Thursday, December 24, 2015

I never thought of that!

In post from 2012, Sense and nonsense about the aging of the population, Circuit considers the aging of the baby boom. The movement of boomers out of employment and into retirement reduces the size of the workforce and increases the population that must be "carried" by those still working.

I really hate discussions like that because they pit generation against generation. Bad enough we pit black against white -- poor against poor -- in our political explanations of economic phenomena. But to set young and old against each other -- to set family members against each other -- is far more troubling.

I really like Circuit's post because it helps me resolve the problem in my mind.

The problem Circuit confronts head-on is that "over the next two decades (2011 to 2030) the number of people 65 and older will rise 78% relative to those 20 and 64." (The numbers are for Canada, but the U.S. faces a similar circumstance.)

To remedy the situation, Minister Finley is proposing to raise the eligibility age to Canada's old age security program as a way to reduce future costs and preserve the "sustainability" of federal budget costs.

Seventy-eight percent. It never seemed right to me that the baby boom generation could have that big an effect. But I didn't doubt the number. And I didn't know what to do with the problem. I never thought about it beyond that.

Circuit thought about it. He says the workforce doesn't just carry retirees. He says the workforce carries everyone who's not working. And that's always how it is.

So looking at it that way,

... when the entire population is considered relative to the working-age population, we note that the ratio rises from 159% to 180% ...

In other words, the actual "burden" of aging based on current projections consists of an additional 13% more people per working-age person. This is much smaller than the 78% that is currently being mentioned by commentators and politicians.

What a relief! And -- as a baby boomer myself -- the 13% number is much more believable than 78%.

I wish I thought of that.

Today -- 24 December -- is my last day of work. I'm retiring after the Christmas party.

Merry Christmas & Happy Holidays.


The Arthurian said...

( 180 is 13% more than 159 )

jim said...

It is worth remembering that from WW2 until somewhere in the 60's the baby boomers were all "carried" by the rest of the economy. It didn't
seem to drag things down then.

Congratulations on your retirement.

Greg said...

Merry Christmas Art

And yes, congrats on having an end to the daily toils in sight!

Jazzbumpa said...

There's another little detail that the analysis leaves out.

We retirees spend our pensions and Social Security checks. Very few people past retirement age are still in accumulation mode. The money comes in, and the money goes out, just that fast.

We saved for retirement, and had some pay deferred in the form of SS and pensions. Now we are spending it. GDP is approx 70% consumer spending. Our income is spent at or above the 100% level.

Far from being the leaches that those who want to raise the retirement age pretend we are, we are the actual job creators with our consumption.

There's another insidious aspect to raising the retirement age - many people will never reach it. The life expectancy increases of society have not been equally distributed. The poor and uneducated have had little to no increase in life expectancy, while the rich and well educated have grabbed all the life expectancy increases.

Raising the retirement age is simply cruel.