There is a broadly held common wisdom in Washington that is factually wrong. No one will say it like this, but once you remove all the niceties its core economic claim is the following - "we cannot afford all of these old people."
But what if older people in the United States contributed a larger share of total U.S. Gross Domestic Product (GDP) than their share of the population? That is in fact the case, according to the economic consultancy, Oxford Economics. The data show that people over 50 years of age are only 35% of the U.S. population, but contribute 43% of total U.S. GDP.
Now we have additional insight into the Longevity Economy in each of the 50 states, from a new study by Oxford Economics. Each state report illustrates the percentage of people 50+ living in each county, state population growth by age through 2040, the impact of the Longevity Economy on State GDP, jobs, income, and state & local taxes, consumer spending, workforce participation, and their occupations.
The broad conclusion at the national level also is reflected across the country at the state level, but with some interesting differences. Every state in the country, with the exception of two, has 50+ populations that drive a share of State GDP larger than their share of the state population.
Several states stand out where the 50+ have a positive disproportionate impact on State GDP by 10 to 15 points. At the top of the list are Nevada and New York, where the 50+ populations are 34% and 35% of state totals, but drive 49% and 50% of State GDP – an economic impact 15 points greater than population share. This is followed by Florida, where a larger 50+ population accounts for 40% of total state population, but drives 54% of total State GDP. Interestingly, Utah has a smaller 50+ population, accounting for just 25% of the total population, but it also has a positive 12-point impact, accounting for 37% of State GDP. At the bottom of the list is Wyoming, whose 50+ population is 35% of the state population like New York, but drives just 34% of State GDP. While there is no correlation, one of the few categories in which Wyoming is in the top 10 is the share of 50-64 year olds who work in government jobs.
One interesting correlation appears to be that between positive economic impact and participation in the work force. Every one of the 12 states that have a positive 11-point-or-better impact on state GDP compared to their 50+ share of the population, all have workforce participation rates greater than 50 percent, which is the average for the country. There is one exception, Utah, which has just 42% of its 50+ population in the workforce. Check out the report. There are lots more interesting insights.
The takeaway? Not only can we afford an aging population, we need these active economic actors because when it comes to their impact on the economy, they are punching above their weight.
Oxford Economics is one of the world's foremost independent global advisory firms providing reports, forecasts and analytic tools on 200 countries, 100 industrial sectors and over 3,000 cities. Their economic and industry models and analytical tools provide unparalleled ability to forecast external market trends and assess economic, social, and business impact. They are headquartered in Oxford, England with regional centers in London, New York, Singapore and offices in Belfast, Chicago, Dubai, Miami, Milan, Paris, Philadelphia, San Francisco, and Washington DC. For more information, please go to their website at: https://www.oxfordeconomics.com. For more information on the reports generated for AARP, please contact Jennifer Sauer at JSauer@aarp.org or (202) 434-6207.
Oxford Economics. The Longevity Economy: How People Over 50 Are Driving Economic and Social Value in the US. Washington, DC: AARP Research, August 2017. https://doi.org/10.26419/res.00172.001