A recent paper on American demographics bodes ill for the country's economic and social health.
The report by Lyman Stone, adjunct fellow at the American Enterprise Institute, finds that while the American population is becoming older, life expectancies of working-age people are declining. This trend, in tandem with the straining of the country's institutions, has serious implications for America's future.
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According to Stone's analysis, the American population is becoming older as the baby boomer generation enters their senior years. This trend would not be very surprising, but it has been augmented by significant increases in the mortality rate of working-age adults, who suffer from what Stone refers to as "deaths of despair." The main force driving death among this population is the spike in recent years of drugs and alcohol abuse, and to a lesser extent suicide, murder, and traffic accidents.
The quantitative increase in mortality rates is far from paltry. Stone writes that "the odds that a 32-year-old will die in a given year rose by almost 25 percent between 2012-2014 and 2015-2017."
The economic and social implications of this pattern are troubling. The report explains how growth of the labor force has been stunted by mortality just as the older segment of the American population enters retirement and becomes a fiscal strain on government budgets.
America's demographic challenges are compounded by flaws in the country's institutions, for which Stone blames policy choices made by the boomer generation and their parents. Once dynamic, America's institutions are now "hidebound by an increasingly heavy weight of rules and regulations." The paper cites stringent regulations on land and work, high incarceration rates, higher-costing but less valuable education, and growing debt as major examples of institutional degeneration that will hinder the country in the future.
Stone warns that this combination of demographic trends and institutional weakness will create a future in which we "will see a rapid increase in fiscal pressure on taxpayers, all to pay for the past, not the future." Pressure on local, state, and governmental services will be massive. The challenges, Stone writes, may be even greater "if fertility is lower than expected, or if prime-age workers die at a higher rate while older people live longer."
The report's findings are bleak, but Stone believes there are policy measures that can be taken to give the United States a better outlook. Regulations can be eased in order to give working-age people better economic prospects. This can be done by repealing land use rules and loosening certain work licensure requirements. The government can also reduce incarceration. Young people can be encouraged to take vocational training rather than become indebted for college degrees that may prove of little value. While Stone admits such measures are hardly politically feasible, government can cut back commitments to providing benefits and entitlements such as Social Security.
But, Stone emphasizes, the responsibility for creating a brighter future for America lies not just with the federal government. Policy responses must be driven as well by lawmakers at the state and local levels who are willing to face and address the dangers foretold by America's demographic trajectory.