Changing Demography and Your Future

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.

“Fast and Furious” Wake-up Call

The movie "Fast and Furious 2009" is breaking box office records. No surprise there. I forecast this in 2003 in my book "Common Census" when the leading edge of Generation Y was just starting to drive. I covered the subject in detail in my 2008 book "Age Curve". I stated that Detroit had missed an obvious cue spelled out in the overwhelming popularity of "Fast and Furious 2001".The huge new market for cars, Generation Y, is not going to buy the latest mutation of the SUV. What are they going to buy? Small light weight rocket fast Asian cars. Watch both movies. The continuity is on the money. I know because I spent the better part of the Summer of 2007 filming Generation Y hot-rodders. Japanese automobile sales are going to spike. If Detroit can get their act together and build what Generation Y wants they can power out of this crisis without a crippling bailout.

There is more, a lot more. Really more than I can cover here. Generation Y is about to overwhelm the US highways driving the fastest cars ever made. The AAA tells us that the chance of dying in an accident in a small car are twice that of an SUV. In addition, as the Baby Boomer Harley riders begin to fade into oblivion, there will be a sea of male Generation Y Sport Bike enthusiasts trying to kill themselves on machines capable of 200 mph (not a typo). In short we have a huge young high accident risk population/generation headed right at us and no is talking about it. Public Safety/police need to start preparing now because believe me they are not going to catch these kids with their anachronistic Ford Crown Victorias or existing technology. Hospitals, trauma centers and emergency workers are going to get caught flat footed by a dramatic increase in traffic accident victims. People needing organ transplants will see a surge in availability. Car insurance rates that have been stable for the last twenty years because of the small number of young drivers (Generation X) could double and triple. The United States healthcare crisis is about to be sucker punched. Auto body shops franchises like Maaco and parts stores like Pep Boys should see a surge in business.

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Unemployment Numbers are only Part of the Picture

Another demographic fact is about to influence the United States' unemployment numbers. Generation Y is flooding the entry-level workforce with about four million new workers a year. The job infrastructure has adjusted itself to the diminutive Generation X over the last twenty years and can only accommodate about seventy-five percent of that number. Even if we were in good economic times this would be a buyers labor market. I am also forecasting that Y will displace a lot of the "entitled" Generation X workers because they will be cheaper and have a better work ethic. This should be a windfall to employers and help bring industry back to the United States just as China begins to feel the crippling effect of their "one child" policy on their labor force. Generation Y will also open a sea of small innovative businesses because everyone has to eat. This should also create a sea of jobs. A very similar scenario played out in the seventies when the Boomers entered the workforce behind the tiny Silent Generation.

Dylan sang: "The Times They are a Changin…"

Demographers versus Economists

Economists are wrong seventy-five percent of the time. It could even be higher than that. The favorite phrase of an economist, after they have made a statement or forecast, is “On the other hand…” demonstrating their lack of conviction in their own observations and calculations. Even the press and news media in general avoid economists because it is unlikely that they will get any definitive information from them that can be reported and understood by the public. We are in the biggest economic crisis in the history of the world. What economist forecast this? What prominent name immediately comes to mind? If you said none, you are not alone.

Demographers are different. We use common sense, count the number of people and superimpose predictable behavior. Small populations of buyers (Generation X) cannot buy enough houses from large populations of sellers (Baby Boomers). This gross over supply explains of the housing crisis that precipitated the world financial crisis. So what is my point? Listen to demographers. They have better information and you can understand it.

Below is a partial list of forecasts I have made. Most are from my book “Common Census, The Counter-Intuitive Guide to Generational Marketing”, written in 2003 and published in 2004.

1. The return of crime especially in our cities. We enjoyed twenty years of reduced crime when Generation X was of the crime committing age: men fifteen to thirty. Security system sales and every new product used in law enforcement will not be able to keep up with the demand once crime returns with a vengeance- starting NOW!

2. Super Sport Bikes are back! But the Japanese manufactures are very slow to embrace this fact. They are still making Harley clones but that style is history starting NOW! Sport bikes and related aftermarket products and modifications will spike, really spike.

3. The crash of Detroit and the SUV. Detroit will not need a bailout if they wake up to Generation Y. Generation Y will buy American, but only if Detroit builds the cars they want. If we get a sense that Detroit has figured this out their sales and stock should soar.

4. Japanese cars will remain strong, stronger than Detroit because they are currently building the cars Gen Y wants. Performance, entertainment and appearance accessories for Japanese cars will explode! Gen Y kids are spending $20K-$30K to modify their cars with no end in sight.

5. AARP and everything elderly will crash! The tiny Silent Generation is aging into the elderly market and erasing it. Assisted living facilities will be especially hard hit. To fill the beds mentally challenged and physical therapy populations are being mixed with elderly residents. It is not a good mix. As the tiny Silent Generation (now 65 to 84) populates the elderly market Medicare should get a break as there will be fewer people dying. This is a huge category with far reaching ramifications. Medical products used to keep old people alive should decline significantly.

6. The Resurgence of first marriages. We are just a few years away from an explosion of first marriages. The peak of Generation Y was 1990. The average age people marry in the United States is twenty-six.

7. Social Security will crash in seven to ten years. There is no chance of keeping this dinosaur alive unless we educate and elevate two significant high potential cohorts; forty million African Americans and forty million Latinos. This has to be done now and done on a grand scale! Obama’s White House has the potential of fixing this. These two cohorts have the potential of driving specific markets straight up if they are incorporated into the economy’s mainstream and make more money. It is very easy to identify what they buy.

8. We are destined for some kind of Socialized Medicine. This can be reversed by the same strategy used to save Social Security above. The Boomer will continue to burden the current health care system especially when they start to die in ten to fifteen years because you spend more on healthcare in your last seventy-two hours of life than you do in your entire life.

9. Middle management and skilled labor shortage is still present. Even in this bad economy. Gen Y will flood the skilled labor category. African Americans and Latinos could make up the shortage of managers with the right training.

10. Airlines will benefit from Gen Y’s upward pressure on the workforce Gen X opted out of high travel jobs because they could, but Gen Y will do anything to get and keep work, including travel all the time. Airline stock should show a slow steady increase especially if they market to Y travelers. This should help hotels too.

11. Big Box retailers are in jeopardy. These businesses are predicated on the Boomer market and do not appeal to Y because they cannot offer selection and quick turnaround. This bodes very badly for commercial real estate. If they can figure out a way to serve Latinos and African Americans they might have a chance. Wal-Mart is hanging on because of the bad economy.

12. The bigots are almost dead. In the late 1990s I forecast an abrupt end to racial bigotry. I wrote about it in 2003 in “Common Census”.

We elected an African American president in 2008.

13. Newspapers are History. Done. TV will hang on in a reduced form and radio will improve slightly as a source of local information. The cyber world will continue to grow and eventually dominate as Gen X, Y and Z overwhelm markets.

14. Immigrants are not a problem, they are a solution. Once the huge Generation Y (born 1985 to 2004) entered the workforce the excess Latino immigrants went home climbing over the Billion Dollar Wall we built to keep them out. The ones that remain are working and we need them to pay into health insurance, pay social security and taxes.