PRB Discuss Online: PRB's 2010 World Population Data Sheet: Fewer and Fewer Workers to Support Aging Population
(August 2010) More than 80 million people are added to the world’s population each year, yet many countries are facing a shrinking pool of workers, generally those ages 15 to 64, to support the population age 65 or older. This demographic trend jeopardizes pension guarantees and long-term health care programs for the elderly. Most of the annual population growth occurs in the less developed countries where fertility rates have remained relatively high. Many of these countries face daunting challenges—ensuring sufficient food, housing, jobs, and basic health care for their populations. PRB’s 2010 World Population Data Sheet highlights the increasingly skewed ratios of workers to retirees caused by population aging as well as the factors driving demographic change around the world.
During a PRB Discuss Online, Carl Haub, PRB senior demographer and author of the World Population Data Sheet, and Linda Jacobsen, vice-president of Domestic Programs at PRB, answered participants’ questions about global aging and current population trends.
For more information on this topic from PRB, see:
2010 World Population Data Sheet
World Population Highlights: Key Findings From PRB’s 2010 World Population Data Sheet
Aug. 4, 2010 1 PM EST
Transcript of Questions and Answers
Arshad Mahmood: Family planning program is being praised through out the world specially in the developing countries or the countries where fertility level is too high. On the other side the countries that adopted FP program at early stages are victim of ageing and depopulation and are taking steps to increase their population otherwise their race will be effected due to immigration. If their decision was wrong then the other nation should stop FP program or they should contiue?
Carl Haub: Arshad, I think that the social and economic situation between developing countris and Europe are so different that it’s difficult to make a comparison. Developing countries began with very high birth rates that the developed countries had not had for centuries. Although PRB does not actually make policy recommendations, it would seem that countries that have policies to reduce very high birth rates would want to continue to encourage FP use.
Robert Prentiss: Why is the job market so stagnant in the U.S.? Doesn’t the emphasis on cutting pension and safety nets detract from innovations in job creation? Some people feel that while the numbers are real, interpretations are mostly politcized. What can be said usefully beyond the spin?
Linda Jacobsen: Historically, of course, the U.S. job market has not been stagnant – especially compared with European countries. However, in addition to the economic recession, one demographic factor that has negatively impacted the U.S. job market is the decline in labor mobility due to the housing crisis of the last several years. Many people are unable to sell their homes and move to better job markets because their mortgages are under water – they owe more on their mortgage than their house is now worth. Recent data showed that only 1.6 percent of Americans moved between states during the period from March 2008 to March 2009. This is the lowest level of mobility observed in the last 50 years.
Paul: What is the role of immigration in this aging scenario?
Linda Jacobsen: In the short term, immigration can help to boost the working-age population and decrease the dependency burden of the older population. In the long term, immigration can make the age structure younger if immigrants have higher fertility than the native-born. Immigration has had both of these effects in the U.S. However, in most countries, including the U.S., it would not be possible to raise immigration to the level required to completely offset the costs of rapidly aging populations. So, it may be part of the solution, but not the only solution. For a more detailed discussion of this topic, you might want to read the PRB Blog by Marlene Lee, “Immigration Numbers Do Not Add Up to an Easy Social Security Solution”, as well as comments by Dowell Myers and Lee’s response to Myer’s comments. Here is a link:
Mario Enrique La Riva Málaga: How to use the encrease of population as a strenght instead a burden?
Carl Haub: Mario, the only way to do that is to ensure people are healthy, educated, have skills and then provide jobs. But many developing countries have only been able to do all those things for a segment of the population.
Genara Rivera-Araujo: Less developed countries that haven’t get economic growth that allows them to attend their populations needs, have still problems of unemployment that affects labour force and don’t let the potential workers contribute to increase their country economic resources. Additionally, in those countries there aren’t politics plans and social programs for the elderly.
What can the present labour force do? Could the political class improve this situation?
Carl Haub: Genara, I think you’ve right on it, it is up to the political class to do it. Often substantial foreign aid is needed. In India, the government has been working to uplift its vast poverty population and has some good success but it also requires the cooperation of the state-level governments.
Issa Almasarweh: Although women live longer life than men, the regulations in many countries still allow women to retire at earlier ages than men; how this will affect the elderly support ratio, social security funds and pension guarantees?
Carl Haub: Issa, it definitely affects the ratio, along with those of both sexes who can retire earlier with private savings. Raising retirement ages is on the agenda of many countries but it can usually only be done in slow increments of retirement ages, if at all.
Elizabeth Elmore: How does the increase in productivity per worker offset the effects of the fewer number of workers?
Carl Haub: Elizabeth, I don’t know the answer to that one but I do know that in Europe, especially in germany, automation and some imaginative machines has redusced the number of workers in manufacturing and construction. But robots don’t pay social taxes.
Linda Jacobsen: It is generally accepted that faster growth in wages would improve Social Security finances even with the prospect of a declining number of workers. Presumably, more productive workers get a better wage rate. Faster wage growth increases Social Security revenues immediately.
Steve Campbell: Do you know of any reliable estimates of the net contribution of undocumented workers to Social Security (i.e, payments to SSA less benefits from SSA)? Does SSA keep records of payments into fictitious accounts? Also, do you know of sources of age/sex cohort data for regional (intranational) migration, especially for relocating retirees within the US? Finally, do you know of any sources of detailed age/sex cohort data on international migration, including any specific country-to-country data?
Linda Jacobsen: I haven’t seen any estimates of the net contribution of unauthorized workers to Social Security. However, according to June 2010 testimony before Congress: “The Internal Revenue Service estimates that unauthorized immigrants paid almost $50 billion in federal taxes between 1996-2003; and the Social Security Administration (SSA) estimates that they paid another $41 billion in Social Security and Medicare taxes during this period.” Here is a link to this testimony from a Senior Policy Analyst at the Migration Policy Institute:
http://www.migrationpolicy.org/pubs/RosenblumtestimonyDeficitCommission-June2010.pdf. With respect to sources of data on migration, a comprehensive overview is provided in the PRB publication, “Immigration: Data Matters”, available on PRB’s website: https://www.prb.org/wp-content/uploads/2010/08/immigrationdataguide.pdf. You may also want to visit the Census Bureau’s website to look at the migration data available from the American Community Survey (ACS). Here is the link to a page with an overview of state-to-state migration flow data: http://www.census.gov/population/www/socdemo/state-to-state.html. There are also ACS tables available through the Census Bureau’s American FactFinder that show migration by detailed age, and migration between regions (but not by age).
Sanjay Mishra: Aging is one of the most sensitive and hearfelt social problem in developing [countries] like Indian subcontinent, where Goverments also have no special hospital/clinics for the elderly. [In] the name of culture and family respect elderly people are ill treated and abused.In India I can state that there is nothing for aging people and very less [understood] about [their] fast changing health status, I especially emphasise to know what actions are being taken for the countries where Aging people [are in] small earning households, how can pressure be made on them to improve the status?
Carl Haub: Sanjay, I’m quite familiar with what you say about India. The government, as you know, is intiating a pension-for-all system as a part of the new national ID card system but that won’t help today’s elderly. Perhaps a quick fix is to recognize that the current estimate of the poverty population is far too low and include more elderly in it so they can receive Below Poverty Line cards?
Dr. Anima Sharma: Dear Mr. Haub and Ms. Jacobson, The demographic profile is changing amazingly, world over. Due to the improvement in Medical, Nutritional, and several other facilities related to health and hygiene etc., the proportion of old age population is increasing considerably. In SE-Asian countries, especially in India, … the number of young population is increasing but the proportion of the old age people is equally high. My understanding is, that due to the changing socio-economic conditions owing to changing job profiles and high job mobilities viz. a viz. changing value system, most of the young people are unable to pay full attention to the elders of their family. Also, in the present times when materialistic aspects have gained more importance then young people find it a wasteful activity to spend time on as un-productive activity as taking care of the elders. My opinion is that instead of falling in the vicious cycle of contradicting or challenging the behaviour of the youths … we should encourage the organizations working for the aging people. … We … should find out the ways to adjust with our environment and surroundings.
Carl Haub: Dr. Sharma, I have certainly observed what you have described in major urban areas, but I wonder if neglect of one’s elders is growing in the villages? NGOs supporting the elderly should definitely keep their welfare high on the national agenda.
Mario Donoso: Why [do] working age people (20 to 65 years) have to support old ones? During our working lives, if we pay SS and medicare, why [do] younger people have to suport the old ones? The problem is different: goverment irresponsability, beacuse they use the funds of SS and medicare of each of us to pay [immediate] deficit needs!
Linda Jacobsen: You are correct, Mario, that most Social Security-type programs around the world are “pay as you go” systems. From a practical standpoint, it would be hard to initiate such a program that was not “pay-as-you-go” , because you would not be able to provide any benefits until some years after the program was enacted because you would have to wait until everyone had paid into the system for some years in order to provide any benefits. Also, it is important to note that not everyone who is age 65 or older is retired. In fact, labor force participation rates among those ages 65 and older have been rising since the late 1990s, and this also helps to offset the elderly dependency ratio.
Ghazy Mujahid: Do you think fertility rates will tend to rise, particularly in the developed countries, and for what reasons? If so, increasing fertility rates will add to the dependency burden as the child population starts increasing. For 15-20 years following an upward trend in fertility, that is until the increasing number of children start reaching working age, we could expect fewer and fewer workers having to support not only a larger number of older persons but also more children. While increasing fertility would have a favourable effect on the demographic balance in the longer run, during the next 15-20 years it would contribute to aggravating the dependency burden. What do you foresee as the implications of this and how whould these have to be addressed?
Carl Haub: Ghazy, At the moment, it does not seem that large increases in very low birth rates to, say, 2 children or more is very likely. Socities and young peoples’ view of marriage, career, family, etc. have really changed. I would think some increase right now would help national budgets.
Ghazy Mujahid: Has population in countries where immigrants have contributed a significant proportion of the total increment in population (like USA and Canada) remained distinctly “younger” than in others such as Japan? In your opinion, are there any special issues which can be expected to emerge as a result of the inevitable aging (already started) of the various migrant communities and how would these have to be addressed?
Carl Haub: Ghazy, Yes, immigrants have definitely helped keep countries “younger,” but as you say, immigrants do not stay young forever. That is part of the projected decline in the elderly support ratio between now and 2050. It would seem the best solution would be to raise the retirement age, something that has been done in the US with little protest.
Cecily Westermann: First, I am happy to see that the U.S. Total Fertility Rate has been reduced from 2.1 to 2.0. (I will be happier when/if I see it reach 1.5.) As far as “fewer and fewer workers to support aging population” this is true. Initially, the intent of social security old age benefits was to support retired WORKERS. Now the program has been changed to also benefit non-working spouses and people who do not contribute to the system for a significant period of time. [Four] steps would help to increase income for Social Security Old Age benefits.
(1) Remove the earnings cap for FICA deductions completely.
(2) Phase out non-working spousal benefits … Everyone should be responsible for their own contributions.
3) Currently, one must contribute to the social security system for 40 quarters (10 years of significant work). This requirement should phased up to 100 quarters (25 years)…
4) The government should not able to “borrow” money [from] the Social Security Old Age Benefit fund.
Linda Jacobsen: Thanks, Cecily for sharing your views and outlining some potential solutions for the U.S. Social Security program. Participants may also want to visit Retirement Policy page on the Urban Insitute’s website to read about additional potential policy recommendations for Social Security: http://www.urban.org/retirement_policy/index.cfm
Sri Moertiningisih Adioetomo: How can developing countries with abundant young wokers (as a result of demographic trnsition) … help solving this problem? Migration replacement? Global partnership to solve problems of lacking in number of workers in developed countries and solve unempeloyment in developing countries?
Carl Haub: Yes, they could, if the developed countries are willing to accept significant numbers of immigrants — not always the case. But the immigrants have to have usable skills. That can unfortunately contribute to a brain drain. Global partnerships would be the best but perhaps too utopian?
Brian McGavin: Why is PRB feeding the spectre of aging populations being a huge burden, rather than taking a more balanced view on demographic support ratios of young and old. Young people generally cost more in support in many ways – Education,crime, unemployment etc. To maintain current demographic ratios the developed world needs to enable immigration and birth rates to rise to totally unsustanable levels, when they are bad enough already. An adjustment of population demographics which will for a while see more older people, is necessary if we are to have any chance of tolerable survival on the planet and will cost a fraction of the money doled out to support failed bankers, not to mention the cost of ecological and resource collapse. PRB is also promoting the idea that Europe’s population is shrinking, when in many countries it is not. Eurostat data in July 2010 shows that while the union’s population topped half a billion this year, 900,000 of the 1.4 million growth in 2009 resulted from immigration. Why is PRB also reinforcing the misleading prediction of 9.2 billion people by 2050 based on rosy assesments of birth rate decline in developing countries, rather than the the more accurate prediction based on current actual birth rates that the global population will rise to over 11 billion by 2050. (UNPD news release March 2009.
Carl Haub: Brian, Aging in developed countries has reached unprecedented levels and continues to increase. The most extreme case is Japan with 23 percent aged 65 and over at present. In Germany, it’s 20, in the UK, it’s 16. This will most certainly place great pressure on budgets to meet committments on pensions, health care for the elderly and long-term nursing care. I would think this will be far more expensive than funds needed to support young people but it would be interesting to see figures on that. As far as projections are concerned, we do use projections that make the common assumption that fertility will decline in developing countries. We point out that that is entirely dependent upon the rising use of FP and that that will not happen everywhere. The UN projection you cite is the “constant fertility variant” and i think for some African countries, that may turn out to be true.
Linda Jacobsen: Carl, with respect your comment about wanting figures for spending, it is certainly the case in the United States that government spending on children, including education, is much lower than government spending on the elderly. Of course, this is because much of the cost of raising children in the U.S. is borne privately. For a more detailed discussion and data, see the PRB Report “Government Spending in an Older America”.
Marian Starkey: At some point (unless we rely on infinite population growth) the old-age dependency ratio will have to increase, at least temporarily, to accommodate the baby boomers. Government incentives to raise fertility rates are only mildly successful. And encouraging larger families solely to support a growing elderly population is the ultimate Ponzi scheme. What are some of the creative economic solutions that low fertility countries are implementing? How can economies support aging populations without relying on continued population growth?
Carl Haub: Marian, Most efforts to raise birth rates involve increasing cash payments, promising to improve daycare services and to make life easier for two-career families. Cash payments have seen some modest success, as in Russia, but even then fertility is low. I should not over-emphasize the countries have made, since a fair amount remains on “wish lists.” And they are expensive. Spain, which had been giving 2,500 euros for a birth from 2007 now removed that payment from the national budget for 2011 for austerity reasons. As far as creative methods go, South Korean ministries have been turning the lights off at 7:00 PM so workers would go home and hopefully procreate! In answer to your last question, I think raising the retirement is the only prectical immediate way but that is difficult to do in Europe where people have been paying heavy taxes into the system.
J Kishore: Dear Carl Haub and Linda Jacobsen, This is my interpretation that [while we] have current model of development where resources are consumed without thinking about future and with more prices rise, loosing family system, inequity, etc., the vulnerable population is going to suffer more and more. We have to change the concept of development.
Carl Haub: If you mean that a small segment of the population consumes more and more, while the poor continue to be deprived, that is very valid. India has tried to tackle this with BPL cards and is planning on expanding the program. But it would be far better to provide education and job skills to the poor — assuming jobs will be there. bidyadhar dehury: “fewer and fewer workers to support aging population”. why this fewer? is this a possible reason that this happens only in the societies in which the “window of opportunity has already experienced”? or now a days most of the students opted for higher education so that they could not get chance to support the aging population at their earlier life? please put some lights on it.
Carl Haub: It’s really due to lower birth rates and, in the case of developed countries, very low birth rates. Women in Germany now have 1.3 children on average and, in Taiwan, only 1.0.Those numbers assume today’s birth rate will stay the same but, at the moment, that’s actually happenning.
Diego Iturralde: Greetings from South Africa where TFR has recently dropped to 2.4 but employment continues to be at around 25% This has aroused alot of debate in the local media as to whether SA needs a lower birth rate to deal with issues of unemployment. My view is that historically SA’s TFR decreased due to family planning programs without ensuring that development in people’s lives increased as well. This was clearly due to the apartheid regimes way of thinking. Would you agree that in a developing society like SA that fertility rates of less than 2.4 are needed in order to stimulate economic growth and fight unemployment or is the answer to increasing unemployment more complex?
Carl Haub: Certainly a lower birth rate would require fewer available jobs needed to strive for full employment. South Africa is a case where fertility declined but many people’s lives did not really improve. One way to create good jobs quickly would be to actively encourage foreign direct investment, it has been effective in India.
Erica Dhar: Re: Cecily Westermann’s Second point of phasing out spousal benefits, won’t this put an extra financial strain on women who were/are the family caregivers for their children? This seems particularly relevant in socities that still have more traditional family structures.
Carl Haub: Thanks for chiming in on this and a good point. Most developing country societies don’t have pension programs so it would not be relevant in those.
Linda Jacobsen: Many policy analysts have pointed out that some current features of the U.S. Social Security program are anachronistic given the changes that have taken place in American families since Social Security was enacted. In particular, more people are unmarried, more children are born to parents who are not married, and dual-earner couples have increased relative to single-earner couples.Under the current program, single people are not eligible for spousal or survivor benefits and dual-earner couples may receive less in lifetime benefits relative to the taxes they paid than single-earner couples do. In other words, there are a range of equity issues that have been raised with respect to the current program, and policy experts have proposed restructuring spousal and survivor benefits rather than simply eliminating them. Ms. Westermann’s comments also do not address the issue of disabled persons who are unable to work.