Aging Populations Could Shock the World
By: Patty Henetz, The Salt Lake Tribune
Medical advances have helped make those 85 years and older the fastest-growing population. Living to 100, once a rare event, is becoming more common.
As elders’ lives have lengthened, a parallel trend has emerged: Families have gotten smaller and money tighter. The two phenomena are creating a profound economic imbalance, not just in our homes but in our world, that is putting elders at risk.
Global power, says a disturbing new book about aging, increasingly rests on a nation’s willingness to edge out, and then neglect, older workers.
That’s according to best-selling author Ted C. Fishman, whose book, Shock of Gray, examines how the aging of the world’s population “pits young against old, child against parent, worker against boss, company against rival and nation against nation.”
Paying the piper • Fishman got the idea for Shock of Gray while in China, a time that led to his 2005 best-seller, China Inc.: How the Rise of the Next Superpower Challenges America and the World. China’s fortunes, he wrote, grew from a vast population of young high-tech workers earning the equivalent of 25 cents per hour.
Corporations around the world, even in relatively poor countries such as Mexico, have found it easier to send their work to China than to compete. China has decided it can’t yet afford social-spending programs like those in Europe or the Americas.
But a reckoning is coming, Fishman writes, because as China’s fortunes grow, it is aging just as fast as other nations have. Chinese communist leaders have decided to take a calculated risk in denying its now-young work force any real pensions or insurance against illness or disability — a sure-fire recipe for poverty in old age.
Dubbing the outcome “age apartheid,” Fishman says Chinese leaders see the social policy as “ruthless, but they see it as necessary.”
Even as China has benefitted from this policy, it also recently ordered its banks to hold back more money as reserves in a new move to curb lending and rising inflation that communist leaders worry might stir unrest.
What seems inevitable could be likened to the U.S. real-estate debacle. “It’s a human-capital bubble,” he says.
The U.S. Ambassador to China, and former Utah governor, Jon Huntsman Jr., touched on these very issues during the fourth annual China Town Hall, sponsored by the National Committee on United States-China Relations and webcast live on Oct. 18.
China’s reserves are growing by $2 billion per day, but a reckoning is imminent. In the next five years, “China has to draw down on its wealth to take care of domestic needs,” Huntsman said. In the absence of openness and innovation, “you can only maintain your economic leadership of cheap labor for so many years.”
And then China will grow old, too.
Not just China • That’s a warning for all the world, Fishman says.
“Old people require the energies of young people,” he writes, “and when a society does not have enough young people, it is forced to change, often in surprising ways.”
As nations age, they turn into vacuums that suck up young workers from other countries. Spain, for example, used to be a young nation but now is old because its young workers were drawn to wealthier nations. Immigrants from Latin America, notably Ecuadorans, who also gravitate to the northeastern United States, have filled the Spanish void.
Latinos, though vilified by nativists who would close the U.S. border, represent great economic and service-related hope for an aging America. In many cases, immigrants are filling caretaker roles family members used to take on before they moved to cities to find work.
Everywhere, women move to cities for their educations and subsequent jobs. They wait to have children until they are established in their work. They run out of time — and money, as cities are expensive — to have large families.
It’s unlikely young workers will move back to the countryside and have large families, Fishman says. Modern life means women are not having the average 2.1 children necessary for population replacement, a phenomenon that is reaching even into sub-Saharan Africa.
That’s good news for children, because that gives parents and grandparents more opportunity to do whatever they can, pay any price to ensure these relatively few children have the best opportunities.
“That’s a pretty good formula for improving humanity,” Fishman says. “Intellectual capital, that’s where the world of difference is made.”
But fewer children means fewer people to support the aged. In the United States, the median age is 36, but the upper half of the equation is growing at a faster rate than the lower. A crushed economy abetted by the loss of manufacturing has left an unprecedented percentage of younger people and those over 50 jobless for longer periods of time.
Scaling back • Americans, addicted to prosperity as we are, seem to be accepting, if not exactly embracing, greater frugality. For the sake of us all as we grow older, that’s necessary, Fishman indicates.
“If we want to pour all of our borrowings and disposable income on preserving a lifestyle that seems unsustainable,” Fishman says, “then we don’t have the ammo to prepare for an aging society.”
Nor for the growing competition between young and old for fewer jobs.
In weak job markets, Fishman writes, “it’s tough to split up jobs between the young trying to break into the market and the old trying to keep a place, even a reduced one, in it.”
In the past few weeks, riots in France and radical social-spending cuts in Great Britain have splashed headlines across newspapers and the Web. While Americans may dismiss France’s unrest as silly — what’s so bad about raising the retirement age to 62 from 60, anyway? — Fishman says we are missing the point.
“What’s really at the heart of the French protests is these fiscal shortages seemed so sudden,” he says. “Only recently have older French people been allowed not to have to work until they drop.” Raising retirement to 62 can delay cash payments to 68 or 70.
British-style cuts would devastate old people in the United States, he says. In any case, pushing full retirement into older age wouldn’t lead to cost savings — it would just delay spending the money while elders fall into poverty, which is extremely difficult to climb out of.
Yet age discrimination, Fishman writes, has its attractions for employers. “Failing to consider how to discriminate against an aging local workforce is itself a management failure, because the rest of the productive world is genius at finding new ways to cut older people smaller parts of the economic pie.”
The pie doubtless will be smaller, too, according to a sobering report from the nonpartisan Center for Retirement Research at Boston College. Requested by the nonprofit organization Retirement USA, the report estimated that the gap between the Social Security, pensions and retirement savings that American households in the 32-to-64 age range have today and what they should have today to maintain current standards of living in retirement is $6.6 trillion.
Because the report assumed steady work, retirement at 65, reverse mortgages to tap equity in homes, spending down all wealth, and no cuts in Social Security, its authors caution their conclusions are probably quite conservative.