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The Federal Budget: Young Workers and Old Baby Boomers

Oct 10, 2013 • Economic Debates, Economic Growth, Economic History, Education, Government, Households, Labor, Macroeconomic Measurement, Tech, Thinking Economically • 402 Views    No Comments

If the proficiency scores of US workers are low and the safety net spending for baby boomers is high, then we have what Barron’s calls the “baby boom budget bomb.”

In a just-released report, the Organization for Economic Cooperation and Development (OECD) published the results of tests taken by approximately 160,000 people. Including 5,000 Americans, participants lived in 22 developed nations and Russia and Cyprus. Through tests of basic skills as well as higher level problem solving and analysis, researchers correlated literacy, math proficiency and jobs issues.

For literacy and math, the US did not fare well.

On the US literacy proficiency assessments, approximately 12% of those tested placed in the top 2 groups while 29% were closer to the bottom.

From: OECD Skills 2013 Report

From: OECD “Skills Outlook 2013,” p. 63.

 

Our results for math also were mediocre. Only 34% of adults placed within the top 3 slots whereas 29% were in the lowest 2.

From: OECD Skills Report 2013, p. 76. Description of test follows chart.

From: OECD “Skills Outlook 2013,” p. 76.

 

If OECD results are accurate, then the US has a skills problem.

In addition, we have an aging problem. According to a Congressional Budget Office Report, by 2038, the number of people 65 and over will balloon to 79.1 million, up from 44.7 million today.

And that takes us to the federal budget. If our skills deficiency impacts the GDP and our baby boomers require sky high Medicare and Social Security safety net spending, then we have some tough tradeoff decisions:

Your solution?

From: Barrons, 9/30.

From: Barron’s, 9/30, based on CBO projections.

Sources and resources: Hat tip to Eduardo Porter at the NY Times for alerting me to the OECD skills study and presenting key stats. After looking at the OECD, the Barron’s article from September 30 immediately came to mind.

 

 

 

 

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