As one of their year-end announcements, The Centers for Disease Control reported the U.S. birth rate at 1.86, below the replacement level of 2.1. There have already been grumblings about how a lowered fertility rate nationally will have an adverse impact on American economic growth.
While fertility can indicate social and economic health, it's simply wrong to conclude that economic growth drops in parallel with fertility. Set this CDC data against the Transamerica Research Center (TRC) data that has just come out - which illustrates how the baby boomer generation is revolutionizing retirement. Taken together, one gets a different, more nuanced view of economic growth in our 21st century. It's not just about babies - but adults.
Sustained drops in fertility will indeed create a world with more "old" than "young," but this is a potential level for growth if the oldies are still active, engaged, and productive. Here are seven things the pundits keep missing about "population aging" and economic growth:
More are working into retirement: The TRC research reveals that a stunning 65 percent of Baby Boomer workers either plan to work past age 65 or do not plan to retire. Of these, over one-in-three will continue to work because they enjoy it. Do the math, and this numbers quickly counterbalance the fall in fertility. But to truly capture this shift, employers must change their workplace norms. Sadly, the workplace isn't keeping pace. The TRC survey found that only 48 percent of employers have practices in place to enable a shifting from full-time to part-time work, and even fewer have employees who believe such options to be available to them.
The U.S. remains relatively fertile. Relative to economic peers -- and even compared to many emerging markets -- American women are fertile. In Japan, Korea, Singapore and much of Europe, birth rates are now well below 1.5, and in some cases even lower. These low birthrates -- combined with the "longevity miracle" bequeathed by massive strides in medicine, healthcare, and technology -- will soon create populations where one-third of the population is over-60, with Japan creeping to 40 percent. Amazingly, by 2020, we can expect Japan to sell more adult diapers than baby diapers.
Immigration is balancing the U.S. Missing from the increasingly fierce arguments over immigration in the U.S. is the role that immigrants play in balancing out the population structure. While the older populations remain vital and brimming with potential, the younger immigrant populations are holding the U.S. back from the warp-speed aging that we're seeing in Japan and Europe.
There is no connection between the "financial crisis" and lower fertility. The drop in birth rates is long-term, structural consequence of modernization, not a temporary fluke of a short-term economic malaise. The trend can be seen globally -- in Brazil, China, India, and elsewhere. In India, it's of particular significance, given that the country is still considered the global poster child for persistent Malthusians who, ideologically, insist that there are too many of us relative to the resources available. In India today, fertility is right at "replacement level," dropping from 5+ births per woman only a short time ago.
Population aging is not a burden on economic growth. It is only a burden if we persist in forcing 21st century demographics into 20th century norms. Keeping people working, active, and engaged into their 70s, 80s, and beyond is the formula for economic growth in our time. It's as true for America as it is for the rest of the world considering what a "Silver Economy" looks like.
Aging matters to all generations. The twin demographic forces -- longer lives, lower birthrates -- are going to be with us for the foreseeable future. Thus, in charting out new avenues for aging, we are equally thinking about Millennials and their children as we are aging boomers. We make a grave mistake if we only engage older adults in conversations about rethinking and reimagining how we spend on health, what we do about retirement, where we make our investments, and what it means to create an age-friendly city.
Boomers have the buying power. While we fret over the reduced buying and consumption power of younger Americans, we are missing the explosion of the "silver economy." By 2017 in the U.S., the over-60s will account for 70 percent of all disposable income. If we begin to reimagine the spending capacity of this -- which is bigger and more vital than ever before -- we see an entirely different set of prospects for the American economy in the next decades ahead.
The new CDC data on the drop in fertility has given the pundits more fuel for their short-sighted fire. But enough of the knee-jerk, doomsday proselytizing. There is immense potential in the aging of the population, and it's time to reorient our thinking so we can seize it.
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