Baby boomer generation could become one of the drivers of the economy, experts say
Chris Farrell is the author of the book "How Baby Boomers Have Changed: What We Think About Work, Society, and the Good Life." According to him, the generation that should have already been retired and supported by the state is ready to become one of the drivers of the economy. More on this, as well as the opinions of specialists and analysts from the brokerage firm Alpari, IFC and others - in our article.
Baby boomers are the Western post-war generation that grew up after World War II, when rapid economic growth was accompanied by a period of a sharp increase in birth rates. The baby boomer generation is considered to have emerged from 1945 to 1964. They are considered highly educated and developed, but also heavily spoiled.
Today, Farrell writes, people live longer and better. Therefore, they also work longer. At the same time, the capabilities of people aged 55 and older extend far beyond the stereotypical pastimes of concerts and the local supermarket. And these are the people who until recently dreamed of retiring on time. However, there are other reasons for this behavior. Crises, mortgages, education and support for children and grandchildren – all this forces many people who feel able to work not to leave their jobs. Moreover, retirement is often accompanied by a decrease in income and, consequently, a lower standard of living.
The change in working conditions also supports not retiring. If, Farrell writes, we were talking about the 50s and 60s of the last century, then the American economy was based on production: fishing, agriculture, mining. And with age, people had difficulty performing work functions that required considerable effort, primarily physical. Now, most of the US economy is services: social, information, healthcare. It's much easier to work if you are sitting in an office.
Yes, indeed, older people do not always continue working full-time. Nevertheless, their employment contracts are maintained. And this prevents young employees from taking such a workplace. Moreover, in some cases older employees are more experienced and require lower pay for their labor. One should not discount another stereotype about older people: that they work unproductively.
Nevertheless, much comes with experience, for example, work in the arts or medicine. In these industries, there are many truly talented and experienced older people. Overall, Farrell believes, all people are in the same boat. When older people get jobs, young people are left out. The reverse is also true. Moreover, if there is no work, older people can rely on a pension, while young people can rely on unemployment benefits. So, the expert concludes, the baby boomer generation, which has long been a headache for American authorities, can still benefit the economy, although it may be a problem for the labor market.
As Expert Online notes, the topic of baby boomers has long troubled economists. Brigitte Miksa, head of international pension programs at Allianz Asset Management, is convinced that the baby boomer generation has exhausted itself, and its decline with accompanying problems has begun. And the issue is not even that older people do not want to make way for the young. Every year, the burden on the younger generation will increase, since they will have to finance the pensions of the aging majority and solve economic problems.
Currently, about 20% of jobs in the United States are held by people of retirement age, notes IFC Markets analyst Dmitry Lukashov. And the US pension system is currently coping well with its responsibilities. Meanwhile, the current state of the US labor market can be characterized by the following features. Over the past 6 years, while the Fed was pumping money into the US economy, average wages increased by less than 1%, while GDP grew by almost 10%. Such an imbalance helped prevent inflation.
Accordingly, elderly baby boomers can afford to work at relatively low wages. Because they have usually already paid off their mortgages and receive partial pension and health insurance coverage. Young people, yesterday's students, demand higher wages. In addition to mortgages, they also need to pay off student loans. This is a global trend observed in Europe and even in our country. Youth unemployment is much higher.
Now, the mindset of baby boomers differs from their positions in the 60s: these people know the value of money, their expenses are logical and balanced, and their incomes grow gradually, without surges and emotions, says Anna Bodrova, senior analyst at Alpari. The crisis economic situation indeed leaves an imprint on consumer behavior: all expenditure items are optimized. However, there is a significant plus here: this generation holds on to jobs, the employment cycle at the same place is 5-20% longer than before. Crisis-wave baby boomers do not chase profitability; they value stability in the social sphere and a steady salary, even if it grows not as fast as they would like. In this scenario, the labor market looks more balanced and amenable to analysis, which provides more grounds for forecasting and confidence in the future.
The advantage of baby boomers is their high productivity, good education and qualifications, agrees Yelizaveta Belugina, head of the analytical department at brokerage firm FBS. The new generation of Americans that has replaced them demonstrates worse results compared to representatives of the same new generation in other countries. In addition, due to their large numbers, the baby boomer generation puts a strain on the relatively small working youth, which threatens to slow US economic growth.
At the same time, it must be remembered that the US labor market has traditionally been shaped by immigrants, says independent analyst Dmitry Adamidov. But if in the 20th century these were mostly qualified personnel fleeing Europe from world wars and social upheavals, now they are mostly residents of Latin America and Asian countries, who as a whole do not have such a high level of education, and a problem of labor shortage arises. In addition, the American social security system will very soon be unable to fulfill its obligations.
It is not surprising that the idea that the baby boomer generation should not retire but should continue to work actively is becoming very popular in the US, the expert believes. In Russia, a similar situation has already occurred, but for different reasons – the upheavals of the 1990s knocked out the middle tier of engineering and technical personnel, and during the boom of the 2000s, when engineers became in demand again, not only those who were 'a little over 60' but also those under 80 were actively working. However, it cannot be said that this situation can be considered healthy.
The existing problem must be solved by increasing the working population, Yelizaveta Belugina is confident. On the one hand, this can be done by creating conditions for the employment of retirees who have great knowledge and experience. On the other hand, aging baby boomers are unlikely to become the main driver of growth, so to normalize the age-sex pyramid, it makes sense for the United States to further lower barriers to immigration of qualified labor resources from other countries.
Anna KOROLEVA.