the growth of medicare spending or through other means - can affect retirement, the labor force, and saving behavior. in addition, policies that link increases in longevity over time to the eligibility age for social security, and perhaps medicare, may need to be considered. such linkages would help protect the financial and, hence, the economic viability of these programs. the aging of the population is bound to bring with it many changes to our economy - some foreseeable, many probably not. though the challenges here seem great, the necessary adjustments will likely be smaller than those required in most other developed countries. but how we adjust will also matter. early initiatives to address the economic effects of baby - boom retirements could smooth the transition to a new balance between workers and retirees. if we delay, the adjustments could be abrupt and painful. fortunately, the u. s. economy is uniquely well suited to make those adjustments. our open labor markets can adapt to the differing needs and abilities of our older population. our capital markets can allow for the creation and rapid adoption of new labor - saving technologies, and our open society has been receptive to immigrants. all these factors put us in a good position to adjust to the inexorabilities of an aging population.

through our regional federal reserve banks and information collected in surveys of small businesses, times have been good for expanding traditional lines of business as well. the most common complaints include the difficulty of finding qualified workers in the midst of strong competing demands for labor. in the current expansion, the vast majority of small businesses have not listed access to credit as their top concern, although, as you know, many business owners are quite apprehensive about the future as the familiar ways of financing business undergo sometimes dramatic changes. several recent developments hold the promise of improving links between financial institutions and the small businesses in your communities. first, major banks and finance companies are trying mass - market approaches to small business finance, similar to the approaches used in the consumer credit arena for many years, and this effort has greatly expanded the competition for loans. in addition, new innovative intermediaries - such as community development corporations and multibank and investor loan pools - are seeking to develop expertise in specific segments of the marketplace for small and minority businesses. i would like to emphasize, however, that credit alone is not the answer for small businesses. they must have equity capital before they are considered viable candidates for debt financing. equity acts as a buffer against the vagaries of the marketplace, and it is, accordingly, a sign of the creditworthiness of a business enterprise and the commitment of its owner. this is especially true in lower - income communities, where the weight of expansive debt obligations on small firms can severely impede growth prospects or more readily lead to business failures. overall, our evolving economic and financial systems have been highly successful in promoting growth and higher standards of living for the majority of our citizens. but we need to reach further to engage those who have not been able to participate. one way is through the education and training of our workforce - that is, enhancing our stock of “ human capital, ” which is a necessary complement to our ever - changing physical capital. a major consequence of the fast - paced technological change of recent years and the growth of the conceptual emphasis of our nation ’ s output has been to increase the demand for skilled workers. in today ’ s economy, skill has taken on a much broader meaning than it had only a decade or two ago. today ’ s workers must be prepared along many dimensions - not only with technical know - how but also with the ability to create, analyze, and transform information and with the capacity to interact effectively with others. moreover, they must recognize that, with new