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California's demographic challenge

As the state ages, nurturing a new generation is crucial.

July 22, 2012|By Dowell Myers
  • Because seniors consume public entitlements and pay less in taxes, that two-thirds increase in the senior ratio means stress on governments and taxpayers as never before. Above: Kingsley Manor Care Center, an East Hollywood senior facility.
Because seniors consume public entitlements and pay less in taxes, that… (Los Angeles Times )

At the root of California's dysfunctional politics lie some old ideas about who we are as a state. Demographics have been more volatile here than in other states, and many Californians older than 55, who make up roughly 46% of state voters, don't want to pay for changes they never welcomed. The tragedy is that they are battling problems that have largely dissipated. The outlook for California going forward from 2012 is very different from what it was two decades ago.

Take population growth. The 1980s brought an unprecedented growth spurt for the state, with population increasing by some 6.1 million people. This far exceeded the population growth of 3.7 million people in the 1970s and 4.3 million in the 1960s.

The Californians who were already here resented all those newcomers, who added to traffic congestion, fueled overdevelopment and strained government budgets. Many longtime residents were particularly aggrieved that so many of the new arrivals were immigrants. Indeed, by 1990 21.7% of California residents were immigrants, up from just 8.6% in 1970.

The perception that migration was swamping the state roiled California politics. It reinforced the ethic of Proposition 13 — make newcomers pay, and give the old-timers a break. It fueled passage, in 1994, of Proposition 187. Its message: Established residents shouldn't be asked to pay for public services used by unwelcome and illegal newcomers.

But what Californians didn't seem to realize was that the rapid growth spurt was just that: a spurt. In the decades since the 1980s, population growth has again fallen below 4.2 million per decade.

Still, the old narrative of a "lost" California continues to animate state politics, most notably in fueling the anti-tax fervor of older white voters. It also shapes public attitudes about which government programs should be cut in tough economic times.

To craft a public policy that addresses the state's current challenges instead of past issues, Californians need to understand the new realities of where the state is headed.

The 1990s recession triggered a shift in migration patterns that has continued. The rapid population growth of the 1980s included a net in-migration of 3.3 million. But during the 1990s, in-migration shrank to about 893,000, and it further withered to about 235,000 in the 2000s. Total growth slowed from its high point in the 1980s, coming in about one-third smaller every decade since.

The bulk of the population growth since then has been largely from births in the state, and these native-born sons and daughters are likely to stay rooted here. Births accounted for 81% of growth in the 1990s and a whopping 93% in the 2000s. For the first time in history, California-born residents constitute a majority of the state's total population, at 53.8% in 2010.

Native Californians are now the state's only majority because every racial group has been a minority in California since 1999. This means responsibility for the future will continue to be broadly shared.

What does this mean? For one thing, that race and ethnicity are far less important issues. Instead, we face major generational challenges. The first is that California may not have enough children to sustain workforce levels. In the last decade, the number of children under age 10 dropped by 176,000. The state Department of Finance projects a decrease of an additional 101,000 this decade. The decline will lighten demands on schools, but it also could haunt us in future years.

The state's gravest problem is that the giant baby boom generation has finally arrived on the threshold of retirement. Never before has California (or the United States) been so top-heavy with seniors. What's crucial for the state's well-being is the ratio between the number of seniors (65 and older) and the number of prime working-age residents who will support them. That relation, known as the "senior ratio," is not good in California.

After four decades of remaining nearly flat at about 20 seniors per 100 working-age residents, the ratio will climb to 28 in 2020, then to 36 a decade later. Because seniors consume public entitlements and pay less in taxes, that two-thirds increase in the senior ratio means stress on governments and taxpayers as never before. An elevated senior ratio also means a housing market top-heavy with sellers looking to downsize or move for retirement or health reasons.

Who will we be looking to in the next decade to shore up California's housing market, workforce and tax base? They will overwhelmingly be the children of immigrants now in our schools. These kids will account for 98% of the growth in the state's working-age population through 2030, according to new generational projections I developed with my colleague John Pitkin.

With this in mind, perhaps we can recognize and avoid the path to self-defeat. Continual slashing of K-12 and higher-education budgets will not produce an educated workforce capable of paying top dollar for houses and supporting government with their taxes.

To avoid that failure, California needs a politics rooted in 2012, not in 1978 or 1994. The prime purpose of this politics should be redirecting the state's resources to a new priority: nourishing and developing the generation that will carry the load of an aging California. Older and younger generations both will benefit.

Dowell Myers is a professor of public policy at USC. This essay is adapted from "California Futures: New Narratives for a Changing Society," which appears in the Summer 2012 issue of Boom — A Journal of California.

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