On the latest Facing the Future, I was joined by Global Aging Institute Founder Richard Jackson and Concord Coalition Executive Director Bob Bixby. We discussed a joint effort between Concord and GAI on a quarterly issue-brief series called “The Shape of Things to Come” that will explore the fiscal, economic, social and geopolitical implications of the aging of America. And our focus was on the first brief, "America's Demographic Future."
[Note: Portions of this week's Facing the Future can be seen in the video clip posted below.]
“Here’s the short version: the United States, like the rest of the developed world, is in the midst of a stunning demographic transformation,” Jackson said. “As recently as 1990, only one-in-10 Americans were aged 65 and over, but by 2050, that’s going to be more than one-in-five.”
He added that two forces are driving the aging of the population, lower fertility rates and rising life expectancy. And Jackson said there are two primary consequences, a rising fiscal burden and slower economic growth.
“Graying means paying,” he said. “Paying more for pensions, more for health care and more for long-term care for the frail elderly.”
Jackson indicated that the aging of our population is inevitable. “It’s baked in the cake,” he said. “The prospects for higher fertility look dim at this point … and even if fertility rates were to surge, it takes 20-25 years to turn a newborn baby into a productive worker.”
Notably, he said that the extent of the fiscal burden and economic drag will depend critically on policy choices that elected leaders make moving forward.
We examined trends and drivers impacting the federal budget, including Social Security and health care costs. And we discussed economic effects, including the proclivity of older generations to stay in the workforce longer.
“The notion that more jobs for the elderly means fewer jobs for the young, has been a very common notion that many European countries acted on,” Jackson said. “Economists actually have a name for this notion; it’s called the ‘lump-of-labor fallacy.’ ”
He said the fallacy is based on the idea of a static economy, that there’s a fixed number of jobs and a competition between age groups for those jobs. At an economy-wide level, the more jobs you have, the more people you have earning money, which creates demand for goods and services and spurs the creation of more jobs. However, Jackson conceded that mobility could still be limited within specific organizations or sectors of the economy.
On a current affairs and technology note, Jackson said that companies will continue to look for ways to substitute labor with technology and the current pandemic will likely accelerate that.
“But, I think in the long run, the demands of the economy end up creating new jobs that nobody anticipated,” he said.
In response to the idea that the U.S. does not really have a demographic problem because Millennials are now a larger generation than Baby Boomers and will swell the ranks of the workforce, Jackson called it a fundamental misunderstanding of what drives our population aging.
“It’s not the absolute numbers, it’s the relative numbers of generations,” he said. “The Millennial generation isn’t ‘a pig in a python.’ ”
Jackson explained that our demographic shift, driven by the Baby Boom generation, will result in a plateau as an older population unless there are dramatic increases in fertility and net immigration.
You can read GAI’s paper “The Shape of Things to Come: America's Demographic Future” by clicking here.
Hear more on Facing the Future. I host the program each week on WKXL, NHTalkRadio.com (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, iTunes, Google Play Music or with an RSS feed. Follow Facing the Future on Facebook and watch videos from past episodes on The Concord Coalition YouTube channel.