Immigration and Baby Boom Demographics

The first wave of baby boomers reached age 65 back in 2011, prompting concerns about how the nation would handle the costs, as successive waves of baby boomers joined the ranks of the retired. The postwar generation, born between 1946 and 1964, makes up almost a quarter of the U.S. population – about 75 million, at last count – and their retirement, en masse, will have a significant impact on the U.S. economy, and on state and federal budgets.

A recent article on FiveThirtyEight.com, a site founded by former New York Times reporter, Nate Silver, discusses the implications of this inexorable shift in America’s demographics. Here’s the problem, according to Ben Casselman, who wrote the piece for FiveThirtyEight:

“Simply put, retirees don’t contribute as much to the economy as workers do. They don’t produce anything, at least directly. They don’t spend as much on average. And they’re much more likely to depend on others – the government or their own children, most often – to support themselves.” [See What Baby Boomers’ Retirement Means For the U.S. Economy, by Ben Casselman, FiveThirtyEight.com, 07.May.2014.]

The issue of dependency causes the most concern, as a growing share of the U.S. population comes to rely on pensions and government support to pay for their necessities: health care, social services, and long-term care, not to mention housing, food, and transportation. With fewer people working, the burden of support will fall more heavily on those who remain in the workforce.

Similar dynamics are present in several industrialized democracies, according to a study from the U.S. Census Bureau, cited in the FiveThirtyEight article: by 2030, more than a quarter of the population of Germany and Italy, and nearly a third of Japan’s, will be over 65. [See An Aging Nation: The Older Population in the United States, by Jennifer M. Ortman, Victoria A. Velkoff, and Howard Hogan, U.S. Census Bureau, May.2014.] By contrast, the United States will remain relatively young; the Census Bureau projects that about 20.3 percent of the U.S. population will be over 65 by 2030.

How will the U.S. avoid the demographic collapse that will afflict many of its key trading partners? In a word: immigration. According to the Census Bureau:

“Immigration is expected to play an important role in determining the age structure of the United States over the next four decades through its effect on the size of the working-age population. The aging of the baby boomers increases the proportion of the population that is in the older age groups, while projected immigration into the working age groups tends to slow the aging of the population.”

Immigration, in other words, will help the United States to keep the system in balance – something we’d do well to remember as the national debate on immigration reform continues.

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