AARP commissioned Oxford Economics to produce state level economic contribution analysis of the Longevity Economy in the US. The "Longevity Economy" is the collective economic contributions by those people ages 50 and older – the sum of all economic activity driven by the needs of Americans aged 50 and older including purchased products, services, taxes, and labor force participation. Too often, this cohort is perceived as an economic burden and lackluster-consumer. The longevity economy is disrupting these myths and perceptions with national, state, and local economic data that show quite the opposite. Gross Domestic Product (GDP) is the best way to measure a country, state, local economy. GDP is the total value of everything produced by all the people and companies in the country, state, or locality.
(All reports in PDF format)
Key highlights of these reports include:
- If examined on a global scale, the Longevity Economy is actually larger than any other country’s economy except those of the United States and China. Americans aged 50 and older make up 51 percent of the over-25 population and are expected to rise to 54 percent by 2032.
- Excluding health care, direct spending on consumer goods and services by 50-plus Americans amounted to $3.0 trillion in 2012 – half (51%) of all spending by Americans ages 25 and older. However, the longevity economy accounted for roughly $1.6 trillion in health care spending – 73 percent of the national total, thereby driving the growth and direction of the industry.
- The longevity economy has a big impact on technology spending. Forrester Research found that people ages 46-64 made up 40 percent of technology purchases and that they shop online nearly as frequently as younger consumers – and they spend more than younger consumers on technology-type products and services.
- The 50-plus contribution to GDP amounts to $7.1 trillion. Overall, spending by older Americans supports more than 98.9 million U.S. jobs – about 69 percent – and $4.5 trillion in labor income (65%).
- Labor force participation rate for American workers ages 55 and older was 41.6 percent in 2013. If this rate continues to rise as anticipated and exceeds the baseline forecast by 2.5 percentage points, by 2020 the U.S. could see an additional $103 billion in economic output. Additionally, almost a quarter (23%) of new U.S. businesses started in 2011 were started by entrepreneurs ages 55 to 64 and those ages 45 to 54 accounted for an additional 26 percent of new businesses.
- The federal, state and local taxes generated by the economic impacts attributed to the longevity economy amount to $987 billion in federal and over $761 billion in state and local taxes.
The core impact results are from an economic impact model built by Oxford Economics using IMPLAN economic software (see http://www.implan.com) to calculate direct, indirect and induced impacts of spending by Americans ages 50 and older – also known as the Longevity Economy – in each U.S. state. Results from the core model are reported in 2013 dollars. In addition to the core model, data from the 2012 American Community Survey were used for the geographic distribution of the 50-plus population and their labor force participation and occupational distribution. Population by age band in 2013 and forecasted out to 2040 are from the U.S. Census Bureau, and from the Weldon Cooper Center for Public Service at the University of Virginia.
Relative spending by product category by households headed by those of different ages is derived from the Bureau of Labor Statistics’ Consumer Expenditure Survey and from data from the Centers for Medicare and Medicaid Studies. These relative spending levels of different households are then combined with estimates of the number of such households in each state, which was estimated using U.S. Census Bureau state-level population figures by age. Total spend by product category is then scaled to state-level category totals from the experimental state-level Personal Consumption Expenditures series from the Bureau of Economic Analysis, with the resulting spending of those over age 50 serving as the primary input to the IMPLAN models. GDP, jobs, labor income, and state & local tax impacts were calculated using IMPLAN and benchmarked against state-level totals from IMPLAN. For more detail on the methodology, please contact Jennifer Sauer at AARP at JSauer@aarp.org or (202) 434-6207 or go to Oxford Economics https://www.oxfordeconomics.com.