In a recent paper published in the Economic Development Journal, James H. Johnson, Jr., Allan M. Parnell and Huan Lian, researchers from the Frank Hawkins Kenan Institute of Private Enterprise, assert that an aging population is an opportunity for economic growth. Johnson, director of the Urban Investment Strategies Center at the Kenan Institute, builds on decades of research into community and economic development and demographic change to outline how businesses, policymakers and economic developers can tap into the power of an aging population.
The U.S. population is growing older. Seniors are living longer, and becoming increasingly diverse by race and nativity. Although the trend toward an older population is frequently viewed as a challenge, Johnson, Parnell and Lian argue that it presents several big opportunities for innovation, business development and economic growth.
Opportunities exist to innovate new products and adapt existing products to meet the needs of the elderly. Many innovators fail to acknowledge that older adults are not homogenous and fail to tap into large portions of the senior market. Innovators who address the needs of these elder sub-groups, including the poor, frail and demographically diverse, will reap rewards as the senior population continues to grow even older and more diverse.
Dedicated business plan competitions and creative financing models are needed to support such targeted innovation, and should leverage the expertise of older adult entrepreneurs. These encore entrepreneurs are more likely to address societal issues, and their ventures have a higher five-year survival rate than entrepreneurial ventures launched by any other demographic group. Thus, investment in encore entrepreneurs who focus on aging will pay large dividends.
The boomer segment of the older adult population constitutes a $15 trillion market globally, and a $3 trillion market in the U.S. However, to successfully tap into this market, businesses must improve their advertising strategy, portraying older adults in positive, non-stereotypical ways and hiring older adults at all stages of the marketing process.
Businesses should also undertake comprehensive research into the needs of older adults, with a particular eye toward meeting evolving needs posed by demographic shifts. For instance, research shows that nonwhite older adults are much more likely than white older adults to live in multigenerational households, and these households are more likely to remodel than one-generation households. Thus, the demand for new construction that accommodates multiple generations in one household will likely rise as the foreign-born older adult population continues to grow.
By 2025, 1.2 million additional senior care workers will be needed to accommodate the growing older adult population. Filling this need will prove challenging for several reasons. Many senior care workers are single mothers of young children, rely on public transportation and/or face cultural and language barriers.
Current immigration policy presents additional challenges relating to foreign-born senior care workers. The federal government presents no clear path to citizenship for law-abiding undocumented immigrants and proposes to reduce by one-half the flow of legal immigrants into the U.S. Current proposed legislation would prioritize well-educated, highly skilled workers, not those individuals who would likely fill senior care jobs. Such legislation would exacerbate the existing shortage of senior care workers.
Still, this growing need for senior care workers poses a large opportunity for HR staffing agencies who are able to recruit and retain home care and institutional care providers.
Major modifications to all types of property are required to accommodate the aging population. Mixed-income, multigenerational communities are one option that can create a host of positive economic and social outcomes. First, these communities can offer affordable, age-friendly homes and thus serve as an antidote to gentrification. Second, by constructing such homes around a community center, these neighborhoods can promote social interaction and combat elder abuse and isolation. Third, age-friendly communities can become major retirement destinations and facilitate tourist activity. This will drive business development and employment growth, all while boosting the local tax base.
Based on the opportunities outlined, the Kenan Institute researchers have developed several recommendations for business executives and policymakers: