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Life for Baby Boomers and Their Children

GROWTH AND CHANGE IN THE AMERICAN POPULATION: HOW SEPARATE ARE WE?

J. Dudley Fishburn, Moderator

Life for Baby Boomers and Their Children

            I thought of my role in today’s program as the humble but necessary one that they call in radio the “continuity person”—the person who links what we just heard with what we’re about to hear. This morning we’ve talked about the growth of world population, which is mainly the continuing saga of the demographic transition in developing countries. This afternoon we’ll be talking about “The World of our Grandchildren.” I’d like to focus on two themes that lead us from one to the other:

$11)     Our own population dynamics in the U.S. are part of this global picture. In part this is because we also went through the demographic transition, and it’s often surprising how recent the changes were. The demographic transition is for most of us part of family history. It’s also because we are a nation of immigrants, and since 1965, most of our immigrants are from developing countries where the demographic transition is an even more recent memory or a current phenomenon. In school textbooks, in academic research, in conferences, we typically keep the discussion of developing countries and of U.S. population completely separate. I’m delighted that this Society decided to deal with them together because that makes intellectual sense.

$12)     Our society and economy and culture, and our policy agenda, are all much affected by recent demographic past. Demographic history isn’t “history.” Demography also isn’t destiny. We have to adapt to some profound changes in the age and racial/ethnic composition of our population, and we can do that smartly or dumbly.

 The Demographic Transition in the United States and in Mexico

Why was there all this growth, and why concentrated in the developing countries this century? It is mostly due to good news—not due to increased fertility followed by increased mortality, as Thomas Malthus expected two centuries ago, but to lower mortality followed by lower fertility.

In this figure, the top line for each country is the “crude birth rate,” the number of births per year per 1,000 residents; the bottom line is the “crude death rate.” Along the horizontal axis are years, running from 1875 to the present. The gap between these two lines measures the “natural rate of increase of the population,” net of international migration.

Insert Figure 1 Here. Demographic Transition in U.S. and Mexico, 1875 to 1999. Sources: (U.S.) U.S. Bureau of the Census; Haines, Michael R. The Population of the United States, 1790-1920, National Bureau of Economic Research (1994); and National Center for Health Statistics. (Mexico) CELADE Boletin demogratico no. 59 (January 1997); Francisco Alba-Hernandez, La poblacion de Mexico (1976); and U.S. Bureau of the Census.

The United States and the other countries that began the transition in the nineteenth century had a longer, gentler decline in these rates, and they were never too far apart. Mexico, along with a few other parts of Latin America and Asia, began to see a decline in mortality rates before World War II, but the big improvement has come since the war.

In Mexico, as in most of the world, fertility rates did not decline until well after the mortality decline. In Mexico in this century, as in most other developing countries, the declines that took a century or so for us are all happening in a couple of decades. They are on “fast forward.” Rates of natural increase in Mexico in the late 1950s and 1960s were above 3 percent. At that rate, a population would double in a couple of decades.

The rates have come down from their high point, but still, Mexico has had to cope with very high rates of growth in the meantime.

There’s one respect in which the United States was unusual even among rich countries. We share with France the distinction of having one of the earliest sustained fertility declines in the world, beginning about 1800, and of having our fertility decline precede the mortality decline.

            The improvement in individual health has been even more dramatic than the crude mortality rates shown in Figure 1 suggest. The proportion of older people in the U.S. population has been growing (as we’ll discuss later), so to have the number of deaths per 1000 people still going down is a real achievement. It is easier to see this if we consider an age-independent measure, like life expectancy at birth—how long a typical American newborn would live, if mortality rates at every age stay at their current level. This has improved through most of the last century, from under 50 years in 1900 to 77 years today.

            Back in the 1950s and early 1960s, there were signs of a leveling off of the rate of improvement. A writer in the Population Bulletin for August 1952 put it this way:

“Curiously enough, none of these modern miracles has increased the life prospect of middle-aged people. During the half-century that 20 years were added to the life expectancy of the average U.S. baby, less than a week was being added for people of 50.” Shortly after that was written, mortality improvement at the oldest ages resumed, and in fact, improvement has been faster in percentage terms at the oldest ages. If there’s a limit to the improvement, as many argue, then we’re probably not near it yet.

The Role of Immigration

Besides the speed of change, there’s another respect in which our population growth has differed from that of the countries going through the transition in this century. During much of our transition, the U.S. was a major receiving country for international migration.

From Independence till about 1920, the growth of the U.S. population was due about half to new immigration and about half to natural increase of the population already here in 1790.

Beginning in 1924, when a very restrictive Immigration Act was passed, we had four decades of very low immigration. During the Baby Boom years (1946–64), U.S. population growth was mainly due to natural increase, the excess of births over deaths. Since 1965, we’re back to the historic half-and-half: About half of our population growth is due to immigration and half to natural increase. But because we’re now at the tail end of the demographic transition, natural increase is down to about half a percent a year. Immigration is high in absolute numbers but low as a percentage of the resident population. So population is growing at just under 1 percent a year, compared with 3 percent during much of the nineteenth century.

How Do Our Choices about Immigration Affect the Future Population of the U.S.?

The next figure shows three possible futures for 50 years from now, differing only in what they assume about average immigration rates over that period. These are based on projections done by Barry Edmonston for a panel on immigration appointed by the National Academy of Sciences. His medium projection assumes 820,000 immigrants per year, about what it has been recently. The low projection assumes about half that, and the high projection assumes 50 percent higher (about 1.2 million). If we dropped suddenly to zero immigration, then our population would peak at about 312 million in 2035 and decline slowly after that.

Insert Figure 2 here. Immigration Policy Affects Future Size and Composition of the U.S. Population. Source: Edmonston, National Research Council, 1997.

            One point to note is that under any reasonable scenario, the proportion of Americans with Asian and with Hispanic ancestry is going to rise. These two groups have grown rapidly, especially since the profound changes in our immigration laws in 1965. Exactly how fast they grow will depend somewhat on immigration in coming decades, but they will continue to grow more rapidly than the White and the Black non-Hispanic populations.

To produce these projections, Barry Edmonston had to make reasonable assumptions about the future course of birth, death, and immigration rates for these groups. He also had to make some assumptions about intermarriage and racial/ethnic identification. In our statistical system in the recent past, “you are what you say you are,” and what people say is affected by the often complicated reality of their ancestral origins. The projections shown here are based on an assumption that people would continue to intermarry with the other groups at about the same rates as in the recent past and that children would identify with parental race/ethnic groups at about the same rates. But these things change over time, as indeed do our racial and ethnic categories.

I hope to have grandchildren in the U.S. population in 2050, but I can’t be sure which of these boxes they will check on the census form that year. I can’t even be sure the boxes will still have these labels. There have been several major changes in the way we collect and display data on subdivisions of the U.S. population in my lifetime. Beginning with the 2000 census, we no longer require people to check just one box. I hope to survive through at least a few more changes in our racial and ethnic classification system. Changing them is a nuisance for statisticians, but it does help remind us all that these are artificial labels and not something handed down on Mount Sinai or discovered in a lab.

The Aging of the U.S. Population

The next figure illustrates another way in which recent demographic history leads to some profound changes in the near future. These are two sets of estimates and one of projections for the U.S. resident population in the years 1950, 2000, and 2030. These are so-called age pyramids. They’re just like lining up two vertical bar graphs and tipping them over on their side. Each horizontal bar corresponds to a five-year age group, with older stacked on top of younger, and with males on the left and females on the right. The size of each bar reflects the number of people in that age and sex group in that year.

Insert Figure 3 here. The Population is Aging. Source: U.S. Bureau of the Census.

For most countries with high fertility rates, these figures do in fact look like pyramids. The U.S. in 1950 had a peculiar shape like the nib of a fountain pen—the big gang of pre-schoolers is the first of four Baby Boom cohorts. In the year 2000, we can see that same group, minus some who died and plus some immigrants, in the 50–54 year age range.

If you look at the population above the line denoting age 65, just eyeball it, you can see it is growing in absolute size and also as a proportion. This is only partly due to the unusually large Baby Boom cohorts about to move across that line. It is also due to the steady size of the cohorts coming along behind them. Each one is now about the same size as the one above it. This is characteristic of countries that have reached “replacement-level fertility.” And each succeeding cohort keeps more of its members further into old age, which is the result of the improvements in life expectancy.

Note the unusual position of the early baby boomers. Above them all their lives have been smaller cohorts, the pyramidal situation characteristic of growing populations. Below them is the shape of the future, characteristic of stable populations.

There has been a lot of discussion of what this aging population means for the future of social security, Medicare, long-term care, and politics. But the changing age structure will also mean a very different experience of youth and middle age.

Life is different in any kind of organization or labor market, public or private, depending on the age structure of the population. Prospects are different, if looking up from your place in one of these cohorts, you see above you a whole bunch of elders. On average, promotions come slower. Some hotshots are going to shoot to the top in any kind of population. But it was easier to respect seniority and wait your turn when the population as a whole, and the labor force, was “young.” We in the early Baby Boomer cohorts may be living through the last of the good times for middle-aged persons of middling talents and energy. We spent our early careers in a time of rapid growth of the labor force, where the number of new entrants coming along behind us was always larger than the number ahead of us holding fast to jobs we wanted. Our younger brothers and sisters, and our children, are having very different experience of the labor force.

Population aging is hardly unique to the United States. Many of the rich countries of the world have higher proportions of their populations age 65 and over. In fact, in Japan, the proportion of the population over age 80 is the same as our proportion over age 65. Many countries have more lavish public pension plans, and most already have higher rates of taxation, especially payroll taxation, than does the United States. They thus face more difficult and imminent problems adjusting to population aging.

This table shows the percentage of the population aged 65 and over for the United States and its ten major trading partners. The European countries and Japan have older populations than the U.S., mainly because of persistently lower fertility rates. China and the other Asian trading partners still have a younger age distribution than does the U.S. now, but their populations are aging as well, because of recent rapid fertility declines and gains in life expectancy. This 18 percent for the U.S. in the year 2025 is often considered a kind of threshold—it’s the proportion of over-65-year-olds in Florida now.

Insert Figure 4 here. All of Our Trading Partners Are Aging, Too. Source: Population Reference Bureau, World Population Data Sheet, 2000; U.S. Census Bureau, International Data Base.

Is the Early Baby Boom Cohort Ready for Retirement?

I mentioned the odd position of the early Baby Boom cohorts. So far we’ve only talked about the changes wrought by fertility and mortality decline, but there have been other profound social changes that leave us entering older years in a very different position from our parents at the similar ages.

First, our families. Early baby boomers are less likely to be currently married, more likely to be single or divorced, than our parents were at this age. This has all sorts of implications for the quality of life, for all. Just to take one example, the strongest predictor of entry into a nursing home for older men is marital status.

We can expect to live longer than our parents did. When he turned 50 a few years ago, President Clinton gave a nice talk using the phrase “more yesterdays than tomorrows”—this table has data on exactly how many.

Insert Figure 5 here. Early Baby Boomers Ready for Retirement? Sources: U.S. Bureau of the Census; National Center for Health Statistics; Bureau of Labor Statistics.

Notice that the gap in life expectancy between men and women at age 50 has narrowed a bit since 1970. This is mainly because of convergence in smoking rates. Men are less likely to make it to age 50 than women are, so the gap in life expectancy at birth is still 6 years.

The average number of children we have has dropped. This is an especially rapid drop, over one child per woman in 30 years. The drop was less precipitous before and since. We are the first and probably only generation of Americans to have more siblings on average than children.

Finally, education—we are much more highly educated than our parents were, on average. This matters for all sorts of things, health as well as wealth. The percentage with college degrees has increased for both men and women, and though I don’t show it here, of all the racial and ethnic groups.

If you look at more recent cohorts, though, this isn’t true any more. For people in their late twenties, all the increase in college graduation rates since the 1970s has come about for women and minorities. White non-Hispanic men and Hispanic men have made no progress, and Black men’s increases have recently leveled off. During this same period, all growth in real income has been for college graduates, who are still a minority of the population.

We’ve become used to things getting better, generation to generation. For most of us in the Largest (not necessarily the Greatest) Generation, that’s been our experience. But such progress is by no means guaranteed. We keep coming back in our discussions to education, and this obsession is justified. My retirement will be more comfortable and more affordable for the country if the small cohorts coming along after me are well educated, productive—and eager to pay taxes.