The April 26th, 2014 issue of the Economist describes some of the demographic changes occurring both in the US and the World at large. The world population over the next 20 years for those 65 and older is expected to almost double from 600 million to 1.1 billion. This increase is a significantly change from the recent past; for the 30 years between 1980 and 2010 the United Nations estimated that 16% of the global population were 65 or older . That percentage is expected to rise to 26% by 2035. Most of the change is the difference in Asia and Africa where birth rates have plummeted since 1970 due to China’s 1 child per family campaign and India’s push to lower birthrates. In the West populations have been aging since the 1970s. In Japan and Germany the population started to shrink by the 1990s. The UN estimated that Germany and Japan each had about 30% of their population aged 65 or older by 2000. By 2010 that percentage had risen to 42% for Japan and 39% for Germany.
In the West the effects are dramatic. The rich educated are able to work longer (productivity of a doctor, lawyer or manager) declines at a much lower rate than a manual laborer. Think Warren Buffet, Larry Ellison, David Geffen, Clint Eastwood, Tony Bennett, Betty White , Jane Goodall, Hillary Clinton and Rand Paul to name a few. Furthermore, technology innovations prolong the usefulness of the professional group while displacing the latter. However, most blue collar workers, police officers and firemen require more physical activity which becomes more difficult as we age. Many more manual labor seniors such as factory workers have technology displace them whereas for professionals computers and technology assists them in being able to work longer more productively. So we are witnessing a greater inequality arising between the wealthy aged and the poor old.
The more educated aged can work on average (10 or more years) longer than the elders who specialized in manual labor.. This trend exists throughout the developed world. From 1965 through 2005 a Harvard study of 43 nations noted that the average legal retirement age rose by less than 6 months, during the same period life expectancy rose by 9 years. The trend for working longer rose sharply starting in 2000. In America in the year 2000 approximately 13% of the workforce worked past age 65 (Warren Buffet being a famous example). Today almost 20% work past age 65. That is true in Germany where more than half the population age 65 who worked continue to work whereas only 25% of the same age group worked past 65 in 2000.
A French study by the economist Thomas Piketty shows that the wealth of French 80 years olds is 134% of French workers in their fifties. Per the study, this is the largest discrepancy since 1959 between those two age groups. And the 1950s saw a huge rise in earnings for the French where only Japan and Germany had income rises that were greater! The implication is that people who are older are working longer and growing wealthier.
Working longer means that people who perform tasks that are less physically demanding, will be able to keep on working into their late years. They save more during these work years and have fewer retired years to fund because they have wages when others are retired. Unlike the people who are employed by manual labor and have their bodies break down over time, due to the rigors of the job.. So, the poorer the educated or dependent upon physical well-being the more likely the person is to retire earlier and poorer. We seem to be witnessing this phenomenon with Baby Boomers who seem to be working longer than prior 2 generations.
