Aging populations do not need to mean a lower standard of living

In a recent articleTHE New York Times once again Blowing the alarm of a supposed sub-population crisis in the United States. Warning of the potential consequences of recent demographic developments, writes Lydia Polgreen:

Country After Country in the rich world faces a heavy future, with millions of retirees and far too many workers to keep their economies and companies afloat. In the not so distant future, many countries will have too few people to maintain their current standard of living.

But this conclusion is far too rushed. What decrease in fertility rates (combined with sufficient lack of migration) will be in the long term is downward pressure on the rate of economic growth due to the drop in growth in the number of workers in the economy. It is a pretty different thing that the drop in average standard of living. We can reasonably Expect an increase in labor productivity to go beyond the growth of the non-workers’ ratio to workers, avoiding the concern that an avalanche of retirees will flow the general standard of living. And it is plausible that workers can even see their standard of living increase – Especially if the workforce increases its share of income compared to capital.

Polgreen here revives which, apparently, becomes a common bait and switch for those who wish to scare readers to support attacks against their own economic interests. However, what really motivates the elite concerns about lower population growth rates is the prospect of the threat to their own portfolios.

The justification for the judgment of Polgreen is a report It is linked to the McKinsey Global Institute published earlier this year, Dependence and depopulation? Confront the consequences of a new demographic reality. The analysis of the report was received sympathily by consumer media, including in another Entering the apparently endless parade of profiles from the Pronataliste Collins family. McKinsey is an appropriate authority to call on anyone looking to plead in favor of the standard of living of depress workers, taking into account his history of Bread price fixing,, facilitation the opioid epidemic and other skulduggery. Indeed, all of his modus operandi was characterized By a former employee as “the increase in the share of investors’ profits by reducing the share of work”.

True to the form, the authors of the McKinsey Report Counsel Sacrifices from workers for the benefit of business. The torsion this time, however, is that the demographic trend in continuous fertility rates below the replacement provides the excuse for attacks against the standard of living. The report tells us that “the trajectory of demographic change will force the company to rethink existing systems for work and retirement in a manner that could oblige a change in our social contract – no slim.”

One of the recommendations of the report is that countries must increase their “workforce intensity” – which McKinsey defines as “weekly hours worked by person” – to compensate for increased dependency ratios (that is, -Dire the relationship between young people and the elderly to the population of the working age, a purely demographic measure which approaches the relationship of non-workers compared to the workers of the economy). Essentially, McKinSey recommends prolonging the working hours for the average worker in order to increase economic growth rates given the lower demographic growth.

But the McKinsey report also has other recommendations. The aging populations mean that other things are also equal, retirees will constitute a larger share of the global population. For McKinsey, this is a problem to solve. Depending on their words, this means “creatively managing an older workforce to maintain productivity”. By hitting a philosophical note, the authors say that “the concept of retirement fades and can become an obsolete construction with societal participation later in life.” (An example of measures that the authors have in mind to dragoon potential retirees in the job market: “CVS, the pharmacy chain, operates some of its older customers to be employees through a program called talent Is ageless. “)

For those who could frustrate McKinsey’s expectations by continuing to retire, their consultants also have ideas for them. Future retirees could reduce the amount they could potentially withdraw retirement systems from their country by retiring later, or not have a guaranteed pension in the first place: “The developed countries have opened up conversations on Changes ranging from the increase in statutory retirement age to passing to defined contribution systems, in which retirement services are calculated according to the money paid to the program. »»

There are many others in the report, and all the solutions that McKinsey’s authors are not simple attacks against the well-being of workers. Other recommendations include current suggestions to stimulate GDP in response to the drop in fertility rates, such as the inversion of fertility rates, the attraction of more migrants and the increase in labor productivity thanks to investment.

In addition, the United States is in a less disastrous budgetary position than other countries that the report analyzes. The United States has a higher per capita,, Labor productivityAnd fertility rate (and, unfortunately, a lower Life expectancy, sixty-five) that the OECD average and remains an attractive destination for immigrants. In addition, the United States has relatively low fruits which it could choose to reduce retirement costs, which have already been collected by other countries with more developed welfare states; eliminating the waste The fact that the private health care system is engaging is an example.

Above all, however, the McKinsey report represents a kind of argument that will probably become more frequent in the coming years when fertility rates are pursuing their greater austerity for the working class. The response of the left should be to reject the fatalistic framing of “demography is fate” and to reintroduce economics and politics in conversation.

In the end, workers’ standard of living cannot be understood currently or precisely in the future in reference to demography alone. Their trajectory depends on a number of other economic factors, such as the level of wages, labor productivity and the participation of the workforce. The negligence of these components will wrongly lead to the forecast forecasts of workers’ living standards. Likewise, do not recognize the impact of policy On these economic factors lead to bad arguments. Whether workers see their standard of living improve or the drop in the next decades will largely depend on the part of the social product they can tear off for themselves.