An Interview with Linda Nazareth,
Author of The Leisure Economy
We all know about the “time-crunch”: these days our lives are a relentless wheel of jobs, families, commuting and things we “have” do. Many of us feel that we never have leisure time at all. That may soon change. Economist Linda Nazareth is the author of The Leisure Economy: How Changing Demographics, Economics and Generational Attitudes Will Reshape Our Lives and Our Industries. She believes we are about to move from a leisure deficit in North American leisure boom, and she thinks businesses, investors and governments need to start planning for that eventuality now.
Q. It’s hard to believe in the idea of the ‘leisure economy’. Most of us are pretty time-crunched.
A lot of people do. We work, we commute, we shuttle kids to soccer tournaments and music lessons at a pace our parents never dreamed of. And thanks to technology – blackberries, email, cell phones – we are never really “off”. We are in the midst of something I call the ‘time crunch economy’.
Leisure is used in dollops here and there – maybe nine holes of golf, not eighteen; maybe a few days away but not a whole week of vacation. And we’ve shaped our economy to accommodate our leisure deficit. Grocery stores are doing a brisk business selling pre-made dinners because there is no time to “enjoy” preparing a meal.
Q. You see a big change coming.
I see a big, quantifiable change. Using very conservative assumptions, I calculate that by by 2015, demographic change alone will catapult total leisure hours in the United States alone by about 12 percent from their 2005 level. Leisure hours for those aged 55 to 64 will grow by 33 percent, and for those aged 65 plus by 28 percent. The gains will continue for another decade after that, this time concentrated among the group aged 65 plus.
That’s a huge number of hours that that can be used for anything – cooking from scratch or playing golf or starting a charitable foundation or just watching television.
We’ll go from having a time crunch economy to a leisure economy.
Q. So this is about baby boomer aging…a story we’ve heard many times before
The biggest push will come from demographics. The baby boomers are still in what I call their “crunchiest” years. By and large they are still working, and often they are in households where two people are working. Think of it this way: in 1975, about 10.6% of the population in the United States was between the ages of 35 and 44. Those are the “time crunch” years: people in this age group have the less free time than any other group. They’re working flat-out in their careers, they have kids, they are more likely to be homeowners than they were a decade earlier and that means they have to spend time on maintenance. Over the next two decades, the absolute number of people in the U.S. aged 35 to 44 almost doubled, and as a percentage of the population it went to 16 percent by the year 2000. So it is no surprise that as a whole, society felt more ‘time crunched’ and we all heard a lot more about it. As the boomers have aged, the percentage of people in their time crunch years is already moving down, and it will continue to move down for the next two decades.
But the leisure boom is not just about the boomers – it is about the post-boom generations too. Once the baby boomers are off the highways—figuratively and literally–the traffic will move easier. The workplace will shift, for example, to accommodate the fewer workers who are in higher demand.
The labor market changes will also be combined with attitude shifts. Generation Xers (born by my definition from 1965 through to 1976) and Gen Yers (born from 1977 through to 1999, again by my definition) will be in their highest power years over the next couple of decades. With the exception for a flirtation with going all all-out during the dot.com years, they have generally not shown the same tolerance that their older brothers and sisters have for all work and no play. They’re warier of corporations. Even if they were not, corporations are offering less than they used to in terms of say benefits, so the drive to take a work-flat-out corporate job is not going to be what it was.
The next wave of parents may also decide to take some time for themselves too. Having spent their childhoods hurtling from soccer tournament to violin lessons, they may decide to go easier on their kids. That will give families more “free” time too.
Q. You also think that productivity gains will help us gain some leisure…perhaps in the form of longer vacations. Isn’t that like the paperless office? And with globalization and out-sourcing and the need to be competitive–why would companies accommodate the need for leisure?
It is hard to know whether they would or they would not—we’ve rarely demanded it, we’ve generally chosen to taken more money over more time. Other authors—notably Juliet Schor, who wrote The Overworked American back in 1991–have chronicled that phenomenon very well. Americans put in about an extra “month” of work now compared to what they did in the 1970s, but their kids wear much nicer sneakers than they did back then. In Europe, some of the biggest battles have been over time off, for example the imposition of the thirty-five hour workweek in France. In North America we fight over money.
Q. Let’s go back to one of your earlier arguments, how can you assume that baby boomers are going to retire early, or even at all? Between what happened to their portfolios in the dot.com boom and the potential collapse of government pensions, lots of them will not be able to anytime soon. And some of them will not want to anyway – mandatory retirement is on the way out.
Not every boomer will be able to retire early or even on time, but many will. Keep in mind that this is the first generation where many households are looking at not one but two partners who will be getting a private pension. More importantly, many of them have a nice amount of equity in their homes. Not all mind you—the refinancing boom has seen to that—but enough that retired boomers will create a fairly significant new “leisure class”.
Q. So is it the rich that will experience the leisure economy?
Not exclusively, but affluent households will be an important part of it. And that raises one of the important points that I discuss in the book. Over the past couple of decades we have seen a split between rich and poor in America, but it has been about income, not time. The next big split will be on “time”—with the new leisure class being much more visible and in direct contrast to the pension-less, can’t-afford-to-retire group.
Q. So we’ll have a new leisure class at the top, and lots of younger people putting more leisure into their lives. What will people do with the extra time?
The leisure industries—from golf to bird watching to scrapbooking—are not going to know what has hit them. Some of these industries are already doing well, of course, but that’s before the extra leisure hours get thrown at them.
I go through some specific scenarios in the book. In golf, for example, it is not too hard to envision a pretty bright outlook. According to data from the U.S. census, 25 to 34 year olds are more likely to be golfers than those 65 plus – 17 percent compared to 7 percent. Thing is, it is the older group who are likely to be what the U.S. National Golf Federation calls “core golfers” – they go to a driving range, for example, at least wenty-five times a year. Given that the census bureau expects an increase of 11 million in the number of Americans aged 60 to 60 between 2005 and 2015, I calculate that threw will be an increase of 786,990 core golfers in this age group over the time period – and an extra 1.97 million rounds of golf played over the decade.
The leisure boom will not completely be a slam dunk for the golf course operators or whoever though. They’ll be competing with other, perhaps more civic-minded pursuits for the boomers. Volunteerism, for example, is likely to be huge. Boomers will transfer the skills they have developed in the labor market to the non-profit sector.
Q. What about other kinds companies?
They’ll have to engage in thinking that is full-circle from the way it is today. Now they think about how they can save people time—they’ve created drive through banking for us, and Soup-to-Go and instant breakfasts. Now they will have to figure out how to stay profitable but still serve consumers who have more time and will spend it selectively.
If you’re Kraft (who has been profitable with Lunchables and Honeywell Granola Bars and single-serving Jello, what do you sell consumers who now have time to make an omelet for breakfast and a sandwich for lunch? Maybe you have to figure out how to sell them pre-cut pieces of cheese and frozen vegetables so they can make a more elaborate omelet. If you’re a bank, you still want to keep things moving quickly—nobody wants to waste their leisure time. But maybe you increase the number of premium service outlets that you have, and even increase the specially trained staff to serve them.
Q. So if you understand when and how the leisure economy will unfold, can you shuffle your portfolio to take advantage of it?
There are certainly huge opportunities to make gains in hospitality sector stocks. Even the airlines—which have been battered by everything from 9/11 through oil prices—will get a bit of a windfall gain from the fact that the leisure boom will begat a bit of a travel boom.
But there are caveats. One is that many companies expected more of a boom already, and they have overbuilt. That’s certainly true of the golf industry, where there was a frenzy of construction in the 1990s. So you have to choose individual companies carefully.
Q. Isnt’t there a downside to this? Surely a move away from work and towards leisure means people will have less money to spend?
How much spending power there is depends mainly on population growth, as well as how quickly the economy and employment grows. According to projections from the U.S. Census Bureau, population growth is expected to be about 3 million per year over the next couple of decades, partly because of immigration. Even allowing for the flood of retirements, the labor force will grow. So in aggregate you will have a bigger consumer market.
There will of course be big changes in how money gets spent. Service sector spending will be huge, while many consumer categories decline. But keep in mind that demographics do not support the notion of a housing boom over the next couple of decades. That will make it easier for the next generation of new home owners to have one partner opt out of full-time work without completely destroying buying power.
Q. What about government…will our institutions have to change to accommodate a leisure economy?
Adult education is set to boom. Governments are literally going to have to decide whether to set aside spaces in post-secondary institutions for people in their 50s or 60s or 70s who want to take university or college courses. They will also have to figure out how much to charge them.
Both younger and older households will have more time to organize and lobby government. For boomers, that might be about the pension system, or it may be about grandparents rights, or it may be just about civic ordinances. What we have seen so far from the AARP is just the tip of the iceberg. Younger households are likely to want tax credits making it easier to keep one parent from having to work.
Q. A “leisure economy” sounds kind of languid. Is this going to be a good switch – for our economy, or our society?
I think it will, and in a bottom line way. North American companies are currently paying out literally billions of dollars in health related costs for their (time-crunched) employees. Giving everyone a little breathing space will be a money saver to them. To individual households, the gains from more free time will be even larger.
A tired, overworked society is not one that is going to be its most profitable or productive. Let’s make way for the leisure boom.
