Changing Demography and Your Future

I am active in town government because I believe all politics is local. It doesn’t seem to matter if the decision is made by Congress, President Obama or our town’s local Board of Selectmen; if it affects me it is local. I feel that I have a responsibility to do my part to insure that good decisions are made. I do believe that the good people in power out number the bad and that the system of federal, state and local government that our forefathers put in place, works. Our forefathers knew that there would always be bad people. However, from my perspective one of the biggest enemies to government is bad information. Good decisions made for the wrong reasons quickly become bad decisions.

Far and away the largest part of any local town budget is always education, schools. It often accounts for eighty-percent and more of the allocation of property tax and property tax is the principal source of funding. In our town of Haddam, Connecticut the Board of Finance holds the purse strings but the real power is wielded by the Board of Education because that’s where the money is spent. The Board of Education has tremendous power, but they don’t always have good information.

I recently attended a Board of Education meeting in our beautiful new $40 million dollar middle school (6th, 7th & 8^th grades). The chair of the meeting was reviewing some unexpected savings in the overall budget resulting from the drop in oil prices and the fact that two fewer kindergarten teachers would be needed for the 2009/2010 school year. I asked why we needed fewer kindergarten teachers and the chair explained that kindergarten enrollment had unexpectedly dropped by twenty-five percent under what had been budgeted. I asked him why there was a drop in enrollment and he stated that it might have something to do with the fact that new housing starts in our town had ground to a halt. That might have something to do with it, but it is not the real reason. I knew that this unexpected drop in enrollment would be played out in towns across the United States and that the inverse, unexpected increases in kindergarten enrollment would also catch thousands of towns by surprise. Why? Because the nation’s demography is shifting, really shifting. While I still had the floor I asked if this reduction in enrollment continues, would we need this new school in eight years? The answer was no. But, hey, it was only $40 million dollars.

Good decisions require good information. 2007 was a record year for live births (4,317,000) in the United States according to Census Data released in July 2008. In fact it broke a fifty year record set in 1957 (4,300,000) at the height of the Baby Boom. The United States is currently the only industrialized nation that has fertility above the 2.2 children per couple replacement level. 2007’s live birth numbers hold significant clues to our Nations future demography and our future overall. Twenty-five percent of the 4,317,000 births were Latino. Latinos make up about fourteen percent of our overall population so it is clear to see where our nation’s population growth is coming from. Let me be very clear here. This fact regarding Latino births bodes very well for our country. Without a replacement level fertility countries do not remain strong for very long. Our future is bright, but we have many challenges ahead. Latinos are not yet geographically diverse. The Nation’s Southern and Western states have high concentrations of Latinos while the Mid-West and Northeast states have relatively few. This translates into significantly fewer live births where you have fewer Latinos.

Both of the Latino families that live in Haddam, Connecticut cannot balance out the drop in live births in our region. Our town is going to need to rethink our school budget to allow for fewer students and fewer teachers. On the surface this may sound good because the amount of tax necessary to run things should be less. Below the surface this is a disaster waiting to happen because long term these kids that we didn’t have will translate into a workforce that we can not tap.

Life is complicated. Stay tuned.

The United States is experiencing a demographic upheaval. This enormous shifting of populations, generations and cohorts will redirect the course of our economy, commerce, culture and government. While most of this change is good news overall, the perils of not understanding this transformation are profound. Especially on the part of our policy makers and President Obama.

The U.S. healthcare industry  has proven to be very vulnerable to the shifting sands of demography. When the massive block of 80 million Baby Boomers born 1945 to 1964 dominated the 20- to 40-year-old segment of the U.S. twenty to sixty year old labor force our current private shared risk, insurance-based healthcare model was very successful. Boomers were paying insurance premiums into the system and not using many of the services.The tiny Silent Generation born 1925 to 1944, occupied the forty to sixty year-old segment of the labor force. The Silents because of their age, used more services than they paid for in premiums but the Boomer Generation more than made up for this deficit. This demographic fact kept insurance premiums low and healthcare service providers profitable. Starting in 1984 The Boomers began to populate the 40- to 60-year-old segment of the labor force and the value of the medical services they used began to exceed what they were paying in premiums. The private shared risk insurance model began to fail. The young healthy generation right behind the Baby Boomers, Generation X, which is about 9 million people smaller than the Boomer Generation, is too small to compensate for the Boomers’ escalating utilization of medical services.

Now Generation Y, the largest generation in American history, born 1985 to 2004, is beginning to enter the workforce at the entry level and all bets are off. In addition millions of Generation Y will begin to start their own businesses because they are facing 20% unemployment at entry level and they have to eat. Couple this with forty-five million assimilating young Latino immigrant populations and the socioeconomically advancing African American cohorts that number over forty million and you have a complex private healthcare insurance marketplace that will surely begin to expand. In short, millions of new very desirable young healthy potential customers will be flooding the private shared risk insurance based model. And all of this will take place without a single piece of legislation or government involvement. Imagine that. Our current private healthcare system here in the United States is not broke, it has just suffered a bit of a set back that will self correct as our demography shifts. 

Pending federal and state legislation poses a significant threat to the viability of the private shared risk insurance model here in the United States. Passage of this legislation can easily lead to unfortunate socialized medicine environments similar to Canada and Great Britain. Our state and federal legislators need to make informed voting decisions based on good demographically based information. This information is simply not in their hands. Maybe someone knows how to make this blog mandatory reading for our senators and congressmen?

By Les Christie, CNNMoney.com staff writer

Last Updated: May 14, 2009: 11:12 AM ET

In the past eight years, America’s population has grown, become more diverse and aged.

NEW YORK (CNNMoney.com) -- The nation is becoming even more diverse: More than one third of its population belongs to a minority group, and Hispanics are the fastest-growing segment.

The U.S. Census Bureau reported Thursday that the minority population reached an estimated 104.6 million - or 34% of the nation's total population - on July 1, 2008, compared to 31% when the Census was taken in 2000. Nearly one in six residents, or 46.9 million people, are Hispanic, the agency reported.

Even more telling for the future: 44% of children under age 18 and 47% of children under the age of five are now from minority families.

The quickly expanding Latino population is having a healthy impact on the economy, according to Ken Gronbach, author of "The Age Curve: How to Profit from the Growing Demographic Trend."

"Latinos have saved our country," he said. "They represent 14% of the population but 25% of the live births. The United States is the only western industrialized nation with a fertility rate above the 2.2% replacement rate."

Growth of other minority groups is also outpacing that of the majority population. Asians, the second-fastest growing group, increased 2.7% year-over-year to 15.5 million. The African-American population rose 1.3% to 41.1 million.

Minority births, combined with high immigration levels, kept the nation's population growing dynamically, spurring the economy by adding to consumer demand.

They will also help to prop up the real-estate market once the economy begins to recover, according to Rakesh Kochhar, associate director of the Pew Hispanic Center. During the housing boom, minorities closed much of the homeownership gap, although the bust has worked to widen that again.

As it ages, the Baby Boom generation, the largest age cohort in U.S. history, will start to sell their castles as they look to downsize their empty nests. But the group that would be expected to buy those houses, Generation X, has about 9 million fewer members.

"There would be about 10 homes for every eight buyers," said Gronbach. "Xers simply do not have the critical mass to make up for the boomers' footprint."

Minorities will help take up that slack. They are relatively youthful and looking to house their families. The Hispanic population, for example, posted a median age of 27.7 years in 2008. That compared to 36.8 years for the total U.S. population - which is a year-and-a-half older than the median age in 2000.

The number of 65-year-olds and older is nearing 39 million, or 12.8% of the population, up from 12.4% in 2000. The state with the oldest average residents is, not surprisingly, Florida: 17% of the retirement Mecca's population was 65 or older.

Biggest minority

Latinos and other minority workers contribute to keeping the Social Security system solvent, according to Monique Morrissey, an economist for the Economic Policy Institute. The undocumented workers among them often pay more into the Social Security pool than they will take out in benefits.

Morrissey said estimates of deficits in the pool's finances were reduced last year when a Social Security advisory board's technical panel revised some unrealistically low assumptions it had made about Latino immigration.

"They took into account people without papers [paying into Social Security] but not accessing funds from there," she said. "That's bad for workers but very good for Social Security."

State and county populations

The most Latino county in the nation was Los Angeles, with 4.7 million people. Latinos accounted for nearly half the population there and increased 67,000 during the 12 months ended July 1, the most of any county. The Rio Grande border county of Starr, Texas, has the highest proportion of Latino residents: 98%.

California leads all states in the number of Latinos, with a population of 13.5 million, an increase of 313,000 in just one year. New Mexico, appropriately, has the highest percentage of Latinos: 45%.

New York State has the greatest number of African-Americans - 3.5 million - while the District of Columbia and Mississippi have the highest percentages, at 56% and 38% respectively. In terms of counties, Cook County, Ill. (Chicago) leads all others with 1.4 million African Americans, while Claiborne County, Miss., had the highest percentage at 84%.

More than 5 million Asians live in California, more than in any other state; Hawaii has the highest percentage of Asians at 54%. It's the only majority-Asian state in the nation.

Los Angeles County is home to 1.4 million Asians, the most of any county. Honolulu, with 58%, had the highest proportion.

More Pacific Islanders (283,000) and native Americans (739,000) lived in California than any other state.

My Reply: 

I was interviewed by CNN's Les Christie for the above article. Once the story hit I began to get hate mail. It is very clear to me that many people do not understand the dynamics of shifting demography and the importance of understanding it. Between 1965 and 1984 the number of babies born in the United States dropped like a stone owing to a misguided belief that "Zero Population Growth" was beneficial. Roe vs. Wade (1973) also played a significant part and our fertility plummeted twenty-five percent after the Supreme Court decision. In 1985 we began to have children again at above replacement level fertility, but the damage was done.

We have a deficit in our population that is twenty years long. It's called Generation X. Generation X has nine million fewer people than the Boomer Generation born 1945 to 1964. This means that Generation X can not earn, consume, pay taxes or populate the labor force at the level of the baby Boomers because they simply do not have the critical mass.

When Generation X entered the entry level labor market twenty years ago they could not satisfy the demand. This sent labor costs soaring and jobs off shore. Latino's poured into the country to fill the demand unmet by Generation X. Now the bad economy and our own homegrown labor force, Generation Y, born 1985 to 2004 is forcing millions of Latinos to return to their home countries. The remaining Latinos have conveniently filled in the deficit in our population between the ages of twenty-five and forty-four years old.

As Generation X, now fortified by the remaining Latino immigrants, ages into the stage of life when they will be required to do the heavy lifting in the United states by paying most of the federal, state and local taxes, it is paramount that the Latinos immigrants assimilate as quickly as possible. Most of this assimilation will occur naturally because their culture is very compatible with U.S. culture and they assimilate faster than any other immigrants in the Nation's history. Without the Latino immigrants our economy would crash in ten years making the current economic crisis look like a cake walk.

As many of you know I have a best selling book called "The Age Curve, How to profit From the Coming Demographic Storm". If you don't already have one, I wish you would buy it. I could use the money. The book continues to sell despite almost no publicity. It seems that if you don't have the proper platform i.e. a Pulitzer prize, write for the New York Times or a degree from Yale, you don't get considered by the talk shows that launch books no matter how profound your content is. Everyone overlooks the fact that I did stay at  Holiday Inn Express.

Someone thinks my book is cool. Look at this video. I love it! 

http://www.youtube.com/watch?v=oy7zT6ogCJI

2007 was a Demographic Bombshell!

One of the biggest population shifts in the history of the United States is taking place right now. This huge change will affect everything from commerce, economics, politics, government, religion and healthcare. 

According to the United States Census 2007 was a record year for live births at 4,317,000. 2007 broke a long standing record of 4,300,000 that was set fifty years ago in 1957 by the Baby Boomer Generation. The peak of the Baby Boomer’s huge bell shaped curve is now fifty-two years old. We have learned a great deal from the Baby Boomers as they passed through the time continuum. Boomers had to be anticipated and accommodated as they aged. Education and healthcare infrastructures had to be built to serve their huge numbers. Are we ready to serve the new Generation Y and Generation Z boom? The answer is, probably not. Generation Y is a more complex generation then the Baby Boomers. The Baby Boomers started in 1945 and reached their apex in 1957. 1958-1961 remained strong four million plus birth years for the Boomers before the fertility trailed off to a low in 1964. Generation Y is different. It began in 1985, peaked in 1990 and then began a very slow sometimes undetectable decent for over fourteen years until it out numbered the Baby boomers. Now Generation Z born 2005 to present is in the news with record high numbers.

However the real news about 2007 is not the fact that it is the biggest birth year in the nation’s history but rather that twenty-five percent of those births, over one million, were derived from parents of a single cohort that represents only fourteen percent of our population, Latinos. And as if this is not profound enough another fact emerges because the Latino population in the United States is geographically selective. Most Latinos live in California, Arizona, New Mexico, Texas, Illinois, Florida, New Jersey and New York. The United States population will experience a demographic/geographic shift like never before in our history. This will effect the consumption of everything and have a significant effect on healthcare. There are parts of our country that will see the biggest baby boom is our history and other parts that will see fertility turn off like a faucet. There will be parts of our nation that will be flush with children and other regions that will see the number of children fall off significantly.

I was recently at a Board of Education budget meeting for the school district that serves our area. The chairman was reviewing line items that represented unexpected savings and one of them that jumped off the page was a sharp reduction of the number of kindergarten teachers. It was a significant savings. When the chair was asked why fewer kindergarten teachers were needed he replied “We have a twenty-five percent drop in the enrollment of new kindergartners.”

A twenty-five percent drop is huge so it surprised me that no further comment was made. I stood up and asked if anyone on the board knew why there was a precipitous drop in the number of kindergarten kids. No one did but the chairman did offer that the housing boom in our towns had stopped. The real reason was simple. Fertility for non-Latinos had dropped like a stone and there were virtually no Latino households in our district. One of the significant ironies is the fact that our school district had just built a huge new middle school just in time for it to empty out and not be needed. Our district could be a case study for the need of demographic research and planning.

This same scenario will play out in healthcare and hospitals throughout the nation in the next ten to fifteen years. There will be areas that will have large vibrant maternity wards and pediatric centers and others especially in the Northeastern part of the country where they won’t be needed. This demonstrates the need and importance of regional demographic study and research.

On a bright note the nursing shortage that has plagued healthcare for the last decade show signs of abating. The huge Generation Y with its early peak in 1990 should deliver a huge number of eager to work entry level healthcare workers and nurses starting in a couple of years.

The healthcare demographic landscape will remain complex until further notice. Regional issues and attendant anomalies will be prevalent requiring careful planning and analysis. It is a good time to formulate a strategic plan based on good information.