The Concord Coalition and the Global Aging Institute (GAI) have joined forces to produce a quarterly issue brief series called The Shape of Things to Come that explores the fiscal, economic, social, and geopolitical implications of the aging of America. Although the series is U.S. focused, it also touches on the aging challenge in countries around the world and draws lessons from their experience. The first issue brief in the series, "America’s Demographic Future," was released today.
“Over the next few decades, the aging of America promises to have a profound effect on the size and shape of our government, the dynamism of our economy, and even our place in the world order,” said Richard Jackson, President of GAI who authored the issue brief.
“We hope that this series will inform the debate over the aging of America and help to push it in a constructive direction,” said Robert L. Bixby, Executive Director of The Concord Coalition.
The inaugural issue brief discusses the U.S. demographic outlook and the underlying forces shaping it. As with most stories, there is some good news and some bad news. The good news is that America is not projected to age as much as many of its developed-world peers. The bad news is that the relatively favorable U.S. demographic outlook is deteriorating. America’s unusually large Baby Boom, moreover, means that its age wave is rolling in unusually fast. The fiscal and economic shock may thus be as large or even larger than in those other aging countries.
Key findings of the issue brief include:
America’s population is now the youngest of the major developed countries, and until recently, its relatively high fertility rate, together with substantial net immigration, seemed to ensure that it would remain so for the foreseeable future. Since the Great Recession, however, both fertility and immigration have fallen, threatening to put an end to U.S. “demographic exceptionalism.”
Many people equate the aging of the Baby Boom generation with the aging of America. Although this is understandable, it is inaccurate. America is aging because fertility rates have fallen and life expectancy has risen, and it would be doing so even if the Baby Boom had never taken place. The existence of the Baby Boom, however, has affected the timing of America’s aging, initially slowing it, but now accelerating it.
Over the next decade, Boomers will continue to swell the ranks of the “young old” in their sixties and seventies. By the 2030s, however, they will be swelling the ranks of the “old old” in their eighties and nineties, who are far less likely to be employed than the young old are and far more likely to be frail, disabled, or suffering from dementia. Aging Boomers are already pushing up the cost of Social Security and Medicare. Their impact on long-term care, which may be the most explosive dimension of old-age dependency, still lies over the horizon.
The aging of America is inevitable. The prospects for higher fertility look dim. Even if the fertility rate were to surge overnight, it would not have an appreciable effect on the ratio of workers to retirees or the growth rate in employment for another 20-25 years, the time it takes to turn a newborn baby into a fully productive adult.
But if the aging of America is inevitable, fiscal and economic catastrophe is not if we prepare and adapt. To be sure, aging will always entail some extra fiscal burden. The old necessarily consume more in medical and long-term care services than the young, and no matter how long people continue to work there comes a time when almost everyone either wants or needs to retire. By the same token, aging will always entail some drag on economic growth, but the magnitude of the extra burden and the extent of the drag will depend on the policy choices we make.
Next up in The Shape of Things to Come: the potential economic, fiscal, and personal benefits of longer work lives.
The paper, "America’s Demographic Future," can be found here.