It’s common knowledge that older workers are staying on the job longer, reversing historic retirement trends. Meager savings and trashed portfolios mean that many can’t afford to quit. Social Security no longer penalizes those who continue to earn. And the great majority of older workers is employed in the education and health sectors, which aren’t physically demanding. This is bad news for those hungrily eying their La-Z-Boy recliners, but “there is a lot to like in this surge of experienced workers,” writes Harvard economist Edward L. Glaeser in an editorial in yesterday’s New York Times. More salaries generate more tax revenue; seasoned talent is valuable; and it’s not a zero-sum game in terms of the job market.
A persistent assumption is that when older people stay on the job, fewer spots are available for the next generation. That’s a fallacy. The job pool is not finite. Otherwise the expansion of the female workforce in the 20th century would have put hordes of men on the street, for example - but it didn’t. New workers and older ones have different skill sets and compete for different opportunities. The amount of work is not fixed, nor is its nature. As Glaeser writes, “It’s a mistake to imagine we can fix the problem of youth unemployment by encouraging older workers to retire." (Age discrimination in the workplace is a lousy idea too.)
In fact, counterintuitive though it may seem, the current trend may be good for young workers. “It’s not that older workers never crowd out younger workers, but there are myriad ways in which older workers also increase employment among the young. As older workers earn more, they can afford to buy more products produced by the young. Older workers may be entrepreneurs who employ younger workers, and they may pass along valuable skills to the young,” Glaeser writes.
He also points out that by at least one measure (self-employment) the elderly are often the most entrepreneurial Americans. “I’m not suggesting that West Palm Beach is likely to become the next Silicon Valley, but we shouldn’t pooh-pooh the independent economic activity of the elderly, either.” Many boomers want to keep working, ideally with the flexibility that self-employment offers. As I’ve written about at length, a job conveys not just income but enormous social and psychological benefits. Glaeser ends his piece with a salute to former colleague John Kenneth Galbraith, who worked well into this 90s because he found it fulfilling. Why, then, title his editorial “Goodbye, Golden Years?” Who says only leisure is golden?