Economic Perspective: Age and Productivity

MARY WALDEN:

“Today’s Program looks at age and productivity. Mike, productivity is one of the most watched of economic statistics. It simply measures how much work a person can do in a given period of time. There’s a concern today that productivity rates have been well below their long run average. What might be causing this?”

MIKE WALDEN:

“This is actually very, very important because productivity is tied to improvements in our standard of living. Now economists that have looked at this say there could be many reasons. First of all, we may not be measuring productivity right. There may be too little business investment. Maybe the workers, now with all the distractions provided by social media aren’t doing as much work at work.”

“But, one factor that economists tend to all agree upon is it may be related to the age of the workers. If you think about older workers; they’ve got experience, they know the ropes so you might expect that older workers may be more productive than younger workers. Younger workers coming in don’t have the experience. It may take them a while to learn how everything is going on, and if you look at the workforce today, what we’re seeing is a large number of the older, experienced workers are retiring. These are the baby boomers.”

“They’re being replaced by the so called millennials, one’s born between 1980 and 2000. So some economists think that this is actually depressing productivity rates. Now the good news though is that this demographic shift will work it’s way out around 2030. That is, the millennials will be hitting that sweet spot at their 40s and 50s when productivity is high, and the baby boomers would have all retired. So we may just have to wait for productivity to come back.”