Connecting state and local government leaders
Currently, none are in that demographic category.
Federal, state and local government officials haven’t been talking much during the midterm election cycle talk about the fiscal stresses governments face from aging populations, but it will be difficult not to discuss it more in the coming years.
According to the U.S. Census Bureau, by 2026 unprecedented aging demographics will push 17 U.S. states into a category none are currently in: “superaged.” That includes Florida, Michigan, Pennsylvania and Ohio.
Fitch Ratings, in a statement released on Thursday, noted that societal aging in the United States “is expected to accelerate over the next twenty years as population growth slows and the baby boomer generation reaches retirement age. While there will be marked variation between states, general demographic trends point to more aging and slower working age population growth in almost every state.”
That also means “knock-on effects for state revenue and expenditure profiles,” as Fitch describes the prospects many state governments face.
According to the United Nations, “super aged” is defined as a population where 20 percent is over the age of 65 and the number of working-age people is contracting.
Smaller states such as Maine, Vermont, New Hampshire and West Virginia are forecast by the Census Bureau to have the highest percentage of population aged over 65 by 2026. They are also likely to continue to be among the states with the largest working age population decline.”
But there are some larger-population states facing “significant demographic challenges,” including New Jersey and New York.
What are some of the expected impacts from these forthcoming changes?
Aging demographics and slowing or declining working-age populations will constrain GDP growth. As state budgets largely rely on income and sales taxes, slower economic growth will be clearly linked to slower revenue growth. Concurrently, state expenditures will face greater pressures from higher healthcare and retirement cost demands.
The states where aging populations are not as pronounced are Utah, Alaska and Texas.
Immigration helps slow the pace of aging in the U.S. since immigrants tend to be younger than the native-born population and, “provide an immediate boost to the working age population,” Fitch notes, pointing out that positive net immigration migration should offset net negative domestic migration in New Jersey, New York and Illinois.
Michael Grass is Executive Editor of Government Executive’s Route Fifty and is based in Seattle.
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