The New Demographics

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The New Demographics: Implications for Regional Planning

Frank Wen

Senior Economist


Demographics Demographics

• Fertility rate--birth • Life expectancy—death• Immigration/emigration• Population--number of people, by

age/gender/race/ethnicity• Life-cycle activities/events-from birth to death• Socioeconomic/cultural characteristics and

behaviors• Outcomes/Impacts/Implications


Total U.S. Fertility Rate: 1940 - 2000

Total U.S. Fertility Rate: 1940 - 2000

1,350

1,600

1,850

2,100

2,350

2,600

2,850

3,100

3,350

3,600

3,850

4,100

1940

1943

1946

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

Replacement Rate

TFR=2,130 in 2000, surpassing the “Replacement Rate” for the first time in 30 years


Historic California Births vs. Historic U.S. Births

Historic California Births vs. Historic U.S. Births

0

600

1,200

1,800

2,400

3,000

3,600

4,200

4,800

5,400

19331934193519361937193819391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000

0

100

200

300

400

500

600

700

800

900

U.S. Births (Left scale) CA Births (Right scale)

Baby-Boom Generation: 1946 to 1964

Baby-Bust Generation:

1965 to 1976

Baby boomlet-the Echo Boomer Generation: 1977

to 1994

CA's Baby-Bust was much shorter than for the U.S.,

CA's Echo-Boomer generation was 50% bigger

than its predecessor.

CA’s Baby Bust was much shorter than for the U.S.

CA’s Echo Boomer generation was 50% bigger than its predecessor


Estimated Life Expectancy at Birth

Estimated Life Expectancy at Birth

54

56

58

60

62

64

66

68

70

72

74

76

78

80

1929

1931

1933

1935

1937

1939

1941

1943

1945

1947

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

54

56

58

60

62

64

66

68

70

72

74

76

78

80

Both Male Female


Is Demography Destiny?Is Demography Destiny?

Demography matters!Three examples closely linked to population and age distributions:

• FBI Uniform Crime Report• Vehicle Miles Traveled (VMT)

Growth vs. Population Growth• Forecasts Building Permits


U.S. Crime Rate From 1982-2001

U.S. Crime Rate From 1982-2001U.S. Crime Rate from 1982 to 2001

(Number of Offenses per 100,000 Inhabitants)

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,00019

82

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001



Source: FBI Uniform Crime Report


State/Region/LA Crime RateState/Region/LA Crime Rate(Number of Offenses per 100,000

Inhabitants)(Number of Offenses per 100,000

Inhabitants)

Source: California Department of Justice


In the NewsIn the News


Goal Faces Tough Obstacles

Goal Faces Tough Obstacles


Percent Distribution of Arrests by Ages: 1995-2001

Percent Distribution of Arrests by Ages: 1995-2001

0

2

4

6

8

10

12

14

16

18

20U

nd

er 1

0

10 t

o 1

2

13 t

o 1

6

17 t

o 1

9

20 t

o 2

4

25 t

o 2

9

30 t

o 3

4

35 t

o 3

9

40 t

o 4

4

45 t

o 4

9

50 t

o 5

4

55 t

o 5

9

60 t

o 6

4

65 &

Ove

r

Source: FBI 1995 and 2001Uniform Crime Reports


Population Growth for Ages between 16 to 24

-500,000

-375,000

-250,000

-125,000

0

125,000

250,000

375,000

500,000

625,000

750,000

875,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40

SCAG California

Population Growth for 16 to 24 Age Group


Source: State of California, Department of Finance, Race/Ethnic Population with Age and Sex Detail, 1970-2040. Sacramento, CA, December 1998.


-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40

SCAG Region California

Population Growth for 20 t0 29 Age Group




Population Growth for the Two Age Groups

Population Growth for the Two Age Groups


Population Growth for the Two Age Groups: (25 to 29 and 30 to 34)

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

500,000

600,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40

25-29 (SCAG) 30-34 (SCAG)

25-29 (CA) 30-34 (CA)


Demography MattersDemography Matters

Three examples closely linked to population and age distributions:




Population Growth Vs. VMT Growth

26%

13%

71%

15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1980-1990 1990-2000

Population Growth VMT Growth

Population Growth vs.VMT Growth

Population Growth vs.VMT Growth

Source: State of the Region, 2002, Prepared by SCAG


Licensed Driver Rate (Percent) by Age

30%

40%

50%

60%

70%

80%

90%

100%16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

76-7

9

85+

Licensed Driver Rate (Percent by Age)

Licensed Driver Rate (Percent by Age)

Source: National Personal Transportation Survey (NPTS) 1995


Population Growth for Ages between 16 to 24

-500,000

-375,000

-250,000

-125,000

0

125,000

250,000

375,000

500,000

625,000

750,000

875,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40

SCAG California





-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40






Demography MattersDemography Matters

Three examples closely linked to population and age distributions:




Housing Supply in the 90s Lagged Employment GrowthHousing Supply in the 90s

Lagged Employment GrowthHousing Supply in the 1990s Has Not Reacted to Changes in Employment

-200,000

-175,000

-150,000

-125,000

-100,000

-75,000

-50,000

-25,000

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

225,000

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Multi-family Permits

Single Family Permits

Growth in wage & salary jobs


Housing Values Outpace Construction Costs

Housing Values Outpace Construction Costs

Housing Values Have Increased Much Faster Than Building Construction Costs Because of the Market and Demand for

Larger Units with More Amenities

90

110

130

150

170

190

210

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

90

110

130

150

170

190

210

CPI* Valuation/Permit Construction cost index**

Note: * CPI-U from BLS for LA-Anahein-Riverside CMSA, Construction cost index** from Real Estate Council of Southern California for single family residence for an average quality, 3Br/2Ba, one story, wood frame, 2 car attached garage.


Who Is Buying?Who Is Buying?First Time Buyers Versus Repeat Buyers: Average Age

1996 1997 1998 1999Los Angeles First-time buyers 32.4 34.7 35.4 33.6Los Angeles Repeat buyers 42.9 39.5 42.9 42.8Orange County First-time buyers 31.2 32.0 33.3 33.4Orange County Repeat buyers 43.8 40.0 42.2 42.9Major Metropolitan Average First-time buyers 32.4 32.1 32.2 32.0Major Metropolitan Average Repeat buyers 41.1 41.1 41.1 41.4

First Time Buyers Vs. Repeat Buyers: Average Age

25

29

33

37

41

45

First-time buyersLos Angeles

Repeat buyersLos Angeles

First-time buyersOrange County

Repeat buyersOrange County

First-time buyersMajor Metropolitan

Average

Repeat buyersMajor Metropolitan

Average

1996 1997 1998 1999

Source:"Who is Buying Home in America, 1996, 1997, 1998, and 1999," Chicago Title Corp's Annual Survey of recent home buyers.

Age


How Much Are They Paying?How Much Are They Paying?Median Price of Home Purchased

1996 1997 1998 1999Los Angeles First-time buyers $171,500 $165,000 $168,600 $173,700Los Angeles Repeat buyers $203,000 $220,000 $244,300 $261,800Orange County First-time buyers $174,800 $169,400 $166,900 $181,500Orange County Repeat buyers $235,600 $257,500 $273,300 $295,400Major Metropolitan Average First-time buyers $130,100 $135,400 $142,200 $150,300

Repeat buyers $170,700 $178,700 $189,800 $195,700

Median Price of Home Purchased

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

First-time buyersLos Angeles

Repeat buyersLos Angeles

First-time buyersOrange County

Repeat buyersOrange County

First-time buyersMajor Metropolitan

Average

Repeat buyersMajor Metropolitan

Average*

1996 1997 1998 1999

Source:"Who is Buying Home in America, 1996, 1997, 1998, and 1999," Chicago Title Corp's Annual Survey of recent home buyers.

Price


-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40


Apartment Demand Will Surge As People in Their 20s Enter the

Market

Apartment Demand Will Surge As People in Their 20s Enter the

Market



First-time Home Buyers, 25-34 Increasing Through 2025

First-time Home Buyers, 25-34 Increasing Through 2025Population Growth for the Two Age Groups: With the Highest

Jumps in Headship Rates and the Dominate First-time Home Buyers

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

500,000

600,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40

25-29 (SCAG) 30-34 (SCAG)

25-29 (CA) 30-34 (CA)



Repeat/Second Home/Vacation Home Buyers, 35-54

Repeat/Second Home/Vacation Home Buyers, 35-54Population Growth For Two Age Groups Who Most Likely are

Repeat, Second Home, or Vacation Home Buyers

-1,000,000

-750,000

-500,000

-250,000

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40

35-44 (SCAG) 45-54 (SCAG) 35-44 (CA) 45-54 (CA)



Age 55-64 Population At PeakAge 55-64 Population At PeakPopulation Age Cohort-Ages Between 55 and 64:Pass the Peak of Earning and Consumption, Empty-Nest, More

Conservative in Investing

-500,000

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40




Rapid Growth in Elderly Population is InevitableRapid Growth in Elderly Population is Inevitable

• Population aging is primarily due to:– Declining fertility rates– Increasing life expectancy

• Population aging can be measured by:– Average or median age of the population– Elderly dependent ratio:

Population age 65 and above

Population between 20 and 64


11.1%

29.7%

27.5%

31.4%

0%

10%

20%

30%

40%

50%

60%

70%

1975-2000 2000-2025

Under 20

Above 65

Share of Population Growth by Dependent Group

Share of Population Growth by Dependent Group

Click to Edit Master Title Style74.0% 81.9%

22.6% 19.1%

5.0% 2.5%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

1975-2000 2000-2025

White Hispanic Asian Black AI

Share of Population Growth by Ethnicity

Share of Population Growth by Ethnicity

-1.9% -3.8%


U.S. Annual Compound Growth Rates of Labor Force and Non-farm Wage and Salary Jobs

1.8%

2.7%

2.5%

1.9%

1.1%

1.7%

2.6%

1.6%

1.1%1.0%

0.2%

1.6%

1.9%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1950-60 1960-70 1970-80 1980-90 1990-00 2000-15 2015-25

Non-farm wage and salary jobs

Labor force

?

(BLS 2000-2010)

U.S. Annual Compound Growth Rates

of Salary Jobs and Labor Force

U.S. Annual Compound Growth Rates

of Salary Jobs and Labor Force


Who Are Baby Boomers?Who Are Baby Boomers?

Births Between 1946 to 1964Size as of 2000 83,484,080 Share of Population 30%Number of Employed Workers 63,633,707 Share of Employed Workers 46%Share of Income 54%Share of Expenditure 50%Share of Tax 57%

A Snapshot as of 2000


$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

0-19 20-34 35-44 45-54 55-64 65-74 75-84 85 andAbove

Other Retirement All Other Public Transfers

Public Education

Social Security

Health Care

Government Related Services Per Capita

Government Related Services Per Capita


Projected Share of Households by Age Cohort: 2000-2040

Projected Share of Households by Age Cohort: 2000-2040

19.4 16.3 17.7 17.8 16.4 15.6 15.6 15.2

25.120.8 18.1 17.9 19.4 19.4 18.1 17.5

20.422.2 20.8 18.5 16.5 16.7 18.1 18.1

12.716.6 17.8 18.3 17.3 15.6 14.2 14.9

9.4 10.0 11.8 13.3 14.5 15.1 14.4 13.3

8.5 9.0 9.2 10.0 11.8 13.5 15.5 16.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

2000 2010 2015 2020 2025 2030 2035 2040

75+

65-74

55-64

45-54

35-44

25-34

15-24

Source: SCAG Preliminary Draft 2004 RTP Trend Forecasts.


$44,649

$19,744

$45,498

$56,500$58,889

$48,108

$25,220

$29,349

$20,563

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

All Under 25 25-34 35-44 45-54 55-64 65 andOver

65-74 75 andOver

HH Income Before TaxesHH Income Before Taxes

Source: 2000 Consumer Expenditure Survey


Average Annual Expenditures by Age of Householders (2000 Consumer Expenditure Survey)

$38,045

$22,543

$38,945

$45,149 $46,160

$39,340

$26,533

$30,782

$21,908

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

All Under 25 25-34 35-44 45-54 55-64 65 andOver

65-74 75 andOver

HH Average Annual Expenditures

HH Average Annual Expenditures

Source: 2000 Consumer Expenditure Survey


Major Consumer Expenditure Categories

Major Consumer Expenditure Categories

13.6% 14.3% 13.5% 13.5% 13.6% 13.1% 13.8% 13.6% 14.0%

32.4% 31.5% 33.5% 33.5% 30.7% 31.4% 33.0% 31.4%35.4%

19.5%23.0% 21.5% 19.3%

19.1% 19.9% 16.6% 18.8% 13.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

All Under 25 25-34 35-44 45-54 55-64 65 and Over 65-74 75 and Over

Budget Share by Age Groups in 2000

Misc./Other

Insurance/Pen.

Cash Contrib.

Health Care

Transportation

Apparel/Service

Housing

Alchohol Bev.

Food


California Age Groups and Personal Income Taxes Paid-1997 Data

27.5%28.9%

19.6%

11.7% 12.3%

22.0%

33.8%

25.7%

12.3%

6.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

25-34 35-44 45-54 55-64 65 & Above

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000% of CaliforniaPopulation

% of CaliforniaPIT

Average TaxPaid

Personal Income Taxes Paid by Californians

Personal Income Taxes Paid by Californians

Source: California State Controller’s Office, based on data from the U.S. Census Bureau’s 1997 Current Population Survey


Implications for Long Term Planning

Implications for Long Term Planning


Trends and Forecasts Suggest:Trends and Forecasts Suggest:

The region’s economy will likely grow very slowly for a very long time after 2010, and will be prone to recession!

Living standards and per capita income will rise more slowly.

The region, like the U.S., will face fiscal challenges. Education and workforce training policies should

encourage increasing labor force supply, and put more emphasis on on older workers.


Trends and Forecasts Suggest:Trends and Forecasts Suggest:

To ensure that long term planning is on track to address “who are we becoming and what challenges are ahead,” future trends—planners and decision-makers must take into account not simply growth projections, but the components and characteristics of the forecasts (e.g., ethnic and age cohort distributions).


It is prudent to conduct systematic evaluation of long-range transportation plan components in order to assess impacts of slow future economic growth.

Revenue forecasts need to take into account the challenges resulting from population aging and demographic shifts.

Transportation demand forecast models need adjustment to reflect the higher proportion of elderly households in the future.

Long-range transportation planning should emphasize safety, security, and accessibility goals-which which will become more important to an aging society.

Transportation PlanningTransportation Planning


Labor Force Training & Workforce Investment

Labor Force Training & Workforce Investment

The region’s economy will likely grow very slowly for a very long time after 2010, and will post great challenges to the region.The core of this concern is originated from population aging and lack of labor force growth.Labor force training and workforce investment play critical roles in addressing these challenges.Education is the key.In the long term, efforts should be targeted on population groups with the lowest labor force participation rates, the least educational attainment, and highest unemployment rates.The earning disparities between gender, age, and race/ethnicity should be carefully investigated to correct likely “inequality”. Immigration policy needs to be adjusted to attract high-quality labor force.


What Are the New Demographics?


Tomorrow’s elderly will behave differently from today’s elderly--Baby Boomers will be different from their parents. But how?

Some of the elderly workers will stay longer in the labor force. But to what extent?

Will Baby Boomers age in place? What are their next moves?

Where will young Hispanics and others in the workforce be able to afford apartments and starter homes in our supply constrained, high priced housing markets?




Will immigrants continue to cram into crowded quarters as they come to the region for jobs?

Are mixed use developments an emerging trend driven by new lifestyle demands of empty-nest boomers in their mid 50s?

Will the different lifestyle and housing needs of aging Baby Boomers and young Hispanics shape development patterns and affect voting decisions on land use issues?


SummarySummary Demography is destiny! The region’s population is aging and will be more

diversified Population growth by age cohorts provides valuable

information on timing and phasing of future growth challenges

The slow growth of employment after 2010 is particularly worrisome, the region needs collectively to communicate this demographic trends, to build up consensus, and to assess the likely impacts in every aspects of our life and regional planning


SummarySummary

How do we assure social equity goal achievement and a healthy economic structure for the region?

An aging society will also generate new opportunities--different growing industries, ethnic markets, and communities

Population aging will pose challenges and cause crisis, however, challenges and crisis can be met with a reasonable set of policy choices and early-on planning.


Thank You!Questions?

Comments?

Visit us on the Web at:http://www.scag.ca.gov/economy

The New Demographics

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