Retirees Replaced by Lower Paid Weigh on Growth: Economy
By Steve Matthews - Oct 30, 2013
Retired Ford Motor Co. worker Tony Fransetta scrimps on every expense after earning about a third of his previous pay since leaving the auto company in 1990.
“There is no magic bullet,” said Fransetta, 77, who lives in Wellington, Florida, near West Palm Beach. “I have cut vacations and travel. You have to manage your food very closely. You don’t go out and buy expensive cuts of beef. You have to catch things on sale.”
As millions of baby boomers join Fransetta in retirement, income growth will provide less oomph for the economy in the next 20 years. The labor force that remains will include a growing share of workers with less earning power. Together, the trends will act as a brake on consumer spending, limiting the economy’s long-term growth potential.
“If we don’t change, we are grinding to a halt,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $340 billion of assets. “The capability of the economy, its potential to grow, is far less.”
Decades of accelerating earnings ended in the last recession, and the outlook for a return to the growth rates of the past is less than promising as more Americans reach retirement age.
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http://www.bloomberg.com/news/2013-10-30/retirees-replaced-by-lower-paid-weigh-on-u-s-growth-economy.html
