By George Lorenzo – Published June 24, 2021 in Workforce Monitor – Subscribe to the WFMonitor eNewsletter
Prognosticating anything is always a risky endeavor, but here we attempt to paint a picture of what the world of work may or may not look like for older adults (age 45 and older) in the not-too-distant future.
For one, older adults will be a much larger portion of the world’s population than in the past as medical advances and healthy lifestyle research continues to keep them kicking and ticking in what’s now commonly called “The Longevity Economy.” Combine that with the trend of death rates outstripping birth rates, except for in Africa, where fertility rates are not declining – and things start to get a little dicey.
As noted in a recent New York Times article, the May 2021 census announcements revealed that China and the United States had the slowest rates of population growth in decades and thus pointed to the possibility of “hard-to-fathom adjustments.” That scenario predicts there will be fewer workers and more retirees, which “threatens to upend how societies are organized. . .” A small town in southern Italy, Capracotta, could represent things to come: A sign on an old eighteenth century building there reads “Home of School Kindergarten — but today, the building is a nursing home.”
This population trend also heralds the possibility of a non-retirement scenario in which older adults will be working well into decades beyond their typical retirement years. In this scenario, the age requirements for receiving government-subsidized retirement benefits will continue to rise. In Germany, for instance, the retirement age was raised to 67 and a recent attempt was made to boost it to 68. Could that kind of policy change soon be coming to the U.S.?
Older Adult Mindsets & Circumstances
Baby Boomers, in particular, don’t consider themselves old until around 72 years of age, or so claims a still-relevant-and-perhaps-more-relevant 2009 Pew Research Center study. The study notes that long held culturally and historically embedded notions about how to retire are becoming outdated. Aging-related scientists are now saying that a life overly focused on leisure and passive entertainment could actually foster poor health.
Secondly, as explained by Paul Irving, editor of “The Upside of Aging: How Long Life Is Changing the World of Health, Work, Innovation, Policy and Purpose,” and Chairman of the Milken Institute’s Center for the Future of Aging: “There are different reasons why retirement is changing. Many people have dramatically inadequate and in some cases no savings beyond social security. The increasing costs of healthcare and housing present a remarkable challenge. The opportunity to generate income for a longer period of time is not an elective for fun and interests. It is a need for resources and the opportunity to maintain an acceptable life.”
According to the National Institute on Retirement Security, “40 percent of older Americans rely only on Social Security income in retirement. Social Security alone is not considered sufficient for a secure retirement, and it was not intended to stand alone.”
From another perspective, the late Gene D. Cohen wrote 15 years ago in “The Mature Mind: The Positive Power of the Aging Brain” that “Some people never retire in the classic sense; they continue writing or teaching or coaching or performing until the end of their lives. And not because they have to, but because they want to. Retirement is also being reinvented in social and psychological ways. Despite the stubborn retention of the notion that older people are ‘over-the-hill,’ it’s becoming increasingly clear that the second half of life can be more rewarding, stimulating, enjoyable, and rich than the first half.”
Employment Options & the Labor Market
Many older adults straddle between or are ensconced in being forced to work to survive and finding rewarding work they can feel enthusiastic about as they enter their elder years. This is when ideas about starting a new career in a totally new field, earning new credentials, or starting a long-desired entrepreneurial venture come into play. By taking a look at the demographic and financial trends related to the labor market and business growth, in general, perhaps we can paint a picture of the opportunities or lack of opportunities that exist in these older adult realms.
In the “State of the Older Entrepreneur During COVID-19,” by Fed Small Business, a research and analysis service by the 12 Reserve Banks of the Federal Reserve System, it is noted that 80% of all small business owners are age 45+. In 2020, they faced “business closures, depletion of personal assets, and weakened revenue streams. These impacts were even more pronounced for older entrepreneurs of color.” Moreover, “Only 5% of owners foresee no significant challenges ahead in 2021. In keeping with this, strong majorities of older small business owners—across all demographics—reported that they would apply for additional government aid.”
The Fed Small Business report goes on to say that for many small businesses, the Paycheck Protection Program fell short and their needs for assistance are still ongoing well into 2021 and beyond, if their businesses even stay alive that long. Subsequently, “The experience of the pandemic creates opportunities for financial institutions to rethink how they can serve the financial needs of older entrepreneurs, particularly those owned by people of color, more effectively.” However, at this time, it remains to be seen how and when these needs may or may not be met.
In “The New Builders: Face to Face with the True Future of Business,” published in 2021, co-authors Seth Levine and Elizabeth MacBride explain how big companies like Amazon, Target, Walmart, etc. have pretty much destroyed the multiplicity of entrepreneurial opportunities that existed in the past. Over the years we have witnessed how many of our country’s Main streets are no longer the same. The familiar mom and pops and family-owned businesses of the past have long been diminished by “big-box” retailers. “In this environment, entrepreneurship is dying,” they write. “We’ve lost touch with the critical part of our society that is created by smaller businesses, which are responsible for much of our innovation and dynamism, most of the job growth, and produce nearly half of US Gross Domestic Product.” They claim entrepreneurship has declined over the past 40 years because it has become much more difficult to get small business loans and much harder to find angel investors, especially for people of color.
Additionally, “today’s entrepreneurs are older than many people realize. They are talented innovators and businesspeople with an extra dose of grit . . . They’re apt to be driven by the idea of contributing to their community as much as by the idea of profit, though they often believe they can do both.”
Despite the claims of difficult times for entrepreneurs made by Levine and McBride, AARP’s Longevity Economy studies point to the positive contributions older adults bring to the economy, provided that ageism abates as it was starting to abate pre-pandemic. For example:
- The 50-plus age group will be a critical driver of job sustainability in the U.S. through 2050. The Longevity Economy outlook found that in 2018, people age 50 and older supported 88.6 million jobs in the U.S., through jobs they hold or create, directly or indirectly. This is projected to grow to 101.7 million jobs in 2050.
- However, age discrimination against Americans age 50-plus cost the U.S. economy $850 billion in 2018. The Economic Impact of Age Discrimination report in the Longevity Economy outlook studies found that the potential economic contribution of the 50-plus age cohort could increase by $3.9 trillion in a no-age bias economy, which would mean a contribution of $30.7 trillion to GDP by 2050.
For another picture of the older adult labor force, a New York Times piece in June 2020 headlined “A Pandemic Problem for Older Workers: Will They Have to Retire Sooner?” emphasizes an April 2020 SSRN report which stated that 60% of individuals who left their jobs through early April 2020 said they were retired, up from 53% pre-pandemic in January 2020. “The largest increase was among people over 65, but nearly half of this group were 50 to 65. . .”
In addition, “The combined rate of unemployment and underemployment for workers over 65 was 26 percent in May 2020, roughly five points higher than for those ages 25 to 54. That is the largest gap since record keeping began in 1948 . . . ” The gap was attributed to “the decline in unions, and the shrinking bargaining power of older workers.” Increased health risks related to the virus for older adults in comparison to their younger cohorts were also factored in.
Older Adult Workers May Be Needed
Increased unemployment and retirement rates for older adults can also spell out the possibility of companies losing out, especially when considering the estimated population declines of younger workers due to low birth rates. A Harvard Business Review article published June 14, 2021 stressed that companies will need to adjust their hiring practices to take into consideration the typically overlooked pool of older adult workers. “A recent review of a vast literature of labor market research since the 1960s shows that these older workers have higher productivity than many firms assume.”All this begs a few questions: Will a drop in older adult entrepreneurship, as the aforementioned research noted, be balanced out by an increased hiring spree of badly needed older adult workers (who are also more dependable and better at decision-making than their younger cohorts), and how will that possible scenario play out in our overall economic well-being? The clear message seems to be don’t count out older adults as entrepreneurs/employers and/or employees at both large and small businesses. They’re here for the long haul due to increased life spans and continue to be more than willing to keep on keeping on.
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