DAVOS, Switzerland — The US labor force is aging rapidly. And many companies hesitate to hire older workers — or to keep them employed.
But in an interview with Business Insider editor-in-chief Nicholas Carlson at the World Economic Forum in Davos, Switzerland, Martine Ferland, CEO of the management consultancy Mercer, said ageism poses a major threat to the national economy.
“People are kind of sleeping at the wheel,” she said, adding that executives across industries are just now starting to understand the business case for employing older professionals.
To put Ferland’s warning in context: Federal data shows that the proportion of people aged 65 and older grew to over 18% in 2015 and 2016, from roughly 12% in the mid-1990s. Federal data also indicates the US labor force participation rate for workers age 75 and older is projected to surpass 10% by 2026. Meanwhile, an Associated Press poll from last summer found that around 40% of US workers under 50 thought that the graying of the US workforce was a negative development.
This increase is driven in large part by people’s fears about running out of money in retirement. But older Americans often have a hard time finding stable work. Many employers assume they lack both the requisite technological skills and the willingness to develop needed competencies.
In reality, these assumptions are unfounded. Beyond the ethical implications of ageism, employers who overlook older professionals are missing out on a valuable asset to their workforce.
Older workers are prime candidates for reskilling programs
“What I’m losing sleep over,” Ferland said, “is people not having enough money in their most vulnerable years.”
Business Insider’s Tanza Loudenback reported that the shift away from workplace pensions and toward defined contribution plans, like 401(k)s, means that Americans may have less money to retire on now than they did in the past. That in turn means they may have to work longer to make up for the savings deficit.
Ferland sees older workers as prime candidates for the reskilling programs that many organizations have implemented. Corporate giants including Amazon, Accenture, and PwC are collectively investing billions in retraining their workforces on the skills that will help them stay relevant through the digital transformation of work.
Older workers are an “under-tapped pool of talent,” Ferland said. Right now though, they’re “totally invisible when it comes to promotion, recruitment, reeducation, and reskilling.” You’re invisible, she added, “if when you talk, people say, ‘Hey, Boomer. Shut up.'”
Overcoming ageism is “the next frontier for diversity,” she said.
It’s not just about finding the time and money to retrain and retain older workers. Ferland thinks it comes down to businesses shifting their mindset about older employees’ potential, and reexamining their biases about job performance and ability.
Ferland clarified that individual employees also need to take the initiative to learn new skills on their own. That might mean simply listening to a podcast about coding during their commute. At the same time, employers can provide the curriculum focusing on relevant technological skills.
Retraining opportunities targeting older workers are rare. As Business Insider’s Allana Akhtar reported, one such federal program exists, but only seniors who make below the poverty line qualify. And many companies that are actively recruiting older workers are hiring them to perform labor in low-wage industries, Akhtar reported.
Deloitte surveyed nearly 10,000 leaders around the world in 2018 and found nearly half said their organizations have done nothing to help older workers find new careers.
Ageist employers are overlooking a valuable asset to their workforce
A 2017 report by AARP describes the stigma older workers can face. At worst, they can be seen as disagreeable luddites who avoid change and can’t use technology.
These judgments can make it harder for older employees to succeed at work. Studies described in the Harvard Business Review found that stereotypes about older people’s ability to learn new tasks can interfere with the training they receive, at least in a lab setting. Even people’s beliefs about what other people think of them can interfere with their work performance, the researchers write.
Yet the business case for employing older workers is strong. More seasoned professionals can be bastions of institutional knowledge and have seen their organization and industry evolve. One study by the decision-making tool Cloverpop found that business teams with a wide age range made more decisions with positive outcomes than teams with a narrow age range.
Ferland said the best way to address ageism and expand opportunities for older workers is to measure employers’ progress on those fronts. Employers should be tracking their efforts to hire and promote older workers and the reasons why those workers leave.
As for companies that don’t work toward these goals? Ferland told them, “You will be left behind.”
SINGAPORE (Reuters) – Singapore said on Monday that the coronavirus outbreak will hurt its economy this year, as it announced new measures to tackle the disease which originated in China and has spread to the city-state and several other countries.
The Southeast Asian travel and tourism hub, which recorded its lowest growth rate in a decade last year at 0.7%, has reported four cases of the coronavirus that has killed 80 people in China so far.
“We certainly expect there to be an impact on our economy, business and consumer confidence this year especially as the situation is expected to persist for some time,” trade minister Chan Chun Sing said.
The government is considering support measures for hard-hit sectors like tourism which could include property tax, rebates and worker levy cuts, he added.
Chinese nationals make up the largest share of visitors to Singapore, one of the worst hit countries outside of China in the 2003 outbreak of Severe Acute Respiratory Syndrome (SARS) which killed 800 people globally.
Singapore is currently forecasting growth in a wide range of 0.5-2.5% this year.
Chan is part of a government taskforce set up to tackle the coronavirus spread in Singapore.
The taskforce also announced a raft of new measures on Monday to halt the spread of the virus, including urging all school students and staff with a recent travel history to China to stay at home for a fortnight. Families in Singapore, many of which are ethnically Chinese and have relatives in mainland China, are currently traveling for Lunar New Year holidays.
It also issued a new advisory for travelers to defer all non-essential travel to mainland China and said it will start temperature screening all inbound flights to Singapore.
The death toll in China from the coronavirus grew to 80 on Monday as residents of the Hubei province, where the disease originated, were banned from entering Hong Kong amid global efforts to halt the rapid spread of the outbreak.
The virus has so far spread to more than 10 countries including the United States, Japan and France.
(Reporting by Aradhana Aravindan; Writing by John Geddie; Editing by Tom Hogue & Shri Navaratnam)
Shiller explains how compelling stories can impact actual economic outcomes.
Shiller says the mysterious story of Satoshi Nakamoto was what really drove the price and popularity of bitcoin.
He also says the Laffer curve became an important part of tax policy because of the powerful story, not because of an actual basis in economics.
Shiller says this is the one place where he will gladly praise President Trump. According to Shiller, Trump is great at reading audiences, experimenting with narratives, and he is never boring.
The Nobel Prize winner explains that these stories matter just as much as or more than the truth. And that these narrative disruptions make it very difficult to make long-term economic predictions.
Robert Shiller sat down with Business Insider during the World Economic Forum in Davos, Switzerland to discuss his most recent book and how it applies to the current economic landscape. Following is a transcript of the video.
Silverstein: So, your new book “Narrative Economics” is a topic that you’ve been interested in for a very long time. Can you explain to me what narrative economics is?
Shiller: A lot of people think about narratives these days, it’s a new trend. But they tend not to be economists or financial analysts. Maybe they think about it, but they don’t research it. I think that major economic events, successes and failures alike, are typically driven by stories that went viral. And we don’t have a deep understanding of events until we understand, we start studying the narratives.
Silverstein: And can you give me examples of something recent that happened because of a narrative, a strong narrative?
Shiller: Yeah. OK, the, the Great Recession. We named it the Great Recession in honor of another narrative, which is the Great Depression. Now you would think that people would be forgetting about the Great Depression. That was 1929 and well into the ’30s. Like 10 years of economic slowdown. But it’s a long time ago. You think people are forgetting about it. But they’re not. And in fact, in the early 2000s, references to that exploded. I count, I count these things, how often they come back in the news media.
So, and then we named it the Great Recession. It’s obviously a reference to the Great Depression. And so people became scared and they stopped spending. They didn’t stop spending, but they cut back. You know they think, should we go on a cruise this year? Well, maybe not. You know, I feel a little unsettled. It’s going to cost a lot of money. If people cut back on their consumption enough that we have a recession. And these stories impact the economy in a way that otherwise wouldn’t necessarily be happening. Yeah. A lot of economists seem to think, want to think, that it must be something about technology, or productivity, or maybe what the central bank did. But I think it’s, it’s more generated in people’s minds.
Silverstein: And what’s so strong about the bitcoin story?
Shiller: Oh yeah, I use that as Chapter 1 of my book. It’s an example of how good stories create economic events. And in the case where — I think it’s clearly traceable to the story. Now I’m not going to even comment on whether bitcoin is a good idea or not. It doesn’t matter. I’m just looking at the story.
The story was that a man named Satoshi Nakamoto had an invention which he promulgated on the internet around 2008. And, it’s the greatest, most wonderful invention in a long, long time. It ties into stories about anarchism. Anarchists don’t like government. Well, bitcoin didn’t ask anybody’s permission. They didn’t go to any regulator to start their bitcoin. And it’s not even tied to a country. It’s international. We’re all cosmopolitans now. It just seems like a good story.
And then they put a little mystery into it. Satoshi Nakamoto has never been spotted by anyone who tells us about these things. How could it be? He’s one of the most famous people in the world now. And yet no one has met him. So maybe he doesn’t exist. Maybe there is a committee, maybe it’s a conspiracy. Who knows? But somebody wrote a nice paper that was, it just has an excitement. I can see people transform. When I bring it up in my class, my students react, they wake up when I bring up bitcoin.
Silverstein: How do you separate out the story from what’s real? And how much can the story affect what becomes real?
Shiller: It isn’t a single story, every telling of the story is a little different. There’s a core idea in the story. And, how do you tell whether it’s a real story or not? That takes work. And in the case of bitcoin, it’s kind of difficult to think through it. It’s not — it’s impressive. It’s not easy. But you can work at it. The problem is, if you reach a decision about bitcoin one way or the other, it’ll never get out, because it can’t compete with the narrative quality of the original story.
Silverstein: Can you tell me about the Laffer curve, something that I think a lot of people take to be fact, but you say that a lot of the strength from it comes from this very simple story?
Shiller: Yes, so I’ll tell you a story. In 1974, an economist named Art Laffer was having dinner at the Two Continents restaurant, a nice restaurant in Washington DC. And he was having it with Donald Rumsfeld, who was the secretary of defense for the United States — really big shot guy — and Dick Cheney, who would soon become vice president of the United States. So a bunch of the — and also Jude Wanniski, who is a writer for the Wall Street Journal who wrote the story up.
And in that story, Art Laffer draws a diagram on a napkin, called the Laffer curve, which illustrates, I won’t get into the details, but supposedly illustrates dramatically how taxes can hurt incentives and destroy the economy. And that even if you, if you actually cut taxes, you may collect more taxes even though you cut, because people will be so much more affluent, they’ll be working and producing. Nice story. It went viral. But not in 1974. It wasn’t until in 1978, when Jude Wanniski wrote a book, a best-selling book called “The Way the World Works,” and he tells this story about the dinner. And afterwards, people want to know the whole story. They ask about the napkin. The napkin is a visual image that enhances the story.
And there it is. It’s now many years later — the Laffer curve went through a typical epidemic. It expanded right after 1978. And everyone was talking about the Laffer curve. Same time as Rubik’s cube came out. That was another, another such fad. Laffer curve and Rubik’s cube were both around that time. They both faded somewhat. But they’re both still here. And Laffer is coming back. It has an internal dynamic like that of a disease. I’m not calling it a disease.
Silverstein: How much does narratives impact how the Fed communicates or how the president communicates? How much does that impact the economy?
Shiller: The people who take positions like Fed or Treasury Secretary become intuitive narrative economists even though they weren’t taught any of that in grad school, because it’s so obvious that the narrative matters.
So for example, when the Northern Rock bank failed in the UK in 2008, the Chancellor of the Exchequer and the head of the Bank of England reacted immediately because they didn’t want, it looked like it was a story about a bank run. This bank was failing and depositors were worried that they wouldn’t get all of their money out. There was deposit insurance, but it was only up to a small amount. And people who had their life savings, planning for retirement, panicked, they thought, maybe I’ll lose all of it. And so they rushed to the bank, and of course it’s a self-fulfilling prophecy. The bank can’t pay out all this money at once.
They immediately rescued the Northern Rock bank and paid off all the depositors. So, the reason they did that is they didn’t want the narrative to get started. They knew that in the past it was rumor and stories that people went to many different banks and asked for their money right away.
Silverstein: And what about Trump? Is he good at this? Has he been able to —
Shiller: This is one place where I can be lavish in my praise of Donald Trump. He is very good at narratives. He’s very good at judging audiences. He experiments. This is a way, the way you launch narratives. You never know whether it will go well. He listens to the audience. He creates a whole story. The story of him at his rally, which is spread by word of mouth. It’s a visceral thing. Most of these people had never gone to a presidential speech before. And if they did it would’ve been boring. He’d be talking about statistics on the national deficit or something like that. Trump is not boring, really not boring. And it started a word of mouth thing that was huge.
Silverstein: And how much has this increase, or is it the same, with social media? Is the impact of narratives bigger or faster, or can we just see it more?
Shiller: Well, the impact of narratives is bigger with social media. But I have to say, I think the mistake people make is more often underestimating how important narratives were long ago. So we have the Latin word rumor, that has the same meaning as it does today. What is a rumor? It’s a contagious narrative, right? Which is not fact-checked by anyone, it’s just out there. So they knew about this thousands of years ago, and it was a factor thousands of years ago. But yes, it is bigger today. We’re living in a world with expanded information technology and ability to communicate. And to communicate with like-minded people. To find each other. Maybe they had computer dating and maybe that helped people find their spouse. But it’s much bigger now. They’re not just, it’s finding someone who has the same political views as you that you can talk with.
Silverstein: And you talk about how difficult it is to predict economic performance in the long term. Is that because of how much narratives play a part?
Shiller: It’s hard to predict whether a new movie which hasn’t been shown yet will be a success. Notoriously hard. The director might have had successful movies in the past, he has famous actors and actresses, but nothing seemed to click this time. It’s when you put the movie in front of the audience and you start to listen to the word of mouth.
Silverstein: And how does that relate to, like, GDP estimates two years out?
Shiller: So when you talk about, oh, yeah, they’re not very good at forecasting GDP two years out because the disturbances are, I think, narrative-based. And they don’t generally systematically study them. And unfortunately, it does require some human judgment at this time anyway, to understand the importance of narratives.
Silverstein: Is there one big narrative that is happening right now that you think we should be paying attention to or that’s dislocating something?
Shiller: Well, a narrative that comes to mind is the artificial intelligence revolution. And we have many stories of neat things. Like your smart speaker, I guess like Amazon Echo that you have. It’s kind of, it does seem like the the new world. Something really fundamental has changed. But I don’t think it has scared us yet profoundly because we don’t have high unemployment. So people think, well, but the economy is strong so, not worry about it now. But I think if we do have another recession, that narrative could come roaring back and become again an obstacle to recovery.
An international outbreak of respiratory illness sparked by a novel coronavirus has spread from its origins in central China to at least 11 countries, with more than 1,200 confirmed cases — including a presumed case in Canada — and over 40 deaths.
Like previous outbreaks, including the SARS virus 17 years ago, the flu-like disease poses a risk to economies around the world as fear and confusion lead to abrupt changes in behaviour, decreased economic activity and a ripple effect across sectors that threatens everything from productivity to consumer prices.
The Severe Acute Respiratory Syndrome pandemic of 2003 cost the Chinese economy up to US$20 billion, according to the Asian Development Bank, as travel warnings and transit shutdowns discouraged consumption, foreign tourists stayed away and local residents stopped going out.
3:11 Coronavirus outbreak: London’s Lunar New Year celebrations overshadowed by virus fears
Coronavirus outbreak: London’s Lunar New Year celebrations overshadowed by virus fears
“The travel and tourism sectors were most obviously hit, although that ripples through the entire economy,” said Richard Smith, a professor of health economics at the University of Exeter Medical School.
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“But many effects are short-lived during an outbreak as once the panic is over people go back to business as usual.”
Chinese authorities clamped down on mass transit during the SARS outbreak, hampering commutes, shopping runs and social outings. The national securities regulatory commission closed stock and futures markets in Shanghai and Shenzhen for two weeks to prevent viral transmission. And Beijing ordered movie theatres, internet cafes and other venues to shut down temporarily while hotels, conference centres, restaurants and galleries saw visitors almost disappear completely.
China’s response to the current crisis appears to be swifter, and the disease less virulent, but the country now boasts a far more extensive high-speed rail network than it did in 2003, and its economy is six times larger, upping the risk of transmission and the repercussions of an epidemic.
“China is the engine of the global economy, churning out goods,” said German health economist Fred Roeder.
Its critical role in international shipping may be thrown into disarray as authorities begin to hold back some ships from entering the port at Wuhan, a key hub on the Yangtze River.
0:53 Coronavirus outbreak: No plans for Canadian government to evacuate citizens from Wuhan, China on flight
“If they cannot leave it creates huge delays in the supply chain and value chain of businesses all across the world,” Roeder said. “It could actually hit the latest generation of smartphone if ports are shutting down.”
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Manufacturing could also feel the crunch as supply chains stall, he said.
Roeder has felt firsthand the disruptive power of a pandemic. In the summer of 2003 the teenage Berliner was eagerly gearing up for a United Nations youth conference that would take him to Taipei, but the event was cancelled a few days beforehand due to SARS.
The epidemic also sparked layoffs and time away from work. At one point Singapore Airlines asked its 6,600 cabin crew to take unpaid leave. Children stayed home from school, prompting more parents to shirk their job duties and further reducing productivity, said AltaCorp Capital analyst Chris Murray.
“I was losing guys left, right and centre as people were quarantined,” recalled Murray, based in Toronto — the epicentre of the SARS pandemic outside of Asia. The disease infected 438 Canadians in total and caused 44 deaths in the Toronto area.
2:33 How airports are screening for the coronavirus
How airports are screening for the coronavirus
The economic damage culminated with World Health Organization’s one-week travel advisory for the city in April 2003, costing the Canadian economy an estimated $5.25 billion that year.
The outbreak of H1N1, or swine flu, in 2009 also sparked work “dislocations,” Murray said. “It went from, `Maybe it’ll be okay,’ to sheer panic.”
6:01 Is Canada doing enough to protect Canadians from the coronavirus outbreak?
Is Canada doing enough to protect Canadians from the coronavirus outbreak?
Freelancers and gig economy workers such as musicians or ride-hail drivers may feel the pinch more acutely, since they can’t rely on a steady wage when demand shrinks.
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“It’s something that unfortunately has happened before in a similar way and it tends to affect areas like retail,” said Carolyn Wilkins, senior deputy governor of the Bank of Canada, said this week.
“People don’t go out, they don’t fly in planes, they don’t do as much tourism to the affected areas,” she said.
The fallout makes workers ranging from servers to wholesale bakers to non-unionized hotel staff more vulnerable. Meanwhile spending or investment plans by larger companies may have to be delayed, said Roeder.
1:40 New coronavirus’ ability to spread getting stronger say Chinese officials
New coronavirus’ ability to spread getting stronger say Chinese officials
It is not clear how lethal the new coronavirus is or even whether it is as dangerous as the ordinary flu, which kills about 3,500 people every year in Canada alone.
“Still, we should be extremely worried about the economic effects of this,” Roeder said, calling on Chinese authorities to work transparently with Western governments and disease control experts to mitigate the crisis.
“At the end of the day, it hits the entire economy. No one benefits from this.”
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