National – A new paper jointly released by The Concord Coalition and the Global Aging Institute (GAI) argues why extending work lives is an essential part of any workable strategy for addressing America’s aging challenge. The paper is the second in a quarterly series of issue briefs called “The Shape of Things to Come” that explores the implications of the aging of America.
Key findings of the issue brief include:
- Longer work lives would boost economic growth. In coming decades, U.S. employment growth will fall to near zero as the smaller cohorts born since the end of the postwar Baby Boom climb the age ladder. Slower employment growth in turn could easily pull down real GDP growth to between 1-1.5% per year, just one-third to one-half of its postwar average. Longer work lives could substantially offset the demographic drag on economic growth.
- Longer work lives would improve the budget outlook. The additional tax revenue generated by the additional employment income could help to alleviate the rising burden of old-age benefit spending.
- Longer work lives would improve retirement security. All other things being equal, increasing the time during which workers save for retirement by just five years while decreasing the time spent in retirement by five years increases benefit levels by roughly 25 percent.
- Longer work lives would be good for the health of the elderly. Growing literature concludes that continued productive engagement can have a large positive effect on physical health, cognitive function and emotional well-being of the elderly.
America has already made a start at extending work lives. After falling steeply from the 1950s through the 1970s, the elderly labor-force participation rate bottomed out in the 1980s and 1990s and has since then been rising steadily.
The paper, “The Case for Longer Work Lives,” can be found here.