Is There Really a Battle Between the Young and Old for Jobs?

What's to come?
Oct. 28 2013 7:45 AM

The Greedy Geezer Theory

Are boomers’ delayed retirements depressing job opportunities for the young?

Older people in the workplace
Job thief?

Photo by Anna Lurye/Shutterstock

Halloween is coming, and somewhere a desperate college graduate is reading the obituaries to anticipate a potential job opening.

Call it the longevity jobs clash. Many of us are working longer to pay for longer retirements at just the moment when the old savings triad of pensions, 401(k)s, and Social Security has proved shakiest. The percentage of Americans over 65 still working rose from 17 percent in 1990 to 25 percent in 2010. But do the late-working boomers mean a generational jobs war with entry-level-position seekers? And if longevity—and thus working life—extend still further, will the clash grow only more ferocious?

There is nothing new about that claim—it’s called the “lump of labor” theory. In the 1850s, Henry Mayhew argued that cutting hours would provide more jobs for London’s poor, and in the 1970s it helped to drive France and Belgium to set early retirement ages in the hope of providing more jobs for the young. The “lump of labor” means there is only one-sized pie, and to get a bigger piece, we must compete with one another. A 1980s American version of it prompted numerous warnings about the coming of the greedy geezer. Then came the 2008 recession, and some could not help but eye older workers as holding down those new applicants desperately needing jobs.

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Today the “clash of generations” school of economics holds that unfunded pensions, looming Social Security and Medicare bankruptcy, and deficit spending are mortgaging our children’s future. But are younger workers also missing good jobs simply because healthy boomers are working longer to pay for their end-of-life bucket lists?

The astonishing thing is that most experts agree that there is no jobs war between old and young. Studies sponsored by the Pew Research Fund, the MacArthur Foundation, Brookings Institution, Conference Board, and others almost all concur “there is no crowding out between young and old,” says Boston College Center for Retirement economist and study author Alicia Munnell.

“It makes a good story,” says AARP policy analyst Sara Rix, “but on a large scale, it’s not true.”

With co-researcher April Wu, Munnell conducted the most sweeping study to date of the effect of older workers and found for every senior position retained, salaries rose for entry workers. Except in industries like fast food, new and older job searchers do not compete for the same positions. In fact the more senior people work, the more entry positions are needed. Even the leading clash-of-generations economist, Laurence Kotlikoff of MIT, agrees delayed retirement is merely a “drop in the bucket” in the jobs outlook for young applicants.

So how do you explain those companies and fields, like academics, where it seems the exact opposite is true? The problem comes in a downturn or jobless recovery, in specific fields with a limited number of openings. For accountants, educators, police officers, doctors, or lawyers, delayed retirements may certainly contribute to the “lousy job market,” to quote the ABA Journal. Healthy long life has its price.

The workforce is aging. For American lawyers, the average age jumped from 39 in 1980 to 49 in 2005. For elementary and high school teachers in the United States, the median age rose from 41 in 1987 to 55 in 2005. In universities across the world, most every professional journal has noted that part of the reason for the crimped job market is due to delayed retirements.

But even in specific fields the delayed retirement trend is neither uniform nor permanent. In New York state, doctors’ retirement rates are actually accelerating, according to the Healthcare Association of New York State. In many aging countries, like Japan, Russia, Italy, and Germany, the problem is a lack of younger workers. And for countries like France and Belgium that bought into the lump of labor theory, lowered retirement ages have not helped younger workers.

Ultimately the retirement bottleneck, where it exists, has a time limit. Already, says Korn/Ferry executive search partner George Atkinson, “we’re seeing more jobs opening because of retirements, at least anecdotally.” By 2030 or 2040 all the boomers will be retired, or dead, and who knows, perhaps the much-anticipated jobs surge will finally come.

But that’s a long way off. In the meantime, some helpful business and government policies can ease the crunch. Two such successes have been work sharing and job sharing. Work sharing in Germany, Turkey, and several other countries pays companies not to lay off a few people but instead trim hours for all. Both workers and companies receive compensating benefits from the government. In the latest recession, work sharing saved some 100,000 jobs in Turkey, 370,000 in Japan, and 400,000 in Germany.

Job sharing is a voluntary version of the policy. Two workers who both prefer to work part time split a position. It has received high marks from some Irish and Canadian companies. Some 54 percent of British companies offer job sharing as an option.

Other creative solutions, including phased or gradual retirement, can also mitigate the problem. But the bigger issue is how retirees can have enough to live on when they stop working. The fact that the American retirement system is too fragile and small is not just a geezer issue. One solution might be a universal government retirement plan, proposed by Washington-based Center for Economic and Policy Research researcher Dean Baker, that would free those who want to retire but cannot afford it.

Ultimately, the biggest issue of all is the economy. In a healthy economy, notes University of Chicago aging researcher Leonid Gavrilov, the job market is dynamic. In fact, the current stock market rise and the curtailment of some pension plans have started us on the right path, says Boston College’s Munnell. Even MIT’s Kotlikoff, when it comes to lingering unemployment, sees issues like “smart machines, immigration, and consumer demand” as more significant than boomers’ delayed retirement in shaping the job market of the future.

So the generational jobs clash is real but limited, and a number of solutions can mitigate the crunch. Good jobs, for whatever age group, follow demand. The more people work, the more they consume. The economic clash of generations is thus part of the larger world challenge—how to keep market-based economies healthy in a world of sustainable growth.

Ted Anton is a professor of English at DePaul University and the author of The Longevity Seekers: Science, Business and the Fountain of Youth. @AntonChekhov

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