Are retirees killing economic growth?

Posted August 14

New research shows the aging of America may be one factor in the country's economic slowdown, and it may be only slightly mitigated by the growing number of retirement-age workers who are instead staying on at their jobs and younger workers not picking up the slack after they leave.

A paper published by the nonprofit National Bureau of Economic Research on the effects of aging on economic growth estimates a 10 percent increase of Americans turning 60 or older reduces national economic output per capita by 5.5 percent, according to U.S. News and World Report.

“In other words, as a state's population gets older, its gross domestic product is measurably dragged down,” wrote Andrew Soergel for U.S. News.

The research by Nicole Maestas, Kathleen Mullen and David Powell looked at census data from 1980 to 2010 and found that the country’s GDP was "9.2 percent lower than it otherwise would have been absent population aging,” Soergal reported.

It’s not surprising, since workforce growth plays a big role in economic growth, Fortune noted. What is surprising, it continued, is that a loss of workforce productivity caused by seniors leaving the workforce has caused the economic slowdown.

“It ultimately suggests that an older America won't be nearly as productive or see nearly the same kind of wage increases that the country would've seen years ago, before decades-old fertility and aging dynamics set in,” Soergel wrote for U.S. News.

It’s not clear why a demographic shift in the workforce would cause a loss of productivity, but the report authors hypothesize that it could be from the most productive workers retiring first, which leads to fewer younger workers immediately replacing the skill levels of their older and productive co-workers, wrote Chris Matthews for Fortune.

“Regardless of the reason, the results of the study should be alarming,” wrote Matthews, noting further that the study suggests American growth is likely to be stunted for the next 15 years, the economy losing out on hundreds of billions of dollars of potential wealth.

Still, retirees causing economic slowdown is not a universal trend, as there are some productive workers hanging on past retirement age.

Bloomberg noted that these older workers are “bucking the overall trend of people leaving the labor force.” Many continue as full-time workers rather than downgrade to part-time, and their spent wages help fuel consumerism and economic expansion.

As AARP noted in an article on the benefits of older workers, “economists almost universally agree that the surge in older workers is a win-win-win: a boon to employers, a boost for the U.S. economy and a bonus for the workers.”

Older workers have proved themselves to be “productive, dedicated and loyal” to their employers, addressing talent shortages in a post-recession economy, according to AARP.

But the number of those reliable workers over 65 staying on is not enough to offset the number of retirees pushing down overall workforce participation, and economic growth will still slow as people retire, according to Bloomberg.

While there’s likely to be limited profitability and discouraged investment spending for an aging populace, Bruce McCain wrote for Forbes that “aging does not normally push an economy into recession.”

And the stabilization of oil after the energy sector’s collapse last year could balance out part of the aging effect, McCain wrote, although a significant recovery would need “higher oil prices than we have seen so far.”

Email:, Twitter: @Sarahsonofander.


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