Institute Forum

Summary: Governments Face Challenges as the World Gets Older April 13, 2011

Governments Face Challenges as the World Gets Older

Impact will hit budgets and other policies for nations and states, experts tell Institute forum

“The world does stand on the threshold of a stunning demographic transformation,” Richard Jackson told a forum assembled at the Rockefeller Institute of Government on April 13.

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Audio

Video: Richard Jackson
Dr. Jackson's slide presentation

Video: Robert Scardamalia
Mr. Scardamalia's slide presentation

Video: Question-and-Answer session

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Jackson, of the Center for Strategic and International Studies in Washington, D.C., and Robert Scardamalia, a consultant who is former chief demographer for New York State, discussed the international trend in aging and its potential impact on government budgets and policy. The forum, “The Impact of an Aging Society: Globally, Nationally and in New York State,” was co-sponsored by the Institute and the Albany Guardian Society.

Both experts discussed the trends that have led to increasing percentages of older people in the world’s populations. Decreasing birth rates and longer life expectancies are the major factors behind the demographic shift, they said. In the United States and some other Western nations, the Baby Boom generation’s entry into retirement age is expected to further boost growth in the senior population.

In New York State, those Boomers — people born during the post-World War II population surge — are expected to create a nearly 80 percent increase between 2010 and 2030 in the number of people who have reached retirement age, according to data presented by Scardamalia. Between 2030 and 2050, the number of New Yorkers 85 and older is expected to surge more than 110 percent, according to data he presented. That will drive increased need for workers in human services and other fields that support older citizens, he added, just as Boomers’ entry into earlier stages of life has spurred spikes in the need for teachers (when they were children) and the size of the labor force (once they were working-age adults).

“This population … has strained every social fabric that it’s hit along the way,” Scardamalia said of the Boomer generation.

Globally, Jackson said many developed countries are entering a phase of what he referred to as “hyperaging.” Jackson presented his Global Aging Preparedness Index, highlighting these trends. By 2050, if current trends continue, people 65 and older are projected to make up 27 percent of the French population, 34 percent of the German population and 39 percent of the Japanese population, he said. In the United States, the percentage of seniors is expected to be lower than other developed countries — at 20 percent — due in part to immigration and a higher fertility rate than other developed countries.

Developing countries, too, are aging, though their median ages remain considerably younger than the developed world’s, Jackson said.

An aging population will create economic challenges around the globe, Jackson said. The falling ratio of taxpaying workers to retirees will strain developed countries’ ability to adequately fund programs that assist older citizens — programs such as the United States’ Social Security and Medicare. The slowdown in workforce growth in developed countries will also result in slower economic growth overall, Jackson said. Declines in savings and investments could further contribute to a decrease in the growth of productivity and living standards. Challenges brought about by these trends will include how to socialize a relatively shrinking percentage of children in smaller families and how to care for growing numbers of elderly people, Jackson said.

And aging workforces may be less flexible, less mobile and less entrepreneurial — leading to a paradox about globalization, he said. An aging world needs globalization more, to match skills to jobs, Jackson said, yet “at the same time, an aging world may be a world in which … you get a pushback against globalization.”

Among developed countries, Jackson said, the United States is best positioned to confront what he referred to as “the age wave.” By 2050, the United States is projected to remain among the most populous nations, while other developed countries are expected to fall in population rank. He listed America’s relatively flexible labor markets, broad and deep capital markets, and an entrepreneurial culture as advantages in the future global economy.


ABOUT THE ROCKEFELLER INSTITUTE OF GOVERNMENT

The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, conducts fiscal and programmatic research on American state and local governments. It works closely with federal, state, and local government agencies nationally and in New York, and draws on the State University’s rich intellectual resources and on networks of public policy academic experts throughout the country.