Hello, and welcome to Stephanomics, the podcast which brings the global economy to you. Do you know why the retirement age and so many countries is sixty five? And it's all thanks to Otto von Bismarck, the first German chancellor who created the world's first social security system back in eighty and he started with the retirement age of seventy. Then he brought it down to sixty five because back
then almost no one survived even that long. I was reminded of that top fact by one of the investors on a panel I moderated this week at the Milk and Global Conference in Los Angeles, where billionaires and wannabe billionaires and hundreds of other people all gather to talk about investing the global economy and when they have any
spare time, making the world a better place. The theme this year has been driving shared prosperity, and there's been some discussion about how to save enough are happy and secure retirement. Of course, one way a lot of people today are investing in their retirement is by working and earning well past sixty. I met someone here with a non traditional take on that. You'll hear my interview with
her in a minute first. One of our Federal Reserve reporters, Matt Bosler, has this story about older workers in the US and what it means for the economy. I was getting a whole six d and eighty two dollars a month on Social Security, and I had bills, and sometimes I had to decide between groceries or medication, and sometimes I had to decide whether grocers were good this week or next week. That's Doris O'Connor. She's sixty eight years old and is part of the growing share of Americans
who work well into traditional retirement years. O'Connor is a native of Brooklyn who has lived in Dallas for the past twenty years. Her story is a relatively happy one from an economic perspective. She's well enough to keep working, she finds her job fulfilling, and she's contributing to America's economy, but O'Connor doesn't have enough money to quit. Her situation
is far from unique. Retirement insecurity as a position many baby boomers find themselves in that's reshaped the US labor market thanks to a new pool of workers available in an economy that's thirsty for them. At the same time, the more older workers, there are the less opportunity younger employees have to rise through the ranks, and the bigger pool of workers overall means employers have more power to pay lower wages, something that's been a puzzle in this
economic expansion. About of Americans over the age of sixty five. We're working or looking for work in March, up from twelve per sent two decades ago. That's more than four million extra people, or more than the entire combined US workforces of Walmart, Amazon, Ups, and Target. For Doris O'Connor,
her path back to work wasn't so simple. It was hard because every day, every day you go online and you look for jobs and you try to find something that thinks that you think fits your skill level, and you put in an application online and you never hear anything. And I also had the additional problem that I didn't have any computer skills. So she went to get computer training at the Senior Source, a local nonprofit organization, and
they ended up giving her a job. Her title is intake coordinator and she points people who call in for help in the right direction. The increase in working among older adults is happening for many reasons. People are healthier office jobs are less taxing than the manufacturing and farm work of decades past, But a lot of it boils down to not being financially ready to retire. People are living longer, and there's been a major shift in pension plans that moves a lot of the responsibility for saving
from the employer to the employee. People aren't that good at planning for their own financial futures. As it turns out, about half of households are at risk of being unable to maintain their lifestyles into retirement. According to research from Boston College, the biggest fear of the older adult is surprisingly not death, it's running out of money. That's Steve Benton. He's a financial counselor at the Elder Financial Safety Center
in Dallas, which is part of the Senior Source. He helped introduce us to Doris O'Connor and Uh, they are woefully prepared. These baby boomers are entering the retirement years and don't have enough assets. They didn't plan. As a demographic, they have been known spenders. This is the first generation to ever reach retirement and still have mortgages. Benton talks all the time to aging workers who haven't saved enough for retirement, or who are worried that in a world
of high longevity, they'll outlive their retirement stores. Life expectancy in America is just shy of seventy nine years, but that average is dragged down by folks who die in middle age. Americans who live past the age of sixty five can expect to live to eighty four for men or nearly eighty seven for women. One in four sixty five year olds will live past ninety and one in ten past ninety five, based on Social Security Administration data.
That's a long time to make retirement savings last, especially in a world where people are falling back on less reliable savings outlets. Alicia Mannell at Boston College has spent years researching the topic. A large swath of the population has a huge financial incentive to keep working, and working longer is really a powerful tool. Sticking around the labor market allows people to delay drawing on their Social Security and four o one case plus, it adds additional years
for extra saving. Given that Manala is happy people are working longer, I think it's good news. If I had my way, if I were a queen, I would like to change the conversation in the United States, so that we established seventy as the UH sort of the national retirement age, and there are a couple of reasons for that. That's the age at which you get your highest Social Security benefit, and so it keeps that ratio constant as
participation climbs for people in their older working years. It could help to delay when folks draw on their Social Security. That can make a big difference in how long that money lasts. Susan Weinstock showed us just how much using the A A r p S Retirement Calculator. She's vice president for financial Resiliency at the Group in Washington. In so it asks about you your marital status, your age, or salary um. Sometimes the numbers are staggering and can
scare people, and we definitely don't want that. So if you plug in the parameters, it shoots out both how much you need to retire and maintain your lifestyle and
when you will start running out of money. Say you're a single, sixty year old woman, your income is fifty thou dollars, you save five percent towards retirement each year, and you have two hundred thousand dollars in your four oh one k You'll face a short fall starting at age eighty if you retire at sixty five and want to maintain your lifestyle, But if you work until age seventy,
you won't fall short until age eighty nine. Retirement insecurity is a problem that's here to stay, as younger Americans are even more likely to lack enough money to retire, according to Boston College data. That's because of the decline of traditional pension plans, as well as events such as the Great Recession, which forced some homeowners to leave their houses.
It's not just the United States. Around the world, people are working longer, and among the G seven economies, the US ranks only behind Japan in labor force participation for ages sixty five and above. If older Americans can find work, it's good for the economy because it makes for more trained and available labor. It's not always an easy transition, though. Like Doris O'Connor, older folks regularly need to build new skills in order to land jobs, and even then they're
often taking on lesser roles than they're used to. Here's Steve Benton and Dallas again the jobs that they are used to and having at a certain financial level are not there anymore, and so they are having to take less and in fact it's often, uh, you almost have to dumb down their resumes because people won't hire them. They tend to accept lesser. If you ask folks who have been on the market recently, some employers might need to adjust their mindsets around older employees. Reports of age
discrimination abound. Six out of ten older workers have seen or experienced age discrimination in the workplace, and of those say it is common. Based on one a a r P study research backs that up. Study of forty applications for over thirteen thousand jobs in eleven states found evidence of age discrimination older applicants. Those between the ages of sixty four and sixty six were more frequently denied job interviews than middle age applicants. That bias was especially present
against older women, something O'Connor is very conscious of. Before I got this job, I had someone tell me that I was just too old and I would not never ever get a job, that I should just give up. And I think that's what's happening to some of my friends. O'Connor says she's thankful that she managed to get her current role. She makes thirty nine dollars a year, and that's helping her to pay off eight dollars in student loans from her bachelor's and master's degree, which she went
back to get in two thousand five. She started a savings account, and she's even able to afford the occasional extra like a bottle of wine or some meat. Now, she hopes that the conversation around hiring older workers changes. Everything is about people needing medical help or medical aids, and you know, it seems to sound like older people aren't fit. We have lots of experience, we have lots of wisdom, we have lots of help to give. I'm
Matthew Bosler with Bloomberg News in New York. Now I came across the speaker here at the Milk and Conference who spent much of her academic life thinking and writing about these issues, Professor Teresa Gilla Ducci, professor of economics of the New School for Social Research in New York. I'm delighted to say I was able to pull her into an empty meeting room to chat. Here's our interview.
Thank you very much for doing this. Now, we heard quite a lot in that piece about the human side of this trend of people working later in life, and it was quite a positive story by and large that we heard. But I guess we should also be thinking about what it means for the economy and society as a whole. Is there anything that we should worry about
in this trend um. There's a big chunk of the American population who are over sixty five, and that's a growing chunk of people who don't have enough income to retire and they have to keep on working. And since that group is going to grow in the tens of millions, I am focusing on that group. These are the people who have to work for money. Their fallback position is basically poverty, and therefore the employer can tell them take it or leave it. They are working on the employer's terms,
not their own terms. And this means much more inequality in America in a way that is felt. But it's harder to measure than wealth, the income inequality. I mean, there's a lot of things they're worth thinking about. I guess one thing I'm struck by, you know, as an economist, and when I was first learning economics, the thing that came across again and again as is the closest thing to a free lunch in policy terms was raising the retirement age. It always made sense. It made the pension
system more affordable. You figured it was probably kind of good for people to work longer, and it all, you know, it makes sure that reduced the amount out of time that people were going to be reliant on their pension income. But the worry I always had was you're treating a lot of very different people the same, and when you're sixty five or sixty you could be very different because you could have had a very different work pattern of work.
So you can have and if you look at the numbers, I know you have a lot of people who have been working since they were eighteen, working in physical labor, don't get anything like the sixty. They might have dropped out by the labor force by fifty. In the UK certainly, and in the US that happens. Does that affect how we think about formally changing the retirement age, even though we encourage people to stay as long as they want to. I really like the idea that went On the surface,
it sounds like a free lunch. Everybody can just work a little bit longer. I hear this from my colleagues to say, it's a plus plus for everybody to work longer um. And they want to raise the retirement age to seventy, which that people aren't guaranteed good jobs into their seventy It means that retirement benefits are cut at sixty two and sixty three and so forth. So what happens if you cut benefits for people who retire before seventy You create inequality in the United States that we
never had before. What our system had done up until now has let the rich and the poor, the blue collar, pink collar, light blue collar, and white collar really have the same amount of retirement time. They educated work longer, but they started their work life, you know later. We don't count graduate school as work. Really it's it's it's effort, it's um involvement. But it's not the same as having started work when you're eighteen. And therefore about everybody had
about fifteen to sixteen years of retirement time. But if you're going to cut benefits, then people who are die sooner are going to have to work longer, and you're telling them you at twelve years thirteen years, where people who have better educations do like their jobs work a little bit longer, live a lot longer. Life expectancy in the United States on average has gone up, but it's
only gone up for people above the meeting income. So the top half of Americans have gotten all the longevity gains, just like the top half of all Americans got all of the wage increases. So that's just building in more inequality in terms of retirement time and satisfaction at the end of our lives um in America, and we didn't celebrate the equality that we had achieved before. So so
there's definitely lots of different size to this. You know, that's there's there's some positive aspects, but also we worry about the longer term entrenching some of these inequalities. What does that mean for policy? I mean, how should governments be thinking about it? Because it's certainly true that you know, they are still all getting it around the world, getting advised to raise their retirement age. I mean in Europe that's usually like number one on the list when you
say how are you going to fix Europe? You know a lot of countries it's often about raising the retirement age. How should we think about it? Well, first of all, let's look at UM the G seven the rich large countries in Europe and in Japan and the United States. UM longevity for people in the United States is the shortest, so people who reach sixty five and the G seven, the Americans live the shortest. Look at the retirement age, it's actually the Americans and the Japanese who work a
lot longer. So it did make sense for the Italian to UM martial their policies to make sure that the labor market was open to Italians who wanted to work past the age of fifty five. That makes perfect sense, but that broad brush does not work for the United States. To have United States workers work even longer would mean that they're working more hours per week, more weeks per year, and more years per lifetime than most other countries, especially
rich countries, were really are outliers. It also doesn't make sense for the economy to force older people UM to work longer without an enormous effort for training, UM and for and and to eliminate age discrimination, because what we're doing in the United States is asking ten thousand people who reach sixty every day to stay in the labor market UM when they don't have a good fallback position.
So we are asking um older people to go to Amazon warehouses, to go behind the counters of drug stores, of CBS, to wipe tables at McDonald's um without protection. That is actually a big enough number, with ten thousand a day to affect the entire labor market. So our biggest occupation, no growth is happening probably in the UK too, and personal care and hope health care. And you have two kinds of people working in that job. You have minority younger women who are mothers, and you have older
white women. It's all it's older women increasingly taking care of even older women. Those are the worst jobs available that it's back breaking work. It there is evidence that work for people over sixty five of certain occupations actually brings on morbidity and foreshortens their life. So it isn't that's really the dark side. And these are the costs um and unattended consequences of this cheery policy for people
to work longer. In terms of policy, we need to make sure that everybody reaches sixty two sixty five, after forty five years of of a work life, with enough money to walk away from a job if they want to. And we have to protect every adult in a civilized society a job if they wanted Asia, discrimination should be
illegal and effectively a non existent everywhere. Um. But having an affirmative policy to make work attractive to older workers is very different than the policies we have in America, which is basically forcing people to work or else they'll
be poor. I guess one final point is you've mentioned it implicitly, but if we're going to have people around the world potentially working longer for a mixture of reasons, it maybe I think in the in the US, maybe some of the disproportionate amount of the growth is coming in these more worrying segments that you've talked about. But it's also true around the world that there's plenty of quote unquote is kind of good late work happening. Do we think in general that's going to have an impact
on productivity growth? Because that's obviously the worry when we already have quite low productivity growth, You know, should we expect demographics to keep productivity low? Um, you're an economist, and um, and I think everyone can intuitively understand the economic lessons. If employers can get workers cheap, there is no incentive for an employers to improve productivity, to improve the way they do things, to add more UM and better machines to the worker. You don't add any more capital.
If you can get a lot of workers cheap, then productivity UM is going to drop. So I'm afraid that if you just have lots of people who would rather not work still have to work, that that will lower average productivity. Employers have to be in a situation where they have to draw people into their jobs to make it attractive, and that's often um higher pay and probably a lot more productivity. So I see this big push for huge increases in labor supply to be productivity diminishing,
not enhancing. Professor going to thank you very much. It's a it's a definitely a different kind of take and a slightly more mix take on this phenomenon we see everywhere of older people working. Thank you very much. Finally, because I'm in l A, of course, I have to talk about the movies. Now, twenty years ago, it took the film Titanic more than three months to become the first film to take one billion dollars at the box
office worldwide. Now, billion dollar global blockbusters are to a penny almost and the final episode of the Disney owned Marvel Avengers series. Endgame has already taken more than a billion after just one record breaking opening weekend. I can't help thinking this tells us something about the world today, other than the fact that we all like a good superhero.
I took a break from Milkin to go to the Bloomberg l A Bureau to get more from our entertainment reporter Anusia SAKUI now Inusia, for the four people left in the world who don't already know about it, just talked me through those record breaking numbers for Avengers Endgame. Well, there are so many stuffing. I mean, it's broken a huge raft of records. It's the fastest to a billion dollars,
it's the biggest opening weekend domestically and globally. It's really ready the tenth highest grossing globally of all time, and just after six days globally already it's earned something like one point through billion dollars, which is you know what you'd hope after a long run, even for a very successful film. So that gives you an idea. Even just after the first weekend, we haven't even got into the second weekend, and I see it had a pretty healthy
effect on the Disney share price as well. But what does it tell us about the industry that the numbers now can get so big so quickly. I feel like it's a combination of two factors. One is a trend of globalization in the movies, which is droven mainly by the opening of China. Over the past you know, decade or more, um, your Hollywood studios have been able to import their films into China with restrictions, you know, and with the current talks between the US and China, there
is hope that that might open up even further. So China is the second biggest movie market globally and is expected, has been expected for a little while, to overtake the US at some point. M So that's a really important
driver in terms of the numbers. The other thing is a trend in content where we've seen the strategy of studios shift from one where you'd have what Warner Brothers still does now, which is says do something like, you know, twenty to thirty movies a year, which can vary in size from the big blockbuster that might cost a couple of hundred million dollars two smaller films you know, maybe twenty million dollars and cater to a range of audiences.
Disney has become the far and away massive leader in this industry by focusing on known branded content, if you like, known intellectual property Marvel, Star Wars, pixar Um, and its own classics to release maybe ten films a year, and each of those are just very big. So they do a smaller number of very big bets and they've cornered the market. I mean, they have something like you know of the box office, and that's before they bought twentieth
Century Fox last year. I mean from thinking about it as an economist, and actually some of the things we've talked about already on Stephonomics is the nature of globalization and what it does to the corporate sector, the nature of companies, but also what it does to distribution of
incomes worldwide. I mean, just on the company side, the fact that we now have a world and I guess technology has been part of this, but technology combined with globalization produces these companies that are just bigger and more globally dominant than any we've had in history. And you know, we see that play out with this film and just the numbers that you described with Disney. I mean, it wouldn't have been possible, a new suspect um fifty years ago,
for a single company to have that kind of dominance worldwide. Well, no, and what's happening is that there is consolidation in Hollywood driven by a number of factors, you know, streaming, and that technology has meant that people now can stay home and have an equally riveting time at the movies. Another thing that's happened is rising ticket prices. Theaters are charging more for supposedly a better experience, um, you know, reclining
seats and bigger screens. That's that's how they're managing to, especially in the US, get to record breaking box office figures that they have done in the past couple of years. Because actually attendance has been stagnating in the US. It's only in China and in the Asia region where we're seeing growth in movie going. Thank you very much, my pleasure. Thanks for listening to Stephanomics. Come back next week for
more on the ground insights into the global economy. In the meantime, you can find us on the Bloomberg Terminal website, app or wherever you get your podcast If you like this show, we would love it if you took the time to rate and review it so it can reach more listeners. For more news and analysis from Bloomberg Economics, follow at Economics on Twitter, and you can also find me on at my Stephanomics. The story in this episode was reported by Genus Malik and narrated by Matthew Bosler.
Was produced by Magnus Hendrickson and edited by Scott Lamman, who is also the executive producer of Stephanomics. Special thanks this week to Professor Teresa Gilla Ducci and the Nusha Sekuli. Francesca Levy is the head of Bloomberg Podcast