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The Diverse Aging Boomers: Who Are They? Melissa Favreault The Urban Institute January 19, 2006.
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Transcript of The Diverse Aging Boomers: Who Are They? Melissa Favreault The Urban Institute January 19, 2006.
Who are the Boomers?
• Focus on three comparisons• Early vs. late boomers (by gender)• Race/ethnicity• Education
• Focus on processes that impact work decisions/capabilities• Life expectancy / Disability/Health• Work history / Wages
• Policy needs to account for this diversity
Defining the Boomer Generation
• Born between 1946 and 1964• First wave turns 60 this year• The youngest turns 42
• Currently 77 million people • Slightly more women than men• Gap should increase as the boomers age
Demographics of the Boomers
• Most are married (71.6%)• Divorce is common (15.5% now)• Many have not yet married (10.0%)• Widowhood low (2.8%)
• Will increase as the Boomers age • Affects more women than men
Source: 2005 Social Security Trustees’ report (year 2005 estimates)
How do Early Boomers Differ from Late Boomers?
• Advantage Early Boomers?• Stronger career start for men• Lower levels of Disability Insurance
• Advantage Late Boomers?• More opportunities for women
• Education/employment
• Longer lives• At age 65, the latest Boomers can expect to
live about 1.1 years longer than the earliest
• Wage growth / technological change
Late Boomers Can Expect to Live Longer
49.9
71.6 74.6
56.1
77.6 80
0
10
20
30
40
50
60
70
80
90
1895 FirstBoom
LastBoom
1895 FirstBoom
LastBoom
Life expectancy at birth
Source: 2005 Social Security Trustees’ Report (cohort values)Men Women
Late Boomers Who Reach Age 65 Will Also Live Longer
13.2
17.418.5
17.4
2021.1
0
5
10
15
20
25
1895cohort
FirstBoom
LastBoom
1895cohort
FirstBoom
LastBoom
Life Expectancy at age 65
Source: 2005 Trustees’ Report (cohort values)
Men Women
But, Late Boomer Men are More Likely to be on DI
Source: OCACT data
Males on DI as Percent of Population, by Age and Cohort
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
34 37 40 43 46 49 52 55 58
Age
Pe
rce
nt
on
DI
First Boomers
1955
Last Boomers
Late Boomer Women are Also More Likely to be on DI
Source: OCACT data
Women on DI as Percent of Population, by Age and Cohort
0%
1%
2%
3%
4%
5%
6%
7%
8%
34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58
Age
Perc
ent
on
DI
Last Boomers First Boomers
1955
More Late Boomer Women Stayed Employed during Childbearing Ages
Source: CPS (1962-2004)
Employment Rates, by Age, for Baby Boom Women
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
16 20 24 28 32 36 40 44 48 52 56
Age
Ra
te
First Boomers
Last Boomers
1955
Late Boomer Men Are Less Likely to Work than Early Boomer Men
Source: CPS (1962-2004)
Employment Rates, by Age, for Baby Boom Men
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
16 19 22 25 28 31 34 37 40 43 46 49 52 55
Age
Ra
te
Last Boomers
First Boomers
Late Boomer Women Have Earned More
Source: CPS (1962-2004)
Average Earnings (in 1990$), by Age, of Baby Boom Women who Work
0
5000
10000
15000
20000
25000
30000
16 20 24 28 32 36 40 44 48 52 56
Age
Earn
ing
s (
in 1
990$)
First Boomers
Last Boomers
1955
Late Boomer Men Got off to a Slower Start in Earnings Terms
Source: CPS (1962-2004)
Average Earnings (in 1990$) of Baby Boomer Men who Work, by Age
0
10000
20000
30000
40000
50000
60000
16 19 22 25 28 31 34 37 40 43 46 49 52 55
Age
Ave
rag
e E
arn
ing
s
First Boomers
Last Boomers
Timing of Wage Growth Impacted These Patterns
Source: CPS (1962-2004)
Cumulative Real Wage Growth (Observed and Projected)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016
Year
Cu
mu
lati
ve
Re
al W
ag
e G
row
th
What Accounts for Differences between Early & Late Boomers?
• Timing of labor market entry• Later boomers faced greater competition• Technological change, productivity
• Rapid change in women’s roles, timing of life events• Married and had children later
• Policy • DI definitions / qualification rules
How do Boomer Outcomes Differ by Race?
• Fraction of non-whites with higher education and income has increased
• However, racial disparities persist in:• Health / Life Expectancy• Education• Earnings / Economic well-being• Marriage
Boomers’ Health Varies by Race
10.5
18.6
11.9
21.5
0
5
10
15
20
25
White Men Black Men WhiteWomen
BlackWomen
% in Poor Health Ages 45-54
Source: NCHS (NHIS 2000-2005)
White Boomers Can Expect to Live Longer than Black Boomers
17.115.9
20.719.5
0
5
10
15
20
25
White Men Black Men WhiteWomen
BlackWomen
Life expectancy at age 65
Source: U.S. Census Bureau Life Tables (2010 table)
Average Earnings Vary Greatly by Race/Ethnicity for Baby Boomers
Source: CPS (2004)
Earnings (Among Earners) Relative to Whites of the Same Sex, by Age and Race/Ethnicity, 2003
0
0.2
0.4
0.6
0.8
1
1.2
39 42 45 48 51 54 57
Age
Rat
io
Black Women
Hispanic Men Black Men
Hispanic Women
How do Boomer Outcomes Differ by Education?
• Fewer Boomers failed to complete high school than in previous generations• 11.9% of men, 10.3% of women• This is now a quite unusual group
• Those with the highest education are experiencing the greatest increases in well-being in recent years • 31.2% of men, 28.8% of women have
college or more, gap narrows laterSource: CPS (2004)
Boomer Earnings Depend Highly on Education
Source: CPS (2004)
Male Ratios of Earnings of Education Group Relative to High School Graduates, by Age (2003)
0
0.5
1
1.5
2
2.5
3
39 42 45 48 51 54 57
Age
Rati
o
College Graduate or More
Some College
Less than High School
Earnings Dependence on Education is Increasing
Source: CPS (1994, 2004)
Male Ratios of Earnings of College Graduates Relative to High School Graduates, by Age (2003)
0
0.5
1
1.5
2
2.5
3
39 42 45 48 51 54 57
Age
Rati
o
2003
1993
Life Expectancy also Varies Greatly by Education, Especially for Men
14.815.9 16
1718.5
0
4
8
12
16
20
0-11 12 13-15 16 17+
Men at age 65
Source: Richards and Barry (1998, based on NLMS)
Health and Disability Vary Greatly by Education
Source: SSA, CPS
Comparing the DI Population to the General Population Ages 19-64, 2003
0
5
10
15
20
25
30
35
40
Less than hs High school Some college College grad
Education
Pe
rce
nt
DITotal
Life Expectancy also Varies by Education, Though Less for Women
19.6 20.4 21 20.921.9
0
5
10
15
20
25
0-11 12 13-15 16 17+
Women at age 65
Source: Richards and Barry (1998, based on NLMS)
Income Inequality is on the Rise
Source: Census
Mean Household Income by Quintiles, 1967-2001 (in 2001$)
0
20000
40000
60000
80000
100000
120000
140000
160000
1967 1971 1975 1979 1983 1987 1991 1995 1999
Year
Inc
om
e i
n 2
00
1 $
Highest Quintile
Fourth Quintile
Middle Quintile
Second Quintile
Lowest Quintile
Why are Disparities (Education/ Race) so Pervasive for Boomers?
• Differences in: • Human capital• Health care access / treatment• Risk behaviors (smoking, etc)• Household structure• Replacement rates for DI
• Disparate treatment in housing, labor markets
• Cumulative nature of (dis)advantage• Increasingly global labor markets• Wage growth differentials
Vulnerability among the Baby Boomers
• Wage growth reduces overall risk • Groups with highest risk of poverty in
retirement (2025):• High school dropouts (30%)• Racial and ethnic minorities, especially
unmarried, limited education• All blacks (14%)• Unmarried blacks (19%)
• Immigrants (33%)Source: The Urban Institute’s DYNASIM
Vulnerability among the Baby Boomers
• Economic risks in later working years and retirement are associated with certain events• Widowhood• Onset / worsening of a disability• Job loss• Parental / spousal frailty
• Long-term fiscal risk Source: Johnson, Mermin, Uccello (2005)
No Single Policy Solution can Address Boomer Diversity / Risk
• Social Security/Medicare solvency• Earlier resolution means greater
possibility for sharing across generations • Later Boomers arguably at higher risk
• Protection at the bottom important• Reforms may increase retirement ages
• Given life expectancy growth
• Tax policy• Can help address increasing inequality• Low returns to work at older ages
No Single Policy Solution can Address Boomer Diversity / Risk
• Health disparities (access/outcomes)
• Short-term, non-work disability gaps• Need for support to overcome short-term
disabilities
• Stricter anti-discrimination enforcement in housing, employment
Conclusions
• Most Baby Boomers are well placed for successful late-life careers and retirement• Living longer, healthy, relatively well-educated
• Some boomers are at risk for insecurity in late-career and retirement• Less than a high school diploma, unmarried
women (especially if raised children), disabled• Certain events trigger economic difficulties
• Economic inequality is increasing• Challenge is to balance the need for an
adequate safety net for high-risk groups with appropriate incentives for those less at risk
Notes
• Data come from a variety of sources• CPS (1960 through 2004)• Census • CDC/NCHS (NHIS)• Selected literature• Social Security Administration (OCACT, Policy)• Urban Institute’s DYNASIM
• Be careful to consider age and cohort effects as distinct in comparisons• Many comparisons account for age to help
disentangle