Most of the nation’s oldest population is now clustered in the Northeast and growing rapidly, according to Census data, straining medical, housing and transportation budgets and forcing lawmakers to look for new approaches. And legislators and governors are reaching the conclusion that the way to pay for the elderly is to cater to the young.
That’s because younger residents just beginning their careers make up the foundation of a tax base that can support older workers who have retired or will soon do so. And a decade of dramatic internal migrations away from Northeastern states and toward the Sun Belt and the Mountain West is putting shrinking those tax bases into the spotlight.
Eight of the top 11 states with the oldest populations are in the Northeast, according to the 2010 Census. The median age in Maine is 42.7 years; in Vermont and New Hampshire it’s above 41. West Virginia’s population has aged precipitously, too, with a median age of 41.3 years — six years older than it was in 1990.
Twenty years ago, the picture was much different. The 1990 Census listed Florida residents as the oldest in the nation, at a median age of 36.2 years. West Virginia was the second-grayest state; there, the median age stood at 35.3 years old.
In the intervening two decades, baby boomers, born between 1946 and 1964, began marching toward retirement. Boomers are less likely to move around the country than younger Americans, who, affected by the recession and the drop in economic opportunities in the Northeast and the Rust Belt, have moved en masse to Southern and Western states. Those factors have sent the median age of Northeastern states soaring.
“There’s a demographic explosion,” said Lawrence Force, director of the Center on Aging and Policy at Mount Saint Mary College in Newburgh, N.Y. “It definitely challenges us to rethink current policy. The funding cannot keep pace with the current demographics, and the reason is the policies were created when the demographics didn’t look like they do today.”
Older states are starting to feel the squeeze. In Maine, more than 1,500 seniors are on waiting lists for a state Medicaid program and home care services; by 2030, more than 25 percent of the state’s residents will be older than 65, according to data compiled by the Portland Press-Herald. More than 18,000 Mainers are turning 65 every year, the AARP reported.
In Tennessee, where the median age has risen 4.5 years in the past two decades, 22 percent of the state’s population will be older than 65 by 2020. That figure is more than a 50 percent increase over current levels.
The sharp rise of older populations means states will be forced to dedicate higher percentages of their budgets to social services. The federal government pays the costs of Medicare, the program that provides health care to senior citizens, but states subsidize housing, transportation home care and other costs. With higher percentages of seniors, states have smaller tax bases to draw from to pay for those services.
States are taking differing approaches to expand those tax bases, and to keep younger residents from fleeing to other regions.
In Maine, Republican Gov. Paul LePage blames high taxes for the exodus of younger residents. Lowering the tax burden and creating a “business-friendly” state, he said, would keep taxpayers in the state and attract new companies — and, with them, new jobs. LePage’s administration has proposed eliminating income taxes on pensions, which they hope will make Maine a “retirement destination.”
“Maine’s demographic imbalance means that there will be fewer employees for businesses, and there will be fewer customers to buy their goods and services,” LePage said in a statement. “Maine’s high-tax policies discourage young people from moving to Maine and staying in Maine, and they discourage entrepreneurs from creating jobs. That is why we cut taxes. Those efforts are working, and thousands of new private-sector jobs have been created in Maine since I took office.”
Democrats who control governor’s mansions in New Hampshire and Vermont, two other states that have aged rapidly over the last two decades, take a different approach. They tend to point to accomplishments and goals in the education arena. Their hopes are to build their tax base by keeping students, as well as attracting new employers.
New Hampshire Gov. Maggie Hassan, a Democrat, pushed for more funding for the state university system to offset revenue lost when the university board voted for a two-year tuition freeze. And the state has set up a nonprofit group, dubbed Stay, Work, Play New Hampshire, to encourage younger Granite Staters to stick around over the long term, a spokesman said.
“When these New Hampshire natives complete school, they often choose not to return, depriving our economy of talented people with the energy and skills needed to drive innovation,” Hassan said in her inaugural address this January. “We need to renew our tradition of attracting new citizens to our state, and we need to help our young people stay here, raise their own families here, and remain part of the future of New Hampshire.”
Vermont, too, is focusing on retaining natives and attracting transplants, said Leigh Appleby, a spokesman for Democratic Gov. Peter Shumlin. Vermont’s Department of Labor works with the business community to connect prospective employees with job vacancies, in hopes of keeping them in state.
Tennessee is trying to build infrastructure needed to care for its aging population. Republican Gov. Bill Haslam last month kicked off a task force on aging aimed at developing livable communities for the elderly while supporting family caregivers.
How to pay for the services needed by aging populations is a question more legislators will face going forward. Census Bureau estimates suggest up to 72 million Americans will be over the age of 65 by 2020, more than twice as high as in 2000. The elderly growth rate will slow after 2030, when the last of the boomers reach retirement age.
Advances in medical science means Americans are living longer, too; the Census Bureau says the number of Americans who live beyond 85 years will increase from 5.5 million in 2010 to 19 million by 2050. Other researchers suggest death rates will decline even faster as science improves, meaning that figure could be low.
Perhaps, Force says, there’s a more pressing, and more fundamental, question that needs to be addressed: What does it mean to be old?
“The issues that my cohort, my age group, are bringing into the aging network are not the same issues that my 95-year-old mother’s cohort brought into the aging network,” Force, 60, said.
Raising the retirement age hasn’t proved to be a politically popular solution, especially in states controlled by Democrats. But if the Census estimates are correct, both state and federal governments are going to be on the hook for billions more in elder care, and the infrastructure needed to provide that care. Paradoxically, whether it’s cutting taxes to provide jobs for recent graduates, or cutting tuition to make sure those graduates attend in-state colleges, the answer to funding the elderly probably lies in the young.