“..we all become caught in a giant feedback loop; the aging of the world accelerates globalization and globalization stokes the aging of the world.”

The world is getting demographically older. It is happening at stunning speed. In September 2011, AARP International and its partners, including the Society of Human Resource Management, honored the 2011 winners of the AARP Best Employers for Workers Over 50—International. This group of 15 companies is particularly farsighted about how their workers over 50 can contribute the most, and gain the most, through their jobs. One common theme among the winners was that they had strong business reasons for honing their practices toward their older workers. They expect their offices, workshops, and field operations to include ever more workers over 50 as time goes on.

Readers of this journal are likely aware of many of the patterns of global aging, but may still be surprised by the speed of change. In 2011 the median age of the planet’s human occupants was 29 years. By 2050, that will rise to 39. That means the median age is pushing up about 2.5 years a decade. That is roughly the rate of increase humanity has seen every year since around 1890. One would think that would be greeted as good news. Much of the increase comes from developments that count among the great achievements of all time. The first and most obvious reason is that people tend to live longer than ever before. We often forget how new a development this is. Robert Fogel, the historian and Nobel Prize-winning economist, notes that for nearly all of the 7,000 generations of humans that lived before 1890, the patterns of life and death were largely the same. Lots of people died before age 10; the survivors lived fairly robustly until 40, and then started dying in large numbers.

The Industrial Revolution was part of the longevity gain, although not at first. Around 1890, about 150 years after the Industrial Revolution’s beginnings, a big change occurred. Statistics on life expectancy started ticking up in the industrialized countries. Cities, which had been places where people died younger, started to create the public health systems that helped people live longer. And now they will likely get richer and better educated, too, two factors that also help people live longer. Today, in America, Europe, and wealthier East Asia, people aged 50 will, on average, add more years to their lives than people living in 1930 could expect to add at age 40.

The Shrinking Family

Once cities became the places to be, families started shrinking. The biggest reason why places have become home to older populations is that the families in those places are smaller than before. Today, no industrialized country, with the single exception of Israel, has a birthrate high enough to replace its own population. There is a lot of hand-wringing over this reality in national capitals, where politicians and their constituents worry that their countries will lose the critical mass of population that keeps them culturally distinct and economically dynamic. Worker shortages, debt and health care woes, and pension crises fill the news. Countries yearn for their younger pasts. Cash programs to give mothers money for having more children drive up fertility rates a little, but not anywhere near what they were before the great drop.

The chief reason that families in the industrialized world are smaller is that women in those countries now have access to education and the job market, and less time to have big families. Not just less time to take care of more children, but a shorter window during which to get married (usually) and pregnant, once school is finished and several years are spent getting established in the workplace. Any groups that want to turn back the clock on that would need to turn it back on a hundred years of feminism and now equal rights. Who wants half of their population to suddenly be forced to stay ignorant and to be less economically engaged? None of the industrialized countries are likely to make that choice soon, and much of the developing world would be just as reluctant. Even in developing countries that are flush with youth today, birthrates are coming down dramatically.

That’s all good news. Longer lives, better heath, more wealth and education, and equality are perhaps the best gifts humankind has ever bestowed on itself. But the changes wrought by all that progress are now unfolding quickly and are often wrenching. In the United States over the next 40 years, every age group over 65 will grow faster than the population at large. In Western Europe, the median age in 2050 will be near 49, and nearly three in ten Europeans will be over 65. Even the developing world is held in the grip of population aging. The United Nations estimates that between 2005 and 2050, the population of the developing world will have grown by 2.3 billion, but the percentage of children under 15 will drop. The population aged 15 to 59 will grow by 1.2 billion, and that over 60 by 1.1 billion. In Latin America, the proportion of people over 65 will rise to 18.5 percent, three times higher than today. Amazingly enough, Brazil, Chile, and Mexico may have older populations than the United States by midcentury. Today, half of Latin America is under 15 years old. In 2050, half will be over 40 years old. But the numbers delivered by national censuses and international organizations may in fact underestimate the speed at which the world is growing old.

Impact on the Workplace

The recent history of the globalization of the world’s economy has been one giant hunt for the world’s best young workforces. Some places, such as Mexico, China, Vietnam, India, or Brazil, lure global investment by offering young workers at low wages. Others, such as Silicon Valley, collect brilliant and creative young minds.

When successful, these young places take on attributes that lead to aging populations and feed the dynamic that is making humankind ever older. Thus we all become caught in a giant feedback loop; the aging of the world accelerates globalization and globalization stokes the aging of the world. In a strange turn, often the youngest places become the fastest aging. Half a century ago, Japan, China, Taiwan, and Southern Europe were among the most youthful spots on the globe; now they are among the oldest.

One of the reasons the winners of the AARP Best Employer Awards are so exceptional is that they are not just adjusting to the change, they are anticipating the greater change to come. They have redesigned their workplaces to accommodate the physical needs of older workers, retooled their training programs to keep them up-to-date, and adjusted their work schedules to allow the flexibility that older workers want, and that younger workers with older people at home to care for need. What makes the winners exceptional is that they have flourished with approaches that much of the world of employment has rejected. They have found alternatives to the global age arbitrage that moves money, jobs, and labor around the world because producers often try to escape aging workplaces.

Here is another way the world of employers is adjusting to an aging population: It is becoming increasingly the home of contingent workers, those who work on contract, are paid hourly wages for unsecured work, or are self-employed (often by necessity when they can’t find jobs). In 2010, for the first time, more than half of the world’s workforce were contingent workers. The shift is well advanced in the East Asian economies that are aging in advance of the rest of the world. Japan is losing population every day and is projected to be smaller by 41 million souls by 2050, when it will also have the world’s oldest population. That change will dial back Japan’s population to its pre-1950 level, when it had one of the world’s youngest populations. South Korea is on a similar trajectory. In those two countries, work participation rates for men over 60 years old are among the highest in the world. In general, workers there retire from their firms—in Japan they get usually their watch at age 60—and then are hired back, often by their original firms, as contingent workers earning about half of their former wage.

It is not all bad. One of the Japanese winners this year has instituted a great program that brings retirees back as contract workers and makes them feel as valued as they ever were.

Many of the older contingent workers want to work, and have pensions and social security that make the lower wages possible. But many work because they must, because their pensions will fall short of covering their needs as they grow older. Similar patterns are emerging in the United States and in the European countries where the work rules allow it. When older workers are urged by the market, or their own needs, to reenter the workforce at dramatically reduced wages, they may push down wages overall, especially for young potential entrants to the workforce, against whom they can compete for space. The conversion of Japan’s older workforce into a legion of contingent workers has also been a factor retarding full employment for young Japanese workers, who increasingly face contingent employment themselves.

If the aging of the population seems challenging, it is because it is a first in human history, and it is bringing myriad and rapid social changes. But the difficulties, as great as they are, are manageable. And no one would trade away the advantages we’ve gained from longer lives in order to eliminate the social problems that come with them.

Ted C. Fishman

Ted C. Fishman is a veteran journalist, essayist and former member and trader of the Chicago Mercantile Exchange.

His latest book, Shock of Gray: The Aging of the World’s Population and How it Pits Young Against Old, Child Against Parent, Worker Against Boss, Company Against Rival, and Nation Against Nation (Scribner Books, October 2010) looks at how the aging of the world is propelling globalization, redefining nearly every important relationship we have and changing life for everyone young and old.



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