Harness the Economic Power of an Aging Population

Harness the Economic Power of an Aging Population

Printer-friendly version
a a
Type Size: Small

As the debate over American market capitalism takes center stage in the presidential campaign,  it’s a good time to focus on the relationship between economic growth and our senior population,  since the greatest social movement of the coming decades will be our aging citizenry.  As we work to harness the potential of this changing demographic group, presidential candidates might consider an interesting parallel with the integration of women into economic life in the last half of the 20th century.
Women's economic empowerment met steady opposition early on, based on the mistaken view that females would take jobs away from males. But as history has shown, an economy that includes women is an economy that grows. And a growing economy has room – and the need – for new entrants.  If American market capitalism teaches anything, it is that we need to prevent barriers into economic life for people of all genders, races, and ages, and indeed, to help make these new entrants part of the very engine that drives growth. If it was never true that women would take men’s jobs, it’s equally untrue that keeping an aging workforce active will not take younger generations’ jobs, as has been documented by Axel Boersch-Supan in his groundbreaking work on intergenerational cohesion. He concludes, “…We find no evidence that the burden of population aging…is systematically related to broad array of indicators of intergenerational conflict”. 

Yet, there are issues that will emerge if we play out the parallel storylines.   Despite the profound progress women have made into the workforce, there remain undeniable differences and inequalities. Women have a different set of questions to answer than men, and they face unique challenges. To point out an obvious example, most women take time to bear children and raise them, either by choice or default, thus delaying their climb up the professional ladder. Though more men are beginning to act as homemakers, the percentages are still heavily tilted toward women. With this and other unique challenges women face, are they worse off in their senior years than men?

It depends who you ask.
According to one recent study by MetLife, "women have not planned adequately, leading to a significant gap between their retirement income security needs and their response to them." Specifically, the report found that 71 percent of women were "very or somewhat concerned" about providing for their family's long-term care needs, with over one-in-four reporting that they were "very concerned," a number double that of men. And just under one-third of women surveyed have either a "vague notion" or have "not done any calculations" for their retirement, a number over 50 percent greater than men surveyed. In addition, almost 40 percent of all women respondents answered that they expect to live to be 90.

A recent article in Businessweek suggests that the future for women is really much brighter. Citing a study from the Employee Benefits Research Institute, the article states that "a higher percentage of women than men have participated in employer-sponsored retirement plans since 2011," with a healthy 72.5 percent of all women doing so who earned over $75,000 per year. And new research from The Urban Institute seems to agree. Their data shows that the number of women 65 and over in the labor-force has doubled since 1985, now reaching 14 percent.
But both of these perspectives miss the essential point. We can no longer afford to ask whether we are prepared for retirement. With life-spans three decades longer than they were just a hundred years ago, the question we need to be asking is how can the aging stay economically relevant far past traditional "retirement age?"

For women, the challenges of retirement and work will be unique, and the answers are uncertain. Policy institutions, like the Institute for Women's Policy Research need to start asking the right questions--questions that go to the economic value of working longer. In light of the inexorable demographic shift and aging of our population, we must all shed our antiquated notions about retirement.  But as we recall the benefits that the women's movement had for us all, perhaps one of its greatest contributions is yet to come. Just as young women created an economic revolution last century, perhaps older women can create one now. And it would be a revolution that would apply to the entire aging population as it would benefit the entire population. 
So as the 2012 Presidential campaign unfolds, it’s fair to ask whether there any candidates on either side of the aisle ready to step up to this huge opportunity presented by the 21st century’s aging population phenomenon.      

Michael W. Hodin, Ph.D., is Adjunct Senior Fellow at The Council on Foreign Relations, and Executive Director of The Global Coalition on Aging.

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.