancies and likewise allow us to make positive economic contributions for years longer than our predecessors.