The United States, like most of the rest of the world, is aging. By 2050, the number of people in the global 50+ cohort is projected to be over 3.2 billion, while the US portion of that number may reach over 128 million. These demographic shifts will drive a massive transformation in how we as individuals learn, earn, live and connect over longer lifetimes. It will also require a collective shift in how we as a society think—specifically, about the economic and social value of Americans age 50 and over.
The Longevity Economy can be thought of as the sum of all economic activity fueled by people aged 50 and older, including both goods and services they purchase directly and the economic activity this spending generates.
We define three channels of economic impact generated by this group as direct, indirect and induced, and this includes all the spending on:
The spending of Americans 50+ causes a ripple effect in our economy, creating further economic activity. As people 50+ purchase goods and services, money ripples through the sellers’ supply chain creating additional economic activity. In our last report, we estimated the spending of the 50+ group amounts to $5.6 trillion, with this longevity economy supporting nearly 90 million jobs—over 60 percent of all jobs held by people in the US.
In addition to spending, wealth levels also reveal the economic value of the 50+ community. Americans 50 and older hold over 80 percent of household wealth in the US. Combined with higher-than-average access to credit, this group has a greater ability to spend on goods, services, and investments than younger cohorts. In addition to its current impact, this economic strength also has major implications in terms of wealth transfer over the next 20 years.
Americans 50 and older are also staying in the labor market longer. Their productivity and creativity stands in direct opposition to many of the long-held misconceptions and stereotypes about older workers.
Our data suggests that older-worker productivity does not diminish with age, and in many cases, may even rise with age. An often cited reason is how older workers tend to be employed in more knowledge-intensive industries, where a lifetime of experience and training has resulted in a more educated and engaged (and valuable) employee. A strong foundation of knowledge and experience may also help contribute to workers aged 55-64 having the highest rate of entrepreneurial activity, with 1 in 3 new businesses in the US launched by someone 50+.
Older workers’ value, increasingly backed by such data, has broad implications for states and nations. A 2015 study by the Department of Work and Pensions in the United Kingdom found that keeping older workers active and engaged in the workforce results in a GDP boost of more than 3 percent annually. The report challenges the “lump of labor fallacy,” finding that higher employment rates of older workers actually benefits younger workers.
GDP numbers further illuminate the vital and leading economic role of older Americans. In its last report on the Longevity Economy, AARP and Oxford Economics partnered to better understand the size, scope and impact of the 50+ demographic at the national and state levels. The overarching conclusions from the national level data hold true across the states, and a few notable state level data points reinforce much of the national data.
In all but two states in the country, the portion of state GDP driven by its 50+ population is larger than the relative share of the total population. In other words, the 50+ population is driving economic activity in excess of the state average, and in some cases, by wide margins. New York is a good example of this. Residents aged 50+ are 35 percent of the state population yet they drive nearly 50 percent of state GDP for an annual total of $1.8 trillion, and generate 41 percent of state and local taxes.
In a similar way to how Disrupt Aging challenges long held stereotypes about what it means to live and age in America, research on the longevity economy takes aim at the misperception that older people are an economic and fiscal drain on the systems and communities in which they live.
In fact, their economic strength and contribution is quite the opposite. As we embark on the next edition of the Longevity Economy report due out in 2019, we expect most of these trends to have continued, and in many cases, increased.
This is good news for local and national economies—but only if we shift our thinking away from the negative-sum model that sees older people as a burden, and toward ways to further engage this human economic engine, optimizing its true economic power.