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Growing Elderly Population Raises New Policy Issues

Wisconsin State Journal

August 20, 2004

It looks like the baby boomers should have had more babies. A study out this week warns that the number of Wisconsin senior citizens is about to explode - and the problems posed by this shift will be made worse by a likely shortage of taxpaying younger workers to cover the older folks' rising costs.

Wisconsin has done little to get ready for an unprecedented demographic shift that threatens to deplete public coffers and derail the state economy. Fortunately, it's not too late to act. But first, we must change the mindset of Wisconsin policymaking, which tends to rely on short-term thinking and focuses too narrowly on quick political returns. Coping with the demographic shift is a challenge that demands a long-term outlook.

In coming years, the number of Wisconsin residents age 65 and older will increase at four to six times faster than the general population, jumping 90 percent to 1.3 million. Many more people will be living off retirement income instead of working, meaning fewer workers will be paying state income taxes, says the Wisconsin Taxpayers Alliance study.

Meanwhile, this growing number of elderly, also expected to live longer than ever before, will absorb an increasing share of resources, which could strain budgets for public services - both for the older folks and younger people. This sets up competition and likely political conflict between the generations - with workers in the prime working years, ages 25-44, at a political disadvantage because their numbers will shrink in proportion to the elderly. Wisconsin's work force will drop by 85,000 between 2015 and 2030.

"With the labor force stagnant, you're going to have fewer people working and spending money, and that's what drives the whole economy," taxpayers alliance president Todd Berry told State Journal reporter Doug Erickson. "That's what makes it possible to enjoy public services."

Health care is easily the most explosive issue: Its high cost will determine broader policymaking affecting the entire population, not just the aging. More elderly people are leading longer and healthier lives, but the costs of serving this population will skyrocket with its numbers.

Less apparent are broader economic implications. Because individual economic behavior varies at different stages of life, a change in the age distribution across our population could significantly affect economic performance. Governments tend to devote a lot of resources to our young and our old, so a huge increase in non-working elderly could limit economic growth.

A ballooning elderly population seems likely to overburden existing health and social assistance programs. There's only one reasonable alternative to collecting more taxes from fewer workers: Wisconsin families would have to assume a larger and more direct role in caring for their aging members than they do today. But with income growth expected to lag, can families handle the burden?

There are implications for our global competitiveness as well. Developing countries - in eastern Asia particularly - are undergoing a different demographic transition, converting their youthful population into an energetic and productive work force. Countries offering quality education and practicing liberal trade will translate this demographic change into economic gain. In contrast, doddering Wisconsin and the United States risk losing the economic edge we enjoy now.

Politically, the "graying" of the population seems destined to reorder government priorities. People 55 and older are expected to be the largest block of voters in Wisconsin by 2015. That means more political attention for health and social services, pension issues, consumer protection and public transportation - and possibly less attention and money for public education. School enrollments in 62 of 72 Wisconsin counties will decline.

A shift away from education funding could be disastrous to Wisconsin's long-term economic health, coming just as our education and training systems must adapt to the broader technological changes expected to accelerate in the next 10 to 15 years. Likewise, economic globalization will reach industries and workers now relatively insulated, requiring that Wisconsin retrain displaced workers and raise overall educational levels to remain competitive.

Wisconsin doesn't necessarily face all of these dire consequences. Trends shift, circumstances change. Nevertheless, we can't dismiss the taxpayers' alliance forecast, which is based on the most reliable data available.

To address the challenges of growing older, Wisconsin must better understand the complex interrelationships of the work, health, economic status and family structure of the aging population. A National Research Council panel recently called for research specialists across all of these areas to collaborate on aging research. Policymakers need to see the big picture more clearly to make better decisions about how to cope with this monumental demographic shift, which will be seen throughout the United States. 
One hopeful bit: Aging is gradual, so policymakers still have a few years to sort things out before our economy begins to sag under the burden of elderly retirees. Can we adapt? Sure. But it will require Wisconsin policymakers to look beyond the immediate political moment.

 




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