When Tom Coughlin coached the New York Giants to a victory in the Super Bowl this past February, he also scored a victory for a much bigger team: the greying army of North American baby boomers that have hit or are soon to hit the traditional retirement age of 65.
Coughlin was five months past his 65th birthday when he hoisted the Vince Lombardi trophy and became the oldest coach ever to win football’s ultimate game. His success proves that employees who are working beyond the usual age can excel even in the most brutal businesses.
Here’s the rub, though: Coughlin’s victory has led to no run on grizzled coaches, no stampede toward more experienced pigskin strategists. NFL teams hired six new head coaches in the off-season. None were older than 55. For all the change in hiring patterns it brought about, Coughlin’s victory could have been expunged from the record books.
The NFL’s distaste for older coaches demonstrates at least one of the difficulties facing the North American economy as we collectively lurch into unprecedented demographic territory. Despite the success of older employees such as Coughlin, most employers still regard anyone over 55 as unhirable.
That may have been fine when the bulk of the population was in its 20s or 30s. But with the oldest boomers already hitting 65, and most in their 50s, a system that militates in this and other ways against older workers could be dooming us to a chronic, severe downshift in economic growth—a long-lasting state of near recession.
Stephen Gordon, a professor of economics at Université Laval, calculates that real GDP per Canadian has expanded at an average annual rate of 1.7% over the past 30 years. (That growth rate may not sound so impressive, but it means that a typical person’s standard of living comes close to doubling over a 40-year career.) Gordon figures that the growth rate has received a half-percentage-point boost from the two major trends that, in many ways, have defined the boomer generation: more women entering the workforce, and more working-age people in general as a result of the continent-wide surge in births back in the late 1940s, ’50s and early ’60s.
Today, here’s the problem: the proportion of women who choose to work is leveling off; meanwhile, the working-age population is shrinking as boomers retire. That means no more automatic boost to growth rates every year. Instead, demographic forces will begin pulling in the opposite direction, Gordon figures. A shrinking population of workers and a dwindling influx of women into the labour force will slam the brakes on economic momentum. Barring a sudden explosion in productivity, growth in real per capita GDP will slow from 1.7% a year to half that level—a rate of expansion so tepid that it may be imperceptible to many people.
An economy in which the average Canadian is seeing his or her standard of living barely budge, year after year, is an economy that is living on the edge. Assuming that raises and gains aren’t evenly distributed, many people will see their standards of living stagnate or decline. It’s difficult to see how we can navigate that future without a rise in political stress.
Businesses, too, will feel the pressure as they adjust their models to older consumers. Back in 1981, the median Canadian was slightly under 30; this year a typical Canadian is 41. As a nation, we are now middle-aged. Wonder why McDonald’s is converting its restaurants from playground-and-Ronald-McDonald themes to McCafés? It’s because we’re moving into a post-kids era. Over half of households now include no children. The proportion of Canadians past childbearing age has soared from 31% in 1991 to 43% in 2011.
Consultants and futurists are fond of arguing that aging boomers will open up new commercial opportunities—senior gyms, home-care services and the like. The risk, however, is that an aging population may be more susceptible not only to slower economic growth, but also outright stagnation.
Japan is a case in point. Despite its advanced factories and technological prowess, it has spent the past two decades in a deflationary funk. Its population—among the oldest in the world—has preferred to sit on its savings rather than spend. Retailers have targeted the over-65 market with smaller portion sizes in convenience stores, medical clinics in department stores and expanding lines of specialty products aimed at the elderly. (Unicharm, the country’s largest diaper maker, reported that last year its sales of adult diapers in Japan exceeded those for babies for the first time.) But all those initiatives have failed to spark much retail fire.
Rather than counting on retired consumers to fuel the economy, it may be more helpful to prod Canadians to work longer, so they can help fuel economic growth, increase productivity and keep up their consumption habits. That is clearly the thinking behind the federal government’s recent decision to raise the age at which people will be able to start collecting Old Age Security. But much more needs to be done. David Foot, a demographics expert at the University of Toronto, argues that pension plans need to become much more flexible, by allowing people to gradually ease into retirement rather than simply walking away from work. A well-designed plan might allow someone to work three days a week past 65 while collecting a partial pension and running up additional pension credits.
That sounds attractive in theory. In practice, however, it requires flexible employers who are eager to hire and employ older workers. So far such companies seem rare indeed. Unless Coughlin reels off a few more Super Bowl victories, the danger both to older workers and the broader economy is that they will stay that way.
Ian McGugan is an award-winning business journalist in Toronto and the founding editor of MoneySense magazine. E-mail: email@example.com.