Converging Trends in Aging and Employment
The central theme of Fifty Year Perspective is understanding the linkages between trends, decisions, and actions. Even when trends in themselves are positive, together they may paint a future that must be confronted with extreme forethought and preparation. A number of trends detailed below will play out over the coming decades so as to necessitate significant policy changes at national and international levels.
Health sciences – Medical advances have extended life expectancy over the last century, with most benefits accruing to developed countries. A baby born today in most developed countries has a life expectancy of at least 80 years. In Asia, Latin America, and the Middle East, life expectancy varies from upper 60s to mid-70s. Life expectancy in many African countries is under 60 years, with some reaching mid-60s. Comparable figures 100 years earlier varied from mid-20s to early 50s. The current world average of 70 years is projected to increase to 77 years by mid-century, all according to the Population Division of the United Nations (UN).
Demographics – Longer life spans combined with low birth rates result in increasing median age and higher percentages of older population. UN median age estimate for the 2015 world population was 29.6 years, projected to increase to 36.1 years by 2050. Europe is projected to have the highest median age in 2050, at 46.2 years, and Africa the lowest at 24.8 years. Worldwide population age 60 and over, estimated at 12.3% of the total in 2015, is projected to increase to 21.5% in 2050. As a result, there will be fewer working age people to support the increasing proportion of elderly population.
Migration – War, lack of economic opportunity, and even climate change are among the reasons that millions of people worldwide seek to leave their home countries. Countries experiencing the greatest imbalance between working and dependent populations, such as Japan and parts of Europe, have not accepted migration as a means of addressing this imbalance.
Social safety net – As long as an economy is growing and birth rates are high, taxes paid by working-age populations are sufficient to finance payments to retirees. Eventually birth rates fall in developed countries, threatening the sustainability of the support payments for pensions as well as health. Increasing the retirement age in coordination with increases in age expectancy would be an obvious response, but would be opposed by elderly voters. Keeping elderly in the labor force for more years would also limit job opportunities for young workers.
Technology – The mixed blessings of technology providing goods and services at lower costs, while reducing the need for workers, impacts both young and old. A recent article in the Los Angeles Times reported that since 2000 the big three U.S. automakers have reduced, by half, the labor hours needed to assemble a car. As reported in previous blog posts (https://fiftyyearperspective.com/preparing-for-industries-of-the-future/; https://fiftyyearperspective.com/technology-and-the-future-of-work; https://fiftyyearperspective.com/robots-are-us/), this trend is taking hold in service industries as well as manufacturing.
International trade – Trade agreements throughout the world have moved jobs from high cost labor markets to low cost ones. However, technology is now able to produce goods at even lower costs. This is having impacts in both high and low labor cost countries. Foxconn, the Taiwanese company famous for manufacturing electronics products for companies in the U.S., Japan, Finland, and Canada, has introduced a fully automated factory in China that runs 24 hours a day, with its lights off. And some U.S. companies that have produced their products overseas are finding that with the latest technology, they can bring their manufacturing back to the U.S., albeit with fewer workers.
Taken together, the trends lead to a future that is unsustainable: an aging population with an extended life expectancy yet anxious to retire; technology that has reduced demand for human labor; and a younger generation competing globally for limited job opportunities and burdened with supporting the growing cohort of retirees.