My last post suggested differentiating the population into two age cohorts with a dividing line at the 55th birthday. In that post, I focused more on dividing government into two bodies with distinct voting population: an operational government with voting age eligibility starting at 16, and an entitlements-allocation government with an voting age eligibility of 55. For eligible population, voting participating in the entitlements government would be voluntary but if chosen they would give up their right to vote in the operational government. I suggested that the entitlements government would also set policies (such as labor laws and health-insurance rules) to govern those who are over 55 and this would provide an incentive for people to switch their voting privilege to this government. As I discussed in that post, I presented this as an answer to lessen the influence of older voters on the operational aspects of government that burdens mostly the younger people.
A consequence of dividing government into young and old age groups is that there would be different laws for young and for old. I imagined that the young people will continue to operate under the current laws, such as labor laws and medical coverage laws. In contrast, the older people can make new laws that may be more appropriate for issues related to aging. For example, the older people may experience a labor laws that are more lenient to the employers. In particular, I suggested that age-discrimination laws would not apply to the population who are over 55.
Older people can continue to work, but they will not be protected from even those terminations explicitly justified based on age. In effect, there will be a retirement age of 55. An employer may continue employing an older person indefinitely, but he would not be punished for terminating any employee who is over 55. After that age, they will work as independent contractors and not have employee status.
I suspect the effect of this regulatory environment will result in mandatory retirement at 55 for most employees. They will likely be rehired as independent contractors but at lower compensation and no employee benefits (financial or seniority status). The independent contractors will compete for their jobs on a regular basis, perhaps on an annual basis. Many will not be competitive for long and they will need to find new careers or enter permanent retirement.
The motivation of age discrimination is to prevent this situation of long-time employees becoming fired simply because of their age. Even with the law in place, there are ways that employers will try to obtain this result such as the examples described here.
In a system where age discrimination laws do not apply after 55, companies would retain only a small number of their best performing older workers and terminate the remaining ones. For most people, this will mean retirement at 55. Assuming continuous employment, this should provide sufficient time to become vested in retirement savings or pension plans. The legitimate role of age discrimination it to protect workers in the 40-55 age range so that they can obtain the retirement savings by working until 55. This protection of retirement vesting or eligibility was one the primary reasons for laws preventing age discrimination. Once a person reaches that age, he will be able to enjoy the full expected retirement benefits at that age although clearly those benefits will be less than if he had continued to work to his late 60s.
The present situation of continuing age-discrimination laws beyond 55 serves a different purpose of securing the income in order to pad the retirement savings and postpone spending that savings. Certainly this benefits the individual, but the company may benefit more by replacing that person with a younger person for lower costs and more enthusiasm. Forcing a company to retain the older worker blocks the opportunity of a younger work to perform the same task, especially when the older worker is doing essentially the same as what he was doing when he was younger.
Individuals would like to work as long as possible. Meanwhile companies may desire letting people go when they are in their late 30s when that would be too early for them to have accumulated much in the way of retirement savings. A cut-off age of 55 for age-discrimination protection is a reasonable compromise.
Although I mentioned that this may become a mandatory retirement age of 55 for many workers, companies are free to continue employing their older workers as employees or rehiring them as independent contractors. My proposal is only to have the over-55 group governed under a different set of labor laws than the group under 55. The loss of age discrimination protections is one aspect of the changes of labor laws affecting the older worker. There may be other impacts as well in terms of loss of employer-contribution to health insurance or to retirement savings plans.
It is hard to imagine a period that transitions from the current economy to this alternative economy. I don’t even think it is possible until some urgent crisis occurs such as a youth revolt or an economic crisis such as hyper-inflation. Without a credible transition, the following discussion is an exercise of fantasy.
I’ll need to write a different blog post to propose a credible transition from current economy to two economies of distinct age cohorts. For now, I want to assume the transition has occurred in order to explore how the economies would work.
After society adapts to a second older-person economy, there will be many changes. Although I assume the laws will remain the same as they are today for younger workers, the younger workers will experience more advancement opportunities as the older workers are let go after reaching 55. In particular, the younger workers will have better access to managerial or leadership positions and enjoy less interference from those whose higher rank is based only on their having more seniority or being older. The remaining older workers will have earned their continued employment by offering some recognized advantage over the younger workers. I assume that these will be fewer in number than we have today with the indefinite age discrimination laws.
A much more dramatic different will be the economy available to the older workers. Whether the person reaching 55 retains his old job or must find a new one, the economic environment will change. The person will become governed by a different set of laws administered by a different government. There will be different labor laws that I expect will have much less protections for the worker. Those who manage to keep their old jobs will encounter new difficulty in defending their jobs from younger qualified workers. The many who will be forced out of their old jobs will have to compete as independent contractors with no institutional benefits like healthcare, retirement contributions, paid time off, or overtime pay.
For many job categories, it may be impossible for the older person to continue working in the career of his youth. Most of those jobs are too easily mastered by younger adults. For many jobs such as those involving stamina and strength, the younger population will have an advantage over workers. For any such job there is likely to be an available and qualified younger person to fill the job held by the person now reaching 55. I assume that job would immediately be reassigned to the younger person.
As a result, there will be a large population of people in their late 50s who still have much to offer to the workforce but will be unable to continue working in the jobs of their youth. They will need new jobs, and in particular jobs that are more suitable for older people, or less likely to face competition by younger people.
In many cases, this will involve a major career change that will require a new education or training. People in this age group will be returning to schools to obtain appropriate aptitudes to prepare them for the job market available to them.
The job market will not involve employment benefits of the younger people, so they will also need to adopt a new approach to manage living expenses. In particular, the lack of guarantees for continued work or even for steady work will greatly reduce the opportunity to incur debt, or will make such debt much more expensive. Of course there will be exceptions where someone will have job security due to unique and well-recognized talents, but most people will be higher credit risks because they have less certainty that they can maintain a specific income for several years. This will have a big impact on budgeting for daily and monthly expenses.
Jobs appropriate to older people will include jobs providing services or products to older people. Examples may include providing rental services for housing, hospitality services, transportation services, or health services but where the services cater primarily to older people.
In the specific case of health care, there are abundant opportunities to for nurses, physician assistants, therapists, and technicians that older people can perform. Much of the current problems of rising health care costs are due to the two problems of an aging population and of a lack of qualified staff to provide the needed care with reasonable working hours. Older adults starting second careers in healthcare may help provide more health care professionals to meet this need. Streamlined education for older adults and malpractice tort reform for these older workers can enable older workers to start a second career in the health service industry.
Similar approaches may be apply to other service fields.
To make this possible, we will need a different education infrastructure of schools and colleges that are specifically designed for an older and more mature population. The existing college structure for young adults are not appropriate for older education. The older population is more educated and more mature. Also, they need faster degree programs in order to have marketable credentials with just a year or two of study instead of a half decade or longer for younger adults. I think the best way to provide this education is to build a separate educational system that exclusively caters to older people.
The younger adults need longer training programs in part because their jobs will be in the areas of the operational government that increasingly demand extensive training. Also, the younger adults education includes building a working maturity to handle responsible jobs.
In contrast, the older adults will be training for jobs outside of the operational government. These jobs will be primarily service jobs and specifically services to their peer age group. After having a career as a younger adult (including the younger adult’s education), they do not need as much schooling time. Older people can obtain necessary learning from accelerated learning schedules where entire courses may be completed in one or two weeks instead of a semester, or where dozens of courses may be completed in a semester. This kind of accelerated learning would not be practical if the same courses had to admit younger people who are just starting their careers.
The accelerated learning involves learning more material in a short period of time. The educational goals for older people is different than the goals of the younger people. While the younger person needs skills to handle the burdens and responsibilities of employment and participation in the operational government, the older person needs skills to start as second career as a contract workers mostly to provide services, and mostly for other older people. The criteria for sufficient knowledge may be lower for the older worker. In the example of health care, we can have sub-specializations like physician assistants that do not require the educational rigor of medical doctors. I think even full medical doctors for primary care physicians may have lower requirements when the student is over 55 and the patients will be over 55. This may be possible because the second government (the one with minimum voting age of 55) will pass laws governing older people. The laws and liabilities for treating older patients may be less stringent than the laws for younger people.
This reduction of requirements for treating older people may be a natural consequence of the two-cohort government. The government of older people is the government responsible for allocating entitlement funds. That management of funds will include direct payments to individuals as well as providing health care. Quickly enabling more older people to provide health care for older people will have a double benefit: providing payments to older providers, and providing more affordable care to the patients. That more affordable care may be lower in quality than the care available to younger people, but this is made possible because the two populations are governed separately, with different democratic governments of distinct voting populations. There is no restriction for consistency for governing the younger and older populations.
The education system set up for older people starting second careers is an example of a new industry that will emerge as a result of the second age-group economy. This education system is a service industry that caters to older people. Most of the education jobs likely will come from older people. The nature of this education is very different from colleges and schools set up for younger adults. In particular, the education pace is faster and the material is streamlined for fast entry into short term contract work. The teachers and administrators will need to innovate new approaches to education that fits the needs of older adults needing to get a start in a second career.
One of the challenges will be education financing. In this economic scheme that separates the population over 55 and excludes them from the labor laws (such as age discrimination) that apply to younger adults, the income prospects will be less reliable. A particular consequence of lower income reliability will be higher risks for securing long-term debts. This population seeking second-career education will need very inexpensive education that requires at most very short term loans that can be paid back quickly after gaining contract work in the new career. There is low likelihood that the education will sustain a career for dozens of years as would be the case for younger adults.
That is another justification for the accelerated learning. Completing a required education in shorter time will reduce the cost of the education and would allow the person to enter the contract work quickly.
Such training are becoming available currently through specialized certification training typically involving a week or just a few weeks of intense training (such as 10 hours per day for 6 days a week) immediately followed by certification exams. Similar experiments are occurring in for-profit colleges that attempt to quickly train people for specific careers. There is controversy over the for-profit schools as being less successful in placing students when compared with state or private schools, but I think eventually they will find a right model. The right model will be more intense and condensed training instead of mimicking the more drawn-out education of other colleges. Also, the model needs to specifically target older students instead of competing for younger students who are not as well prepared for such intense training. In a futuristic economy that separates the over-55 population from the younger population, these for-profit schools may provide the innovation needed to deliver the education for the older population for preparation into their second careers in contract work.
This blog post just my initial thinking about the situation people over 55 will find themselves in the proposed two age-group economies. I am optimistic that eventually society will find workable solutions to make an comfortable life for the people over 55 even though I’m pessimistic that we’ll find an easy transition path from the current economy.
In this imagined economy, the notion of retirement will change fundamentally. Instead of defining retirement as an ideal of a life of leisure sought by working as long as possible, retirement is the transition from the young population to the old population. The older population may continue working indefinitely but no longer under long-term employment arrangements. The work will be short duration contracts that may require frequent retraining to prepare for future work.
The result for many people is a lower expectation for how well off they will be in retirement, but that period would start sooner and provide more leisure compared with the current system that continues to delay retirement until a person reaches his late 60s or early 70s. The condition of retirement will start at 55 but will involve a mix of work and non-work depending on access to contract work. The savings from the employment period of youth would finance a comfortable (or at least tolerable) life during the period between contracts. Unless one encounters a debilitating illness or injury, there may never be a time when there is no prospect of returning to work in some contract capacity. Our current definition or concept of retirement is not relevant in this new economy.