The Longevity Phenomenon: The Impact of an Aging World
How would you characterize the situation in the U.S.?
Hodin: As you would expect, the US is a huge beneficiary of longevity. We are at the top of the list along with our European friends and the Japanese when it comes to healthy aging. We continue with a birthrate of about 2.1, which is replacement level, whereas our industrial democratic partners – countries like Germany (EWG), the UK (EWU), Italy (EWI), the Netherlands, Australia (EWA), Canada (EWC) and of course Japan (EWJ) are all under 1.5. As a result, we are actually in a healthier economic place where we can manage this transition process a little bit easier than most of the Europeans (IEV), the Japanese or some of the others who already have so many more old than young.
Market Realist – The United States (VOO) could benefit from longevity in a big way, if the graying population is treated as an asset and proper policies are put in place. As explained above, the United States is in a better state than its counterparts in the developed world. The above graph shows how the proportion of people aged 65 years and older is estimated to increase to ~21% of the workforce in 2050, from 13.7% in 2012.
The retirement age of the American population is on the rise, as you can see in the above graph. More and more of the elderly population is opting to stay in the workforce longer in order to provide for longer life spans. This trend is only set to increase in the future. The following points explain why older workers may prove to be assets for companies in the future.
- The experience of older workers helps them make fewer serious errors compared to a younger workforce. A study by AARP (American Association of Retired Persons), which studied assembly lines, showed that worker productivity grew up until 65 years old, because the instances of errors made with severe repercussions were lower than in the case of their younger counterparts.
- The focus and drive in older workers is usually higher. As reported by Business Insider, a recent survey by the Pew Research Center observed that 54% of the workers aged 65 years or older worked because they wanted to and not because of financial compulsions.
- A recent report by the U.S. Bureau of Labor Statistics indicates that there is a direct relation between the duration of time a worker spends under the same employer and the age at which he or she joins the employer. Out of the jobs started by workers at 18–24 years old, 69% ended in less than 12 months, and 93% ended in less than five years. On the other hand, out of the jobs started by workers at ages 40–48 years old, 68% lasted more than 12 months and 31% lasted more than five years. The level of job satisfaction is higher in older workers, which makes them a motivated and driven force.
We’ll explore how to unleash this so-called longevity dividend in the later parts of this series.
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