Today, from the middle school all the way up to the university level, students are wrongly taught that the world is becoming overpopulated. That view cannot be farther from what the numbers actually present. In fact, at this time we need more people born, not less. The world’s elderly population is expected to increase dramatically by 2050.
Even developing countries who traditionally had higher birthrates than developed countries are beginning to decrease. In the United States, retired people (ages 65 and older) are expected to account for 20 percent of the total U.S population by 2030. This underscores the need to examine the economic effects of population aging in European and Asian countries and how their inevitable economic woes will be applied to the United States.
The TFR (Total Fertility Rate) is the number of children born to a woman over the course of her lifetime. TFR is the measurement that most demographers use to calculate future population projections. In order for a nation to be at replacement, it needs to have at least an average of 2.1 children per couple. The two children are the minimum needed to replace both of their parents. The United States is currently averaging 1.8 children per couple and with an ever-increasing median age of 38 years of age makes United States an aging country. The U.S. should take note of other countries to reverse its low-birth rates.
In their 2009 study, researchers from Harvard University analyzed the relationship between birth rates and income per-capita in Europe.
The study finds “lower fertility will increase income per capita in the short run, but decrease it in the long run.”
This is because, as they argued, as more people enter their retirement years, there will be a small number of workers who will replace them. This will hurt the economy because the declining number of those in the working age population (15-64 years of age) will have to divert more money from their savings into Social Security and Medicare.
As an increase in longer lifespans increases, working populations increase their savings to prepare for retirement. However, when the population falls out of replacement, savings tend to drop.
As three university professors from Thailand pointed out in their 2014 study, savings drop because the “high ratio of dependents leads to lower aggregate saving.”
For example, Japan in 1990, had the highest savings rate in the world being at 15 percent after taxes. Today, 40 percent of Japan’s single population and 30 percent of families are at or below a zero savings rate which is leading them into debt. Japan’s savings crisis is expected to become worse because the current TFR of Japan is 1.44 children per couple as of 2016.
In addition, according to a 2018 report by the International Monetary Fund, if current population trends in Japan remain the same, their debt to GDP ratio will reach above 245 percent above its overall GDP by 2030.
Moreover, countries like Japan, Hong Kong, South Korea, Spain, Switzerland, and Italy have grim futures. Their young population (ages 0-14) are all below 15 percent. In fact, Japan’s economic downturns from its struggle to sustain a healthy amount of working-age people in the workforce that can sustain old-age dependents over the long term, has become so grim that in 2013, Japan’s head of the Ministry of Finance, Taro Aso, who was 72 years old at the time of making his statement, was reported as saying, it's time for old-age dependents to “hurry up and die.” While his comments were quite inappropriate, he was correct to say the ever increasing number of elderly people is straining Japan’s economy.
Since the future working-age population will be financially strained by an ever growing number of old-age dependents, it is certainly plausible that they will be challenged with improving and maintaining the health of their populations. For developed and developing countries alike, both healthcare systems are ill-suited for the increasing demand for health-care by old-age dependents.
A 2013 paper by researchers from several prestigious universities in Canada, China, Israel, Switzerland, and Mexico expressed concern for the future of medical care for elderly dependents,
“Developed countries are struggling to control the costs of healthcare while providing for the increasing demands. The traditional model based on institutional care is neither appropriate nor sustainable given the evolving and growing needs of the population.”
The current existing data for future prospects is alarming considering the percentage of elderly people in Japan, for instance, is 30 percent, according to the World Health Organization in 2015.
Moreover, the Japanese government is increasing the amount of pharmacies to accommodate for the increasing amount of visits to the pharmacy by the elderly population. Consequently, that increase has, in turn, resulted in a rapidly increasing expenditure on healthcare. So while aging societies in developed nations are enjoying higher quality healthcare, it will likely not remain so in the future.
Can we solve the aging population crisis with automation? That possibility is uncertain because there is a growing body of evidence that the decline of productivity since 2000 is associated with those in the baby-boom generation working fewer hours due to their old age. With this data collected, some economists predict that if current demographics remain constant, education, economic inequality, and government debt will “offset the effects of any potential technological innovations.” Therefore, even Japan’s increase in innovations is unlikely to continue in the long run.
Japan’s looming economic downfall should be used as model by the United States not to follow. Therefore, the United States must avoid a looming economic disaster. The predominance of empirical data on this issue confirms that what is presently occurring in Europe, much of Asia, and Japan in particular can happen to the United States. In 2016, researchers from Harvard Medical School and the RAND Corporation conducted a study that analyzed the trends in fertility across all U.S states from 1980-2010 and found “our estimates imply that 10 percent growth in the fraction of the population ages 60 and older decreases growth in GDP per capita by 5.5 percent.”
While it is true countries in Europe, and Asian countries such as China, Thailand, and Japan in particular, may have sealed their fate, the United States can avoid economic ruin. The United States can increase its TFR with Hispanic immigrants who generally have more children than white, African American, and Asian Americans. An increase in the birth rate of Hispanics and may aid future prosperity in America.
Efforts must also be made to decrease the alarming number of abortions in the African American population especially in New York City where abortions outnumber births by 416. More emphasis must also be made by utilizing strong family values, professional workforce, and the involvement of community in the respective communities of the elderly that will serve the needs of an aging population as well as ease the economic burden faced by the future workforce replacing them.