Challenges of an Aging Population
Maine is aging rapidly. In 2005 the median age was 41.2 years, up 6.7 percent from 2000 when the median age was 38.6 years. This increase is twice the increase at the national level–6.7 percent versus 3.1 percent. As a result, Maine is not only getting older, it is getting older faster than the rest of the country.
This will have serious economic consequences. A new working paper published by the Federal Reserve Bank of Boston finds that older workers will face a number of challenges. From the paper’s conclusion:
“These results imply that older workers will face increasingly unfavorable relative labor market conditions as their ranks become crowded by the baby boom generation in the near future. Although the slowing of labor force growth may create tight labor markets, the pecuniary benefits of labor market tightness will disproportionately accrue to younger, less experienced workers. Loss of defined benefit pensions and increases in Social Security’s normal retirement age may result in baby boomers retiring at older ages than did the birth cohorts that immediately preceded them, but the boomers will suffer from the same cohort crowding effects on wages, as they consider retirement that they did earlier in their careers.”
My interpretation of all that is that future retirees will not only have to delay retirement but will also have a hard time making ends meet since there will be a glut of peers also looking for jobs thus depressing wages. Since Maine has fewer young workers and more older workers, the economic implications of this is that Maine’s economic performance will continue to lag behind the rest of the nation.