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Aging and the U.S. Economy: How a Shrinking Workforce and Aging Related Disorders Slow Economic Growth

August 25, 2017

The U.S. economy is facing the crisis of an aging workforce that has the potential to harm the economy as more people begin to exit the workforce than enter it. By 2030, it’s predicted that 20% of U.S. residents will be aged 65 and older, compared to only 13% in 2010 and 9.8% in 1970. [1] The U.S. fertility rate is also at a historic low, sitting at 62.0 births per 1000 women aged 15 to 44. [2] This combination leads to a slowdown in the replacement rate, and makes it difficult for the U.S. to sustain or increase its economic growth. Additionally, an aging population can have other drags on the economy, especially the costs associated with neurodegenerative disorders and other diseases associated with aging.

An aging population impacts economic growth in a few ways, through a decrease in labor productivity and slower labor force growth. It’s predicted that a 10% increase in the portion of the population over age 60 leads to a decrease in the growth rate of GDP per capita by 5.5%. About one third of that decline arises from a slowed labor force growth, while the other two thirds stems from the decline in labor productivity. [3] With the first year of the baby boomer generation turning 65 in 2011, the decrease in the growth rate is only expected to increase over time, especially as there are fewer children being born to help increase the size of the workforce.

Image: Rates of participation in the labor force by age over time, Source: Pew Research Center.Image: Rates of participation in the labor force by age over time, Source: Pew Research Center.

Additionally, there are other drags on the economy that stem from aging, with one of those being neurodegenerative disorders. Alzheimer’s disease is prevalent in 6% of the U.S. population aged 65 and older, while Parkinson’s disease is prevalent in 5% of the U.S. population aged 80 and older. [5][6] A study done in China simulated that there will be an increase in Alzheimer’s prevalence from 6-28 million people from 2011-2050, and that the elimination of Alzheimer’s would save China $8 trillion dollars over that time frame. [7]
Another factor contributing to an economic slowdown is that of cardiovascular disease. By age 65, a person’s cardiovascular disease risk is 80%, and it’s expected that total cardiovascular costs will reach $1.1 trillion by 2035. [8] 123.2 million Americans are projected to have high blood pressure by 2035, with most of them being over age 65.

However, the budget for FY 2018 does not seem to offer any substantial relief for either of these issues. The National Heart, Lung, and Blood Institute is projected to lose $575 million, an 18.5% drop in funding from FY 2017 to 2018. The National Institute on Aging, which deals with neurodegenerative diseases, is not faring much better, at an 18.4% drop in funding from FY 2017 to 2018. [10] These potential savings are dwarfed by the comparatively miniscule amount of funding that research for these diseases receive, and increased investment is imperative to help discover new treatments and to lower the costs needed to treat these diseases.

Being able to find cures and treatments for these common and expensive diseases is one way to counteract the negative effects of aging on the economy. If people can remain in the workforce longer and be more productive while they’re there, that could potentially slow the decrease in GDP growth as the workforce ages. It would also allow workers to stay in the workforce for longer if they desire. This increased number of people in the workforce, the increased productivity, as well as saving money that is currently being used to treat these diseases would be necessary to counteract the negative effects of aging on the economy.

However, it is much more difficult to find a solution for the lower fertility rate. An essential first step would be to determine why the rate is so much lower now than it has been in the past, and why it continues to decrease from year to year. A workforce cannot sustain itself if it does not have labor to replace those that are leaving the workforce.

As the baby boomer generation continues to reach retirement age and begins leaving the workforce, a solution must be found to replace the retiring workers or to maintain an elevated level of productivity in the workplace. Investment in diseases associated with aging like Parkinson’s, Alzheimer’s, and cardiovascular disease is essential, especially as those diseases continue to cost the economy billions of dollars per year. Additionally, a thorough examination of the reasons for the lower fertility rate is necessary to determine the best course of action for stabilizing the replacement rate, and ultimately providing a long-term solution for one of the biggest issues facing the economy.

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  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


  [1] Colby, Sandra L., Ortman, Jennifer M. “The Baby Boom Cohort in the United States: 2012 to 2060.” United States Census Bureau. Last modified May 2014. https://www.census.gov/prod/2014pubs/p25-1141.pdf

  [2] Cha, Ariana Eunjung. “The U.S. fertility rate just hit a historic low. Why some demographers are freaking out.” The Washington Post. Last modified June 30, 2017. https://www.washingtonpost.com/news/to-your-health/wp/2017/06/30/the-u-s-fertility-rate-just-hit-a-historic-low-why-some-demographers-are-freaking-out/?utm_term=.1034378dce0f

  [3] Maestas, Nicole., Mullen, Kathleen J., Powell, David. “The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity.” The National Bureau of Economics. Last modified July 2016. http://www.nber.org/papers/w22452

  [4] “Number of older Americans in the workforce is on the rise.” Pew Research Center. Last modified January 7, 2014. http://www.pewresearch.org/fact-tank/2014/01/07/number-of-older-americans-in-the-workforce-is-on-the-rise/

  [5] Takizawa, Claire et al. “Epidemiological and Economic Burden of Alzheimer’s Disease: A Systematic Literature Review of Data across Europe and the United States of America.” Journal of Alzheimer’s Disease. Last modified July 23, 2014. http://proxy.library.upenn.edu:2131/download/journal-of-alzheimers-disease/jad141134?id=journal-of-alzheimers-disease%2Fjad141134

  [6] Kelley, Gordon R. “Parkinson’s Disease Incidence and Prevalence” Remedy’s Health.com Communities. Last modified September 29, 2015. http://www.healthcommunities.com/parkinsons-disease/incidence-prevalence.shtml

  [7] Keogh-Brown, Marcus R. et al. “The Impact of Alzheimer’s Disease on the Chinese Economy.” EBioMedicine. Last modified February 4, 2016. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4776062/

  [8] “Cardiovascular disease costs will exceed $1 trillion by 2035.” RTI International. Last modified February 14, 2017. https://www.sciencedaily.com/releases/2017/02/170214162750.htm

  [9] http://www.freestockphotos.biz/stockphoto/16730

  [10] “HHS FY 2018 Budget in Brief – NIH” U.S. Department of Health and Human Services. Last modified May 23, 2017. https://www.hhs.gov/about/budget/fy2018/budget-in-brief/nih/index.html


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