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This is Capitalism: Up Close, Inspired, Explained

Aug 15, 2019

It was probably inevitable that as his career as an economics and finance writer evolved, Chris Farrell would be drawn, ever deeper, into matters of age. After all, for the past quarter-century, the dominant theme in personal finance has been about savings, IRAs and 401(k)s, and the fact that most Americans haven’t saved enough money to retire on. In economics, there’s a parallel strain that centers around the aging of the U.S. population and how an economy with fewer younger workers and more and more retirees living longer could reach a tipping point. Chris Farrell doesn’t think it needs to turn out that way. His latest book, Purpose and a Paycheck, is about the too-often-ignored realities and the still largely-unappreciated potential of older people in the workforce. People are living a lot longer.

Chris Farrell is the Marketplace Senior Economics Contributor for American Public Media Group, Economic Commentator for Minnesota Public Radio, Columnist for PBS’s Next Avenue, Columnist for the Minneapolis StarTribune, and for many years, a colleague of Ray’s at Business Week.


Key Takeaways:

[:22] Ray Hoffman introduces Chris Farrell.

[1:34] Chris proposes that people who exercise their education and skills throughout their lives have a greater life expectancy. Chris developed skills during his time on merchant ships. His first job was as a wiper, cleaning the engine room and the bathrooms. He joined the Coast Guard and was a Merchant Seaman.

[2:41] Chris learned from people with incredible knowledge and skills onboard ships. Chris’s degree was in History.

[4:02] In 2035, for the first time, the number of people over 65 in America will be greater than the number of people under 18. Employers do not appreciate the knowledgeable and skilled employee. Productivity peaks at around age 65.

[5:15] Management can best use the older worker by creating opportunities for experienced workers to exercise their creativity and be productive on a multi-generational team. Research shows that the most productive teams are multi-generational.

[5:32] One of Chris’s motivations for writing the book is that for the past 30 years, there has been this strand of economic commentary that the demographics of aging is a bad thing. The story was that a dependent older generation would be supported by too few young workers, which would lead to stagnation.

[6:04] Steve Jobs gave the Stanford University commencement address in 2005. He talked about how important it is to connect the dots. You don’t know how to connect the dots looking forward. You connect the dots looking back.

[6:31] Manufacturing research from Europe shows that the experienced worker makes more mistakes than the younger worker, but they are smaller mistakes. When the unexpected happens, the experienced worker is more calm about it. They draw on their experience and connect the dots and help solve the problem much more quickly.

[7:02] Younger workers have seen less. They run around causing commotion, but not solving the problem. Putting experienced workers with younger workers leads to a more productive team.

[7:33] Germany has an older workforce than the United States. BMW wondered what the older worker meant for their assembly line and productivity as the workforce ages. They created “The Pensioners’ Line,” to reflect the workforce in Germany in 10 to 15 years. Initially, the productivity of the pensioners’ line was way below their other lines.

[8:01] They spent $50,000 on barbershop chairs, bigger computer screens, corkboard and bamboo floors, meditation, and yoga. Now, BMW’s pensioners’ line is as productive as their other lines.

[8:21] “The Forgotten Man,” showed up in the 2016 vote: the mill workers and mine workers from Southwestern Pennsylvania. Chris points out that U.S. businesses do not have a good record of training and retraining. They neglected it because they didn’t want to train somebody to go work for someone else.

[9:19] Training is picking up because of the tight labor market. Chris cites a case study from a former program in Danville, Virginia. It was very successful, but it ended when funding stopped. When people work longer and labor force participation goes up, more taxes are paid, and the age to claim Social Security is delayed. Everyone wins.

[10:55] Look at the aging of the population as an incredible opportunity to get this economy to a higher growth path. 27% of new businesses was formed by the 55- to 64-year-old age group in 2017. That’s up from 14 to 15% in 1996. These are mostly small businesses.

[11:27] Ray notes there is a lot of risk involved in starting a business. People over 55 are more willing to experiment. They take risks that younger improvisers don’t.

[11:58] The risks of starting your own business as an older person are less as you have knowledge and experience to guide you. You draw on contacts you developed over the years. Because of your time in business, you can identify problems that need to be solved.

[12:18] You probably own your home. The home is your office. Technology has lowered the overall cost of doing business and managing your business. A lot of times, starting a business means working on weekends or in the evenings, testing out the business idea before committing to it — this is a good thing to do.

[12:39] It’s a good idea to join a co-sharing workspace or an incubator where you can get feedback.

[12:45] Most small businesses are started with $5,000 or less, according to Steve King, a small business consultant in the Bay Area. You can easily test a business in the market. Do not use your home or 401(k) for collateral. Chris wants to be very clear on that point.

[13:11] People have knowledge and skills; they also have a sense that this is what they want to be doing. That is where your purpose comes in.

[13:27] Chris quotes over 100 people in the book. He recalls interviewing Rick Harris, who grew up in segregated Texas. He went to the Bay Area in his 20s and built a commercial interior design business. Later, he moved to Minneapolis and tried to start over, but it was hard to break into the market. Then, his son asked to join him in his business.

[14:10] Bringing his son into the business rejuvenated Rick Harris. There was no inter-generational conflict. They shared the values of working together, doing a good job, and building a successful business.

[14:27] Ray loves the story of Tim Carpenter in Burbank with his various senior art centers that create a wonderful sense of purpose for people. Chris notes that the center in Burbank is low-income affordable housing with arts courses modeled after a college curriculum. People are thriving in that atmosphere.

[15:05] Tim Carpenter was moved to start his centers after visiting nursing homes and observing dim arts and crafts rooms with people gluing wooden sticks together. Tim found that people love the opportunity to learn and create something. Purposeful activity counters age-related depression.

[15:34] In general, working longer makes you healthier.

[16:06] Chris Farrell, who has hit 65, has realized he wants to always be learning. He writes a lot about work, using your skills, and passing your skills along. Whether at a job or doing something else, it is important to learn. The idea that we stop learning at an arbitrary age is wrong.

[16:32] We age, and we can’t do certain things. But we can do other things that we didn’t know enough about when we were young. Keep learning. Never stop learning. When life becomes the couch and TV, it slows down a lot.


[16:49] Chris Farrell, sharing his purpose in his new book, Purpose and a Paycheck. This is capitalism.


Mentioned in This Episode:

Chris Farrell

American Public Media Group

Minnesota Public Radio


Next Avenue

Minneapolis StarTribune

Business Week

Coast Guard

Seafarers International Union

Merchant Seaman/ Merchant Marine

Steve Jobs

Stanford University, 2005 Commencement Address

The Forgotten Man: A New History of the Great Depression, by Amity Shlaes

Steve King

Rick Harris

Tim Carpenter