An Aging Population Leans on the Arm of Its New Immigrants
By: Susan Raymond, Ph.D., 11/12/04

This is the third in a six-part series examining how changes in the economic and social environment of America in the coming two decades will impact philanthropy and the non-profit sector.

An increasing number of Americans stand in front of their open mailboxes aghast and in despair as they receive their first mailing from…..the AARP.

It is no secret that the nation is aging.  By 2015, one in every five Americans will be over the age of 65.  The fastest growing portion of the population will be the “oldest old.”  The number of Americans over the age of 85 will nearly double between now and 2025.

These may be golden years from a personal point of view.  Indeed, life expectancy at birth, now about 73, will rise to over 86 years by mid-century.  The better measure, however, is life expectancy at age 65 and at age 85 because this illustrates the true effect of aging on the productive work force.  By mid-century, the average 65 year old will expect to live to 85 or 90, compared to an expectation of about age 80 today, and the average 85 year old will expect to live to well over 90 and perhaps as old as an average of 95 years.

Personal accomplishment, however, will become national challenge.  By 2025, nearly 80% of dependents will be elderly, not children, compared to 40% in 1960.  The costs to the public purse will soar because elderly dependency is denominated in terms of both social security and health care costs.  Elder dependency costs the economy three times youth dependency, and dependents over the age of 80 are three times again as expensive as dependants between 65 and 80.

But aging has potentially deeper economic consequences than those of social program payouts.  In the experience of all industrialized nations, economic growth is most robust when dependency rates dip and societies can re-invest in the factors of production. Resources public, individual, and family --  fuel investment, not social payments.  By 2025, however, the U.S. will have 65 dependents for every 100 workers, compared to 51 in 2000.  Fewer workers and greater dependency is in the process of crippling European economies; the same scenario lies before the United States.

What will save us?  Here, we must turn to the second significant demographic trend immigration.

Immigrants now comprise a greater portion of the U.S. population than at any time since 1920.  Immigrants are younger than the American average, and, when rates of natural increase are combined with in-migration, immigrants account for 40% of American population growth, compared to 6% in 1959.  Immigrants are the reason America continues to grow.  By 2025, without immigration, the Northeast would lose 2.1 million people; with immigration it will gain 5.9 million.  The same pattern holds in the mid-Atlantic states.

Two immigration trends follow a different pattern than in the past, however.  First, immigrants are from new places.  As recently as 1970, 60% of immigrants to the United States came from Europe.  In 2000, Europe was the original home of less than 20% of U.S. immigrants.  Latin America and Asia are the overwhelming sources of U.S. immigration, and by mid-century over a third of the U.S. population will be of Asian or Hispanic origin.  The result is that cultural, religious, and linguistic diversity will increase.  Already 47% of the population of the Bronx speaks Spanish at home, and there are 20 religious faiths in the U.S. with at least one million adherents each.

The second trend that differs from the past is the destination of immigration.  While the East and West coasts have historically been the magnets for immigration, projections to 2025 indicate that, as a percent of population, immigration will be greatest in the deep South and the Plains states.

What does this all mean for philanthropy and nonprofits?  Clearly, American society and the American economy are in for several decades of fundamental change.  With change comes tension, tension between generations over the allocation of resources, tensions between sectors of the economy in the competition for workers, tensions between ethnic groups in the search for equality and rights.  These will not be trivial matters.  Whole institutions and assumptions may come into question. 

When, for example, communities are dominated by the elderly, yet public education continues to be financed by property taxes and education costs rise with the imperative of expanded science and technology training, who will support expansion of the tax burden? 

As the economic costs of aging rise, where will America find the non-partisan leadership required to articulate to the people, including its elderly, the hard choices that will need to be made about resource transfers?

Medicare already consumes 2.6% of the American GDP.  As technology allows us to address deeper and deeper health care problems at older and older ages, who will raise the inevitable problem of rationing of health care in a world of limited resources?

Waiting to work through these answers is waiting for Godot.  The time for American philanthropy to begin understanding these trends, and crafting an appropriate leadership role in their resolution, is now.

Sources:

Raw data from the U.S. Bureau of the Census and the Administration on Aging

“The Older they get, the more they cost,” The Economist, September 25, 2004, 40.