Workforce & Economics

A tale of two greys

Addressing inequality in retirement
Nov 1, 2016 / By Nicholas Eberstadt

One unanticipated consequence of greater longevity is likely to be increasingly divergent outcomes for older people, grouped by socio-economic status. Not only has this trend not been thought through, no steps have been taken to mitigate some of the possible unwelcome consequences. The time to begin addressing this looming challenge is now.

If we are successful in adjusting to 21st century realities regarding longevity, improved health, longer working lives, and population aging—and this is still a big “if”—we must also be ready to deal with the unintended consequences and problems that may emerge from those very successes.

Chief among these stands to be a new axis of economic inequality in our society: one that separates the “working greys” from the “Social Security greys.”

Already we know that education, health and work for older American correlate strongly. Better-educated, higher-skilled older men and women have higher labor force participation rates than their less skilled peers, irrespective of ethnicity. They work longer and earn much more. They also live longer. Indeed some research suggests that a longevity differential has already opened, and is widening today, between our older “haves” and “have-nots.”

Re-figuring work-life to comport with the currently untapped potential of a healthier grey population will inevitably widen the income and wealth gaps between those who chose to (or are able to) continue working and those who do not (or cannot).

We can expect major political and public policy debates about how to deal with these emerging and growing gaps. The most predictable of these will run along the lines of “who is subsidizing whom?” Are the “working greys” paying for a leisure-filled retirement for their less educated brethren—or are the healthiest actually being provided long pensions by those who live shorter, less-educated, and less wealthy lives?

The ideal policy outcome in neoclassical welfare economics is to create “winners without losers.” We stand on the verge of a huge potential boon—and boom—in “unlocking the value of older age.” It will behoove us to think—now, today—about how we can prevent this boon from being ruined by the politics of envy and economic division.

A tale of two greys

Hear Nicholas Eberstadt explaining inequality in retirement.

Author: Nicholas Eberstadt

About the author

Nicholas Eberstadt
Henry Wendt Scholar in Political Economy, American Enterprise Institute

Nicholas, a political economist and a demographer by training, is also a senior adviser to the National Bureau of Asian Research; he has served inter alia on the President's Council of Bioethics, the Board of Scientific Counselors for the US National Center for Health Statistics, the Overseers' Visiting Committee for the Harvard School of Public Health, and the Global Leadership Council at the World Economic Forum.

He researches and writes extensively on demographics, economic development, and international security; he has often testified before Congress on these questions, and has consulted or advised various parts of the US Government on such matters for almost three decades. His many books and monographs include Fertility Decline in the Less Developed Countries (editor, 1981), The Tyranny of Numbers (1995), Europe's Coming Demographic Challenge (co-author, 2008), Russia's Peacetime Demographic Crisis (2010), and An Nation of Takers: America's Entitlement Epidemic (2012). In 2012 Eberstadt won the prestigious Bradley Prize.