Blame an ageing population for fewer new firms in the US
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Version 0 of 1. Middle-age workers may be more productive, but don’t expect them to launch companies Ageing changes us all. What we do and how we do it shifts as the years tick by, affecting our lifestyles and economies. Here’s an example. The US prides itself on being a dynamic economy. But fewer firms have been springing up. Policy failures are partly responsible, with unnecessary occupational licensing making it harder to start a new business. But recent research takes a different angle, noting that population growth slowing means fewer firms start up. Postwar, the US was home to lots of new workers and companies. As the population growth slowed, older firms hung on to their workers and fewer new businesses sprang up. So an ageing country means older firms, not just older workers. And because workers in older firms get a smaller share of the value they create, demographics help explain why the US has become less worker-friendly. Demography is also a factor in the developed world’s productivity slowdown. Explanations focus on new tech being less transformative than in the past – a distracting iPhone does less to make us productive than the steam engine. But research also reveals that we’re more productive in middle age than when young (and learning) or older (and risk-averse). As the baby boomers have moved towards retirement, the share of fortysomething workers has shrunk. The result? Fewer midlife crises, but less productivity too. As always in life, there are trade-offs. • Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org |