PwC Golden Age Index reveals $1 trillion potential in older workers

21 June 2018 Authored by Consulting.us

By increasing employment in the 55-64 age bracket to New Zealand levels, the US could boost GDP by 3% and generate more than $800 billion in wealth. The latest Golden Age Index from PwC also found that older American workers are threatened most by automation.

In its 2018 Golden Age Index, Big Four professional services firm PwC analyzes labor market and population trends across 37 OECD countries, concluding that there is a vast source of untapped wealth lying dormant in the pool of older workers. OECD countries include Japan, but are largely North American and European.

By 2050 PwC anticipates that the number of people aged over 55 in the OECD will soar to 538 million. If this population is employed in all OECD countries at the same levels as they are in New Zealand, PwC estimates that this would result in a boon to GDP of around $3.5 trillion.

Among OECD countries and in absolute numbers, the US stands to gain the most from mimicking New Zealand’s embracing of an older workforce. Employment rates in the 55-64 age bracket currently hover just above 60%. In New Zealand the figure is 79%, and in Sweden 78%. Across the OECD the average is 52%.

By boosting employment of this demographic to New Zealand levels, the US would generate an increase in GDP of 3%, translating to around $815 billion extra in the national economy – double that of France in second place at $406 billion. Even if Swedish levels were reached, the boost would still be a substantial $591 billion. 

The United States could increase its GDP by over $800bn

In relative terms, Greece would benefit most from reaching New Zealand’s high of 69% employment. Currently the rate stands at just 35% for 55-64-year-olds in the economically troubled nation. By almost doubling that rate, PwC estimates that GDP would soar by 23% resulting in an extra $44 billion.

In fact, the relative impact to the US is fairly minor. Among OECD countries, only Norway, Israel, Mexico, Chile, Korea, and the US would see a benefit to GDP of less than 5% by adopting New Zealand’s employment rate. Each nation has a relatively high proportion of older workers in full time jobs.

Aging automation

The US is, however, back on top of the table when it comes to the risk posed by automation to workers aged 55-64. Separate PwC analysis found that around 27% of US jobs occupied by older workers could be automated in the next decade. This is the largest percentage among OECD countries – with France a near second on 25%, and Turkey, Greece and Korea all under 10%.

The average risk to their job posed by automation stands at 21% for workers aged 55-64 across the OECD. For workers of all ages, the average is lower at 19%. In the near future both rates are projected to increase, and by the early 2030s one in three older workers will be at risk of being replaced.

Automation risk of workers in the next ten years

Older workers tend to be employed in clerical and other roles that rely heavily on routine, PwC analysts found, making them especially vulnerable to automation. Around 50% of clerical jobs are expected to vanish by 2030, compared to 9% of those which involve complex social and/or computational skills.

The upshot of this is that older female workers are the most likely to be replaced by new technologies, given the higher proportion of women in clerical roles – particularly in the financial, insurance, and manufacturing sectors. Around 13% of all employed women aged 55-64 work as a clerk in some capacity.

Yin and Yang

So how can the US boost employment rates for older workers, while those same workers are the most vulnerable to the onward march of automation? The answer, PwC found, counterintuitively lies in more automation. The take-up of Artificial Intelligence by businesses is projected to boost North American GDP by 14.5% in the next decade – equating to around $3.7 trillion, mostly concentrated in the US.

PwC expect that the advance of AI will create millions more new jobs and help older workers perform tasks that they, or even younger colleagues, couldn’t perform alone. Not only that, the evolution of healthcare technologies means that the older workers of tomorrow may be less afflicted by illness and injury than their counterparts today.

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