Working During Retirement Years Can Prove Beneficial to All
The idea of working until you retire seems to be undergoing a metamorphosis with the idea now being forged of working past retirement, or at least past the age of 65, which Americans have usually considered the beginning of their golden years when they would no longer have to face the 9-to-5 routine.
That’s the word from a large percentage of the baby boomer generation who are entering the time when Social Security checks traditionally begin to appear in their mail boxes. As each year passes, the number of people who turn age 65 and remain on the job continues to climb.
The reasons are fairly evident as to why older persons are choosing to supplement their main sources of income—personal savings, pensions, and Social Security—with ongoing employment. Among them are (1) the increasing lifespan, which is requiring more money to cover the “extra” years; (2) rising health care costs; and (3) declining health care coverage.
In addition, older citizens are improving in health and, therefore, they are more able to work. A corollary to that reality is the fact that there has been a steady decline in the number of jobs that require strenuous physical demands from 20% of all jobs in 1950 to 7% in 1996 and probably even less today.
With concerns about the slowing US economy, odds are that in the days ahead, even more “senior citizens” will be opting to remain at their jobs a bit longer or at least take advantage of the opportunities they might have to continue receiving paychecks in different fields of endeavor, either full time or part time. While money is not the only reason people choose to work past retirement, it is certainly the driving force for many.
Individuals who delay retirement will, of course, earn extra money and build up additional Social Security benefits. They also may be able to accumulate more in employer-sponsored pensions. The Urban Institute suggests that delaying retirement by five years could increase annual retirement spending by 56%.
In addition to the benefits of continued income, many of these workers remain on the job for personal reasons. Many men and women define their lives with their jobs. For such individuals, quitting work is like removing a part of themselves. Continuing on the job also promotes social integration and social support. Moreover, staying active can enhance physical health and emotional well being. Several recent studies show that 97% of those who are 70 years of age and older really enjoy what they are doing in the workplace.
Keeping people in the workforce longer is also good for the US economy. The US population is living longer, and couples are having fewer children. There are over 36.8 million Americans 65 years of age or older, an increase of 5% (from 12% to 17%) in the past half century. According to the Census Bureau, the percentage of seniors in our nation by 2050 will likely be around 27%. Tapping this source of labor will facilitate future economic growth. As of January 1, 2008, the first of the baby boomers became 62 and, thus, eligible for Social Security benefits.
The number of people over age 70 has been edging up during the past decade or so. In 2007, the percentage of men 70 years old and older who were employed was 14%; for women it was less than 8%. Currently, there are approximately 2.7 million Americans still going to work every day who are in their 70s, 80s, and even 90s.
An influx of older people would certainly ease the labor shortage in many critical fields, especially those requiring higher education. The older population could expand the inventory for the additional workforce needed in the US for the future. By 2020, it is estimated that 60% of adults under age 75 will be composed of individuals ages 55 to 74. If everyone continued working five years beyond the normal retirement age, the extra Social Security taxes would prove greatly beneficial in reducing the anticipated Social Security fund shortfall over the next 35-40 years.
But not everything is positive with regard to this age group. Many employers believe that seniors tend to be less creative and not as willing to take the initiative and learn new ways to do things. Some employers are unwilling to train older workers because the cost ratio compared to the years of expected labor is too high.
Moreover, for those jobs that do require greater physical strength, the older folks do not fair as well as those younger. Additionally, health insurance plans often cost more for employers as workers age, and, in many cases, those who have seniority on the job frequently require higher salaries.
Still, most employers value the loyalty, work ethic, and reliability of older workers. Many even view older white-collar workers as more productive because of their experience, sometimes sufficient to offset health-related costs and higher salaries.
It’s up to the seniors, of course, to convince businesses that they are still capable of contributing well past the traditional retirement age (although increasingly the convincing is going the other way). As more seniors shun or delay retirement, we can expect the benefits to the individuals and companies, as well as the economy as a whole, to continue to expand.
New Medical School Could Benefit All Texans
The past decade has seen enormous expansion in many industries that were virtually nonexistent before that time. Biosciences and biotechnology are expected to be key economic drivers in the decades to come, and exponential growth is anticipated in life sciences industries which are only now beginning to emerge.
If Texas were able to gain a leading role in these rapidly expanding fields, there is every reason to believe the state could develop into a much more notable site for the biosciences. A medical school is an important component of this development. Recognizing that Texas has a unique window of opportunity and taking advantage of it to establish a position at the forefront of these industries could help ensure the future prosperity of the state.
Currently, the biotechnology industry is concentrated within nine of the nation’s 51 largest metropolitan areas, none of which are in Texas. These regions account for 75% of the nation’s largest biotechnology firms. A major reason for this success is that these urban centers fulfill two essential requirements for industry growth: strong research capacity and the ability to convert research into successful commercial activity. The availability of pre-commercial medical research has also been cited as an important factor.
The Lone Star State has identified the biosciences cluster as one of its key targets for future economic development. Significant success in this area requires the creation and development of an outstanding group of medical schools and research facilities as they can dramatically alter economies.
Research-intensive medical schools tend to generate a sizable number of discoveries with significant commercial potential. In areas ranging from genomics to nanotechnology, new discoveries can rapidly develop into spin-off companies, which is many cases can become quite large in a relatively short period of time. Moreover, spin-off activity can arise in virtually any industry.
Unfortunately, Texas currently lags behind many other regions in the volume of major external research funding, as well as the presence of biomedical industries, especially those with outstanding medical schools and university collaborations. A more focused research and clinical program could enhance the state’s competitive position in this sector which exhibits virtually unlimited growth potential. The industry is also a key element of the convergence of various technologies that is expected in the future.
Medical schools are important research resources for not only their faculties, but also for other sciences both in the public and private sector. Expansions in health-related sectors tend to be concentrated in areas with high quality educational institutions. Given likely future patterns in health-related technology and demographics, this phenomenon will likely become even more pronounced.
Most of the top schools of medicine in the US are located proximate to large universities. According to the Association of University Technology Managers, research expenditures generated from universities with nearby medical schools are significantly higher than those of universities without medical schools. In a nationwide study, the Association of American Medical Colleges ranked Texas fifth among all states in the economic impact generated by its members, despite the fact that Texas is the second most populous state.
The development of a new medical teaching facility in Texas in conjunction with a top-tier research university could bring substantial gains in business activity through its operations, student spending, and so on. It could also foster research in a broad spectrum of areas associated with health care. Furthermore, such an operation could contribute to the development of related industries such as the life sciences cluster and other sectors involving nanotechnology applications.
One excellent opportunity lies in locating a medical school in Austin in conjunction with The University of Texas. Chief among the advantages of this strategy is the wealth of knowledge and research capacity at the University of Texas at Austin and the presence of several large and well-respected hospitals with myriad areas of expertise in the Austin area.
The University of Texas currently has over 100 research units, many of which are cutting-edge science research programs. Initiatives already in place at the hospital facilities, as well as the thousands of knowledgeable staff, will further enhance the potential of a new medical school.
Austin is also a significant center for electronics, software, and several other technology sectors, as well as notable private research entities. Many local firms and other enterprises are engaged in activities that have enormous potential for commercialization in conjunction with future health-related advances and applications. The convergence of various disciplines will only escalate these prospects.
The joint presence of the excellent scientific research programs at the University of Texas at Austin with a major medical school would greatly expand competitiveness in this arena. The strong base of technology-oriented companies adds yet another potential source of synergies.
According to a recent study by my firm, ongoing operations of a major medical school in Austin would generate some $2.38 billion in yearly spending in the regional economy ($2.92 billion in the state) and 19,307 jobs (21,484 in the state). Economic development effects stand to be much higher if such a facility helps Texas achieve a market presence in the biosciences similar to that of other states with outstanding medical school and university collaborations. Moreover, enhanced health care outcomes may reasonably be expected to generate more than $11 billion annually in net social benefits.
A University of Texas Medical School in Austin could be a central factor in positioning the state more prominently as a competitor for the biosciences cluster and improving the health and well-being of all Texans.
Economic Impact of the Writers’ Strike
To some people, it might seem that the recently-ended writers’ strike affected only a small group of individuals. In reality, it involved thousands of people and reached far beyond the Hollywood neighborhoods and the Big Apple boulevards.
Those of us whose pocketbooks were not directly affected by the situation have been looking forward to the time when our TV viewing will not be inundated with reruns and reality shows, and when more movies will start hitting the big screens. Some television shows, however, may now wait to start up production until next season due to the shortage of weeks remaining. Others may not start back at all due to the loss of viewers.
As in similar walkouts from various industries in the past, not everyone involved got what they asked for or felt they deserved, but the settlement reached this week has enabled people to return to work with hope for more equitable financial benefits, especially as related to “new” media such as the Internet and “on demand“ cable and television outlets.
The strike of the Writers Guild of America against Hollywood studios, networks, and production companies—the first in 20 years—started November 5. About 12,000 East and West coast guild members were directly involved. In Los Angeles, the entertainment industry provides about 3.5% of the overall employment, and in New York, the film and television sectors account for some 2% of the area’s jobs.
More than 6 million people, from agents and managers to production and broadcasting crews have felt the strain of the three-month dispute.
The 1988 strike lasted 22 weeks and was estimated to cost the entertainment industry some $500 million. Because of the build up of scripts prior to that walkout, many filmmakers and television producers were able to continue operations.
Economic losses to the Los Angeles area economy as a result of the current three-month strike are estimated at more than $21 million per day in direct spending. A substantial portion of the loss resulting from the cessation of scripted television programming was due to layoffs of support staff and the shuttering of production companies.
Perhaps the economic strain of the strike on Los Angeles County’s $442-billion annual economy, of which the entertainment industry provides some 7% or around $30 billion, has not been too significant, but the impact on ancillary activities has been of major importance. Businesses hard hit by the situation included mom and pop stores, caterers, dry cleaners, set designers, carpenters, drivers, costumers, and even dog groomers, as well as local area hotels and restaurants.
In near-by Santa Clarita Valley, where more than 6,000 people owe their livelihood to the film and TV industries, permits for local filming fell steadily because of the strike during the three-month timeframe, and most sound stages went silent.
Additional revenues were lost because of changes in the airing of the People’s Choice Awards and the Golden Globes programs, which reduced the television audience size and diminished opportunities for advertisements. Long-term strikes of this nature often lead to migration of both audiences and advertisers to other forms of entertainment.
The impact of the strike has not only been felt on both US coasts, but even as far away as China where more than 40,000 carpenters, electricians, and laborers were laid off due to the lack of work on US movies and television shows, resulting in a loss of hundreds of millions of dollars to that economy.
The settlement of the walkout reduces the concern over the possibility of another strike this summer by approximately 150,000 actors whose contracts are due to expire June 30. Although that possibility still remains, the fact that various sides are communicating with each other regarding problems and possibilities greatly diminishes the probability of a similar major economic dilemma. The resolution also virtually assures the star-packed audience of the 80th Academy Awards program on February 24 to be up to its traditional flair.
Those who were impacted personally because of lost wages are undoubtedly pleased that payrolls will once again include their names, plus a little extra, compliments of the agreement that increases residuals and shares revenues from the Internet in the future. We are finally back to a situation where “The show must go on!!” I, for one, am very pleased.
Super Sunday
If you missed it Sunday evening, you were one of the few as 97.5 million people tuned in to watch the Super Bowl. The hype prior to the event was most interesting, especially the anticipation regarding the advertisements. And for the most part, it was well worth the wait, especially in the final quarter when more than 105 million people were glued to their television screens.
While the 17-14 New York Giants’ triumph over the New England Patriots proved that once again David can prevail over Goliath, the historic contest had a far greater impact on the American economy.
Super Bowls are typically all-day affairs, but the planning for being included in the associated activities takes a lot longer and includes everything from travel and accommodations to food and souvenirs—not counting the advertisements, of course, which cost millions to produce and air. Over the past 20 years, ad sales totaled $1.72 billion, and that’s for some 682 minutes for 221 advertisers. The top five, Anheuser Busch, PepsiCo, General Motors, Time Warner, and Walt Disney, shelled out over $613 million during the 1987-2006 timeframe.
The 63 ads made available for Super Bowl LXII cost up to $2.6 million for 30 seconds, about $100,000 more than in 2006. (Prior to the mid-1990s, ads cost less than a million dollars.) Most of the advertisers this year were repeat customers, but 10 were newbies. The huge expenditures were considered a gamble since many people often remember the ad itself, but not the product associated with it. However, the ads are usually worth the cost if they create a buzz that results in increased sales.
Prior to 1984, the general public traditionally viewed advertisements as personal timeouts for kitchen or bathroom breaks. Since then, when the groundbreaking and unique Apple ad introduced the Macintosh, the half-minute offerings have become almost as popular as the action on the football field. In many cases, advertisements have become an art form offered in a theatrical production using revolutionary approaches.
Amazingly, almost one-fourth of the commercial time available for advertisers is traditionally used by the network showing the game to promote its own programming.
For the 70,000 or so who were lucky enough to get tickets (and some of them were very costly), most of them also spent a significant amount on transportation, overnight lodging, and entertainment. Nearly 1,000 aircraft were added to local and nearby airport traffic during the days prior to the contest. Seven hundred luxury sedans and limousines supplemented the more than 2,500 vehicles normally permitted for airport services.
Souvenirs for the Super Bowl normally run the gamut from the usual to the unusual, from photos of teams and players to a variety of trinkets emblazoned with the Super Bowl logo. This year, post office employees even offered postmarks, artwork, and envelopes with a Super Bowl postmark. A survey by the Retail Advertising and Marketing Association indicated that those planning to purchase Super Bowl-related merchandise this year were anticipating spending on average approximately $56, up considerably from the nearly $37 spent last year.
Estimates of economic benefits of the Super Bowl to the Arizona economy top $400 million. That’s a substantial return on the funds chipped in by the Arizona Tourism Office, as well as the convention and visitors’ bureaus of the state’s major cities and various other public and private groups sponsoring and hosting the Super Bowl and its scores of associated activities.
Even though Super Bowl Sunday is the biggest day of the year for gridiron enthusiasts, the days prior to the event have proven to be a big boom for retailers who sell big screen televisions, recliners, and couches. In an effort to make the big experience more like being at the stadium, many shoppers are opting for large screens. More than 2.5 million new television sets were expected to be purchased just in time for this year’s Super Bowl. With the addition of the new TVs, hundreds of families also sought to improve their viewing environment with new couches and recliners.
Charities, especially those promoted by celebrities, also benefit significantly from events planned around the time of the annual game. Taking advantage of the platform and pageantry surrounding the Super Bowl, activities ranging from sports competitions to cook outs to special parties garner upwards of $2 million for football-related charities.
Major pizza chains always look forward to the annual big game because sales often increase by more than 50% over a typical Sunday. In fact, this day reportedly ranks second only to Thanksgiving In food consumption, though the menu is quite different.
A special attraction for sports fans this year was the FBR Open golf tournament held about 20 miles away from the location of the football contest. Nearly 540,000 were drawn to the golf links to watch many of the top PGA players compete, although Sunday’s crowd was significantly smaller than the average attendance for the closing day. Two golf fans were not on hand for the finish because of Phil Michelson, who gave away Super Bowl tickets to a spectator and his son.
Regardless of whether you wanted the Giants and Patriots to win, Super Bowl LXII proved to be a big economic winner for various segments of our economy. And that’s in spite of the myriad challenges Americans are facing during this unique period of unrest and uncertainty.
Economic Stimulus Plan
Very few things in life, if any, are perfect. Most are far from it. Yet, in spite of apparent imperfections, we constantly make decisions and choose paths that are generally perceived to be the most feasible or the most needed at the moment. Such is the case in the economic stimulus plan now being framed in Congress.
There are two (or more) sides to almost everything, of course, and the proposal regarding the best approach to stimulate the nation’s economy in an effort to improve its vigor is no exception. By many measures, we are currently facing a massive slowdown in growth. The operative word, however, is “growth.” We’re still headed in the right direction, just not as fast as we have become accustomed.
Undoubtedly, the current economic state of affairs has its uncertainties, but the nation has persevered through worse scenarios in the past and, in all probability, may face similarly severe conditions in the future. The status of the US economy is always fluid, and peaks and valleys are inevitable. Knowing how to act during either situation is what makes the difference.
As we are all quite aware, there are numerous matters attracting the attention of our nation’s leaders, and even more, it seems, on the plates of the various presidential candidates. However, of all of the difficulties and challenges the nation faces, economic conditions seem to be having the greatest impact on our daily lives. Although it’s not technically true, there is emotional validity to say that the pocketbook provides the fuel for advancement.
President Bush noted in his State of the Union address Monday evening that, “our country has been tested in ways none of us could imagine” over the past several years. The obstacles the economy is encountering are certainly a case in point.
Various steps are being taken to encourage business activity and ensure sufficient money is available for undergirding and providing a solid foundation for ongoing expansion. The dramatic dropping of interest rates by the Federal Reserve in the past couple of weeks will prove advantageous in working through the current situation. The central bank and some of its major counterparts around the world have made it clear that they will provide adequate liquidity to sustain the global economy.
Adding to the mix of responses is a fiscal stimulus that will most likely include sending tax rebate checks to 117 million families (something our fearless leaders love to do a few months before an election) and providing businesses substantial incentives for investment in new plants and equipment.
Before we hear “the check is in the mail,” however, the proposed stimulus plan must be approved. Some lawmakers, particularly in the Senate, will no doubt attempt to load up this initiative with other provisions that slow down or impede its implementation. The sheer complexity of sending out the funds through our vast bureaucracy will likely get us to late spring or early summer. Nonetheless, the principle effect is psychological, and the spending stimulus will happen before the money actually arrives.
The magnitude of the impact from the proposed “rebate” will depend on how many people use it for consumption as opposed to saving or paying down debt. Economic research dating back to some of Milton Friedman’s early work and a lot of historical experience tells us that such schemes do not make a great deal of difference in a real sense, but this one is all about the perception of consumers
On the other hand, the incentives for investment are an unabashed winner. Whenever we improve the climate for purchasing plants and equipment, small businesses respond quickly and decisively, and jobs are created!
From my perspective, however, a glass half full is better than a glass half empty, and a bipartisan effort to respond in an election-year environment sends a positive message. Times are not as rosy as the recent past, but we are not in a recession. The definition of a recession calls for decline in gross domestic product for two consecutive quarters. That has not occurred, and productivity growth will in all likelihood prevent such from happening.
In spite of media headlines, which often create undue stress and depict an economy in need of life support, the nation’s economy is not ready for ICU. An injection of a swift-acting elixir is good, but crash carts are not required.