AN ECONOMIC TSUNAMI IS HEADED THIS WAY
By Kenneth W. Gronbach
To predict the future accurately, only one crystal ball will do: people, by the numbers. Demographics can predict the future and its effect on the nature of different states in the United States. Remember, demographics precipitates economics, not the other way around. People came first, and then came money. Think about it. Money is a concept, an idea, ink on paper or electrons on a computer. People are real, really real, flesh and blood. Economics is a symptom. People are the cause.
To get to the source of economic, cultural, political, commercial and societal change, think people. And remember, it’s just math. Don’t get tricked into thinking too deeply. Don’t get mired in DNA, minutia or, worse, subjectivity.
For Texas, the next 10 years will see profound changes. For instance: Texas will see an enormous infusion of Baby Boomers as they are retiring to warm-weather states. Roughly 80 million Boomers, currently 53 to 72 years old, make up the largest US generation ever to retire. The generation that retired ahead of them, the Silent Generation, is the smallest of the last 100 years. Will this change retirement as we know it? You think? Get ready, Texas. This is just one of many key changes that will determine fortunes and futures in Texas in the next 10 years.
Here are seven trends to pay attention to:
Boomers: Surging To Warm Weather States
Texas, the second largest state in the country, has already been experiencing marked population growth. Now it’s about to experience an enormous housing boom as well. That’s because the Baby Boomer generation is starting to retire, and they’re moving to warm-weather states. A 2014 survey by the California Department of Aging found that 44 percent of its Baby Boomer population had plans to retire to Sunbelt states like Texas. The positive impact on the housing and building markets — and ripple effects on retail — will be felt for years. There simply aren’t enough homes for them to retire to. While we are on the subject of housing, let’s do a little more demographic math. There are about 330 million people in the United States when you count the undocumented immigrants (and demographers do because they are here) and about 155 million housing units. The two largest sectors of our population are the 80 million Baby Boomers and their 86 million Generation Y kids. For the most part, Boomers and Generation Y, aged 13 to 32 years old, are still living together. But that is about to change as Gen Y finally leaves home, gets married and starts households. Problem? You betcha! Unless generation Y is going to sleep on the ground, the United States is conservatively 25 million housing units short of our needs over the next 15 to 20 years. Will Texas be immune to this exacerbation of the housing shortage? No. Texas is right in the middle of it.
Women: On The Move
Women professionals are increasing their ranks — and Texas workplaces will see that. Nationally, there are now 60 women to every 40 men in college, and they’re entering the world of work in force. Women are going to be taking on increasingly important roles in the public and private sectors and moving into more critical leadership positions. Of course Texas has already been on the forefront here — consider Governor Ann Richards, for instance. There’s more. Women are overpowering law schools at the rate of 70/30. Treat them with dignity, parity and integrity, or they will sue you.
Immigration: On The Rise
We are a nation of immigrants. Did you know that 70 million Americans are of German descent, 60 million of Latino descent and 40 million of Irish descent? Texas is a major destination for immigrants, and in many ways it’s ahead of the rest of the country. By 2045 the United States will be a nation of color as non-Hispanic whites will be in the minority at about 45 percent. Texas is already a state of color, at 43 percent non-Hispanic whites. The Latino/Hispanic population of Texas is over twice the national average at 38 percent. As immigrant populations increase nationally, we’ll see the Asian population double from 5 percent of the US population to around 10 percent by 2050; and Latinos, currently about 17 percent, should be about 25 percent. More Latinos will be participating in the private and public sector, which will certainly affect the Texas economy. So if you are a bigot, get over it. The Latino immigrants, especially Mexicans, filled our population exactly where we needed them, between the ages of 33 and 52 years old. The non-immigrant US population that occupies this space, Generation X, is missing 10 million people owing to a drop in fertility between 1965 and 1984. Without the Latino immigrants we would not have enough taxpayers to run our country or maintain our culture in 20 years.
Education: More Students And Different Classrooms
Right now we’re witnessing a dip in public school enrollment everywhere, including Texas. But once Gen Y’s children reach school age over the next ten years, we’ll see a comeback. Remember Generation Y, born 1985 to 2004, is the largest generation ever born in the United States, and the largest generation of potential parents the United States and Texas have ever seen. Will they average three kids per couple? We don’t know. The national average now is about two. We’ll also see a rise in MOOCs (massive open online courses). In higher education, community colleges, traditional colleges and Ivy League schools will remain stable, but small private and for-profit colleges will see a decline. Think off-site, on-line education.
Health Care: An Oncoming Tidal Wave
Another result of Baby Boomers retiring and aging is a tsunami headed straight for our health care system — and Texas will feel this acutely. Boomers, now between 53 and 72 years of age, will soon comprise the largest generation that’s ever needed health care. In medicine, the human body begins to start breaking down around age 75. In three years, our doctors, nurses, hospitals and clinics; and our eldercare, hospice and death care systems are going to face unprecedented demand. Healthcare, eldercare and death-care are totally under-served and ill-prepared for the Boomers. Opportunity?
Cars: Waning Market Demand
America’s love affair with the automobile is over, even in Texas, a state noted for its deep car culture. As Generation Y reaches adulthood, they’re not craving wheels like their parents did. We’ll see a much heavier reliance on mass transit, which may focus on cities such as Houston, Austin and Dallas. Among cars on the road will be self-driving automobiles, which can go 80 mph bumper to bumper, so no more traffic jams. Also, watch Uber and Lyft carefully, and keep an eye on Tesla.
Trucking & Shipping: Strained To The Limits
The building of new houses, communities and infrastructure — as well as the new demand for retail that delivers — will strain trucking and shipping to its limits. As Boomers retire to Texas and other warm-weather states, the explosion on new retiree housing, coupled with the younger generations’ need for homes and our preference for online retail, will make roads Lone Star State mighty crowded.
What else can I tell you about Texas? The largest state in the South has the highest birth-to-death ratio from 2010 to 2015: 120 percent, with more than 2 million births. It led the region in population growth over those five years, and since 1990, that growth has grown more than 50 percent. It’s inevitable: we’re about to see a very busy state with a rejuvenated economy. The future is laid out before us, by the numbers, in black and white. Saddle up.
Kenneth W. Gronbach brings a background in marketing to his work as a demographic researcher and sought-after speaker on societal and business trends. He is president of KGC Direct and the author of The Age Curve (AMACOM, 2008). Ken is a Baby Boomer with two Gen Y daughters. His new book is UPSIDE: Profiting from the Profound Demographic Shifts Ahead.