New PRB Report on Aging in America

Yesterday's mail brought the latest Population Reference Bureau's Population Bulletin on "Aging in the United States," by Mark Mather, Linda Jacobsen, and Kelvin Pollard. This is a very nice overview of the socioeconomic characteristics of the older population in the population, with an emphasis on what it means for the country that an increasing fraction of the population is growing older. Keep in mind, of course, that the U.S. faces less of a problem than most European and East Asian countries, because immigration has kept the number of births higher than it would otherwise be.

The increase in the older population is especially related to the large size of the baby boom cohort now moving into the older ages. Baby boomers are generally recognized as those born between 1946 and 1964. Their parents had more children in the post-WWII era than their grandparents had during the Depression. However, the boomers turned around and restricted their own level of fertility, and this produced a very nice demographic dividend for the U.S. that "made it great" (to borrow a phrase from the current political stump speeches). During this period of greatness, as the baby boomers came of age, several policy choices were made that we are now having to cope with: (1) Social Security benefits were increased--it was fairly easy to do because there were a lot of baby boomers earning money and not too many older people (yet); (2) federal income taxes were dropped just as the first of the boomers were coming of age (1965), and they have continued to drop, thus producing less money that can be set aside for the future on a per person basis; (3) at the very same time that federal tax rates were trimmed, Medicare was signed into law (1965), providing universal health coverage for Americans aged 65 and older; and (4) later on, money that had been set aside in the Social Security Trust Fund, for which there was a surplus at the end of the Bill Clinton administration, was used by the Bush administration to help pay for the ill-fated war in Iraq, and that has not been replenished. 

So, policy choices in the past come back to bite us in the future. What to do? The PRB report reminds us of the basic things that are going to have to happen. The younger boomers are going to have work to an older age than did their parents, and they're going to have to save more than they're doing now. The report doesn't come right out and say it, but another obvious thing to happen is for taxes to go back up on the working population. This clashes, though, with some worrying trends among younger people, as noted in the report:

The baby-boom generation may be the last made up of a non-Hispanic white majority population. The younger generation is much more diverse, with higher shares of Latinos, African Americans, and Asian Americans in each successive cohort. But blacks and Latinos, in particular, have lagged behind whites and Asians on most measures of economic well- being, including the amount of money saved for retirement. Improving economic conditions for younger workers and their families will yield better health outcomes and quality of life for future generations of older Americans.

Up to this point, these kinds of issues have been discussed only in vague terms by the candidates for President. No matter who is elected, though, they will have to be dealt with.