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This large group of people born in the U.S. from 1946 to 1964 amounted to 76 million children. Those born during this time make up approximately 36% of today’s population (Deutsch). What impact has this had on the economy? Read on to see how the baby boom generation has affected the economy and what will happen as they retire. This generation has had a huge impact on the economy due to its sheer size. At first there was a crunch at hospital maternity wards. When the boomers reached school age, schools became overcrowded, forcing towns to build additions. By the time they were entering senior high the cities and towns were expanding. New office buildings, hotels, apartment complexes and stores were springing up everywhere. When they reached college age, American Higher Education had to expand. Large enrollments along with inflation pushed college costs higher. When they started families of their own and became homeowners it drove real estate prices up. As they passed through the life cycle, these shortages soon became surpluses. An example being the collapse of the real estate market in the late1980’s (Sullivan). We can expect a large demand for retirement housing, elder care and finally the funeral industry as the Boomers continue their life cycle. Marketers have followed the boom generation for decades, producing items that appealed to them as children, teens and young adults. With more money in their pockets than time on their hands, today’s baby boomers are dining out at an all time high. Now it is people over the age of 40 who have the resources to purchase big-ticket items. Today the engine that is driving our economy and our stock market is due to the lopsided demographics present right now. The coming of age of discretionary spending is allowing people to buy that SUV, boat, computer, etc that would have been put off in the past (Income). The economy is sensitive to the Boomer generation’s desire for a luxury lifestyle. As they look toward retirement, baby boomers are aware that Social Security may not be able to support them as it did their parents. This has led them to invest large amounts into 401k plans and mutual funds. Now that we’ve looked at the spending issues, let’s see how the baby boomers have affected the workforce. When baby boomers began entering the workforce, they increased the size of the labor market. The job market has been greatly expanded with the coming of this generation, especially with the addition of women to the workforce. At times, the baby boomers faced relatively high levels of unemployment because they had to compete with one another for jobs. But eventually the jobs materialized. The average age of the workforce is steadily climbing. The first of the baby boomers will start to retire in large numbers after the year 2020. The retirement tack boomers end up taking in coming decades will have a profound, but unknown impact on the economy. As Peterson says, “The forecasts range from impending doom to marketplace godsend.” Some predict that as baby boomers retire unemployment will fall and that this process should begin by the year 2002 and that labor shortages should emerge about 2005. This will continue to get worse as the number of people who retire exceed the number who enter the workforce (Generation). Some economic observers predict financial disasters, both national and personal, when the baby boomers retire. They say that as nations of workers and investors become nations of retired consumers, withdrawals will far outweigh deposits in investment and savings vehicles. Market values and retirees’ assets will drop and prices will rise as labor becomes scarce and wages soar. If Boomers opt to liquidate their equity investments as they approach retirement, the results could be catastrophic. Boomer investments have caused a sevenfold increase in total stock, bond, and money market assets during the past ten years (Buckner). If boomers dump stock en masse, it could be “the big one” for the market and the national economy. Finally, I would like to look at how the demand for social services will be filled The size of this generation is sure to put a strain on programs designed to help senior citizens. The Social Security fund will run out if revisions are not made to the program. The baby boomers could have 30 to 35 years of active living ahead of them after they retire. Their families are much smaller, which will make it difficult for an elderly Boomer to gain assistance from their offspring. It is easier to get help if you have six children than it is when relying on one or two. The baby boomers have lived in prosperous times. This privilege gives people a sense of entitlement. It will be interesting to see if they push to get the things they think they deserve. The next generation of elderly will be better educated and informed. When combined with their numbers, this will give them organizational and political clout to advance their agenda. “Recent events in Florida politics offer an instructive leading indicator: Elder power has slowed spending programs for children, while a new state agency was created to represent the needs and concerns of older citizens.” (Sullivan). The baby boom generation has had a profound effect on the American economy at each stage of their life starting with the demand created for goods, then filling the labor market. Now we’ll have to wait and see if their retirement will cause the doom predicted by some or create the marketplace godsend predicted by others. Bibliography: Buchner, Gail. “Demographics is Not Destiny”. Journal of Financial Planning. Institute of Certified Financial Planners 1999. Deutsche, Alex. Topical Study #51. 10 Oct. 2001 www.yardenicom/topical.asp Generation Gap to Create Jobs Turnaround. Sydney Morning Herald 4. 10 Oct. 2001 http://www.ncpa.org/pd/economy/econ 10.html Jackson, Gerard. “Will the Baby Boomers Cure Unemployment?” TNA News with Commentary. 9 Apr 2001. Peterson, Peter G. “Gray Down: How the Coming of Age Wave Will Transform America and the World”. 1999: 189-90. Sullivan, Teresa A. “Baby Boom Generation”. Discovery Channel School. 2 Oct. 2001. http://www.discoveryschool.com/homework.help/worldbook/atozhistory/b/040930.html Word Count: 987
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