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America is getting older — and not just herself (as we officially hit 244½ years old) — but her population is aging, which will have an impact on the economy and the workforce in the coming years.
In the first of its The Shape of Things to Come series, The Concord Coalition looked into how and why America is aging, and the burdens that will be borne by the country's fiscal and health systems.
|"Graying means paying"
By 2050, the report states, the elderly share of the U.S. population, which was 12% as recently as 2000, will climb to 22%. (The Coalition uses statistics from World Population Prospects: The 2019 Revision (New York: UN Population Division, 2019).)
By the 2030s, workforce growth will slow to near-zero in the United States. As employment growth falls, economic growth will slow. And as people age, they become more risk-averse and less likely to make investments that carry long-term payouts, resulting in a decline in the rate of savings and investments.
"Graying means paying," the report says, adding that an aging population results in higher costs for pensions, health care and long-term care.
|Falling fertility, rising life expectancy
The Concord Coalition identifies two main reasons why America is aging: 1) falling fertility; and 2) rising life expectancy.
Fertility rates began declining in the 19th Century and, according to the report, were already approaching the so-called 2.1 replacement rate needed to maintain a stable population from one generation to the next.
In 1900, the life expectancy at birth was 47 years. By 1950, it reached 68. As of the World Population Prospects report in 2019, it had risen to 79 years.
While that is quite an increase, it is currently three years lower than the average for developed countries around the world. Many of the explanations for America's lagging behind are debatable, but one thing is clear, the report says: America has a much worse health profile than other developed countries.
|The good news
The good news is that America is not projected to age as much as Europe or Japan (Europe is expected to rise to a 28% elderly population share by 2050, and Japan is expected to have a 38% share), but that might not last too long; the Baby Boomer generation is coming into its silver years.
The Baby Boomer generation is not making America older — fertility rates and longer life expectancy would have happened regardless of how many babies were born in that era — but their existence has accelerated the nation's aging.
"Boomers" are now entering what the Coalition calls the "young-old" age range of 60-70, and will soon be in the "old-old" ages of 80-90.
|Impacts now and later
"Aging Boomers are already pushing up the cost of Social Security and Medicare," the report states. "Their impact on long-term care, which may be the most explosive dimension of old-age dependency, still lies over the horizon."
The report concludes that the fiscal and societal impacts of a more rapidly aging America do not have to signal disaster. The aging of America is not coming as a surprise, and policy decisions can be made to limit the extent of the impact on the country's financial, employment and health systems.
Steve Salkin is a Managing Editor for ALM.
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