How the ‘Silver Economy’ Could Get Us to 4 Percent Growth

How the ‘Silver Economy’ Could Get Us to 4 Percent Growth

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Public and private leaders gathered at the once-a-decade White House Conference on Aging (WHCOA) this past Monday. The goal of the conference was to focus on the “opportunities of aging.”

Also this past week,  Americans all over the country praised, condemned, vilified and embraced Jeb Bush’s call for us to “work longer hours.” Though Jeb has since recalibrated his remarks, the media storm rages on.

If these two events seem unrelated, they’re not. Both are concerned with one of the foundational issues of the 21st century: achieving real economic growth as the population ages. Yet no one seems to be making this connection.

At the WHCOA, lots of words were spilled around questions of dependency and disability, still the predominant narrative about 21st century longevity.  The paradigm at the White House was still basically, how do we take care of all these old people, not how can an aging population become a lever for economic growth. 

President Obama hinted at a new approach in his speech at the conference: “We have to work to do more to ensure that every older American has the resources and the support that they need to thrive.  That challenge -- protecting our seniors, dealing with the rising costs of an aging generation, ensuring we have enough home care workers looking out for our family members -- maximizing the contributions that older Americans can make to our country -- these challenges are just becoming more urgent. ”

The president was speaking about the relevance and challenges of Medicare, Medicaid and Social Security today. But what the president did not address in any detail and what the conference largely overlooked was how we square 21st century demographics with a 21st century growth model where the proportion of old to young is not just different from when those programs were created 50 or 80 years ago but thoroughly transformed.    

It is the question of jobs, economic growth and work that we will solve only if we rethink and reimagine what it means to age in America. It’s not whether Americans already work too much, as the Bush point was interpreted inside much of the media and political world. Rather, we should focus on the huge opportunity of an untapped and highly productive segment of our population that can stay committed to the workforce, helping to drive growth to the 4 percent target that Bush and many others would like to see in the American economy.

If we can keep “retirement age” Americans contributing and producing, then the elusive 4 percent real annual economic growth that Gov. Bush has proposed becomes much more feasible. With over 20 percent of the American population over 60, strong economic growth will be impossible if old models of retirement are maintained.  As Andy Sieg -- Head of Global Wealth and Retirement at Bank of America Merrill Lynch and one of the few but notable business leaders present at the WHCOA -- said, “The barrier we need to overcome is how we look at later life and how retirement has transformed with added years of life …”

To appreciate why so-called seniors are an untapped source of economic growth  and not just a segment that needs protection, the women’s movement holds a great lesson. Prior to women entering the knowledge economy, legions of dunderheads were claiming that women were going to take men’s jobs. But what happened instead was that women didn’t “take” jobs; they added jobs by jumpstarting an economic miracle – a miracle that helped drive and sustain growth in the American economy throughout the 20th century.

We face a very similar situation today. Older workers are not going to divide the economic pie into ever-smaller pieces; they are going to grow the pie by adding to our ability to produce. But we need the right attitude and public policies to enable such an approach. 

This understanding of a “silver economy” is gaining traction among industry thought leaders. Recently Blackrock – one of the world’s most trusted and successful managers of capital – argued that “longer lives have created a vast pool of experience, capability and wealth that can become a driver for 21st century economic growth.”

There’s a real opportunity here for Mr. Bush or another presidential hopeful to re-frame this take care of the old people conversation -- and to link it to America’s need for wealth creation through economic growth.  With this framework, there’s no need to tell exhausted voters that they’re not working enough. It’s also the only way to ensure we have the resources to help or, to use the president’s formulation, to “protect” those who do need it. 

This opportunity also prompts a critical dissociation. Right now, there are two arguments being merged into one. On one hand, there are older Americans who truly need and deserve assistance; on the other, there are millions over 65 who are still vital and capable.

A better dialogue would recognize that there isn’t one bloc of older Americans, but a gradient of many older Americans who have vastly different needs, capabilities and desires.  

If Mr. Bush or someone else suggested that older Americans should stay active to contribute to driving economic growth, it’s not an anti-aging argument. It’s just the opposite. It’s pro-aging because it helps reframe the debate and re-channel resources to where we need them the most.

This nuance was missed at the WHCOA and it’s absent from the firestorm following Mr. Bush’s “work more” comments. Yet it’s the key to economic and social success in the coming decades.

The presidential field is becoming increasingly crowded and cantankerous, and the WHCOA has been overshadowed by newsier events. The answer to revitalizing both could be the same.

Executive director of the Global Coalition on Aging, Michael W. Hodin, Ph.D., is also managing partner at High Lantern Group and a fellow at Oxford University's Harris Manchester College.