Lifestyle

Can we take care of the elderly without bankrupting the young?

Could the brat be right?  “I have been stunned by the financial greed of modern parents who are more concerned with retiring into some fantasy world rather than provide for their children’s college and young adult years,” Rachel Canning, the New Jersey teen who is suing her parents to pay for her education, wrote on her Facebook page. In the new book, “The Next America,” Paul Taylor notes that the skyrocketing cost of Social Security and Medicare will indeed fall on the Millennial generation. An excerpt:

Young and old in America are poles apart. Demographically, politically, economically, socially and technologically, the generations are more different from each other now than at any time in living memory. Let us count (some of) the ways:

  • They have a different racial and ethnic makeup. Nearly half of all children in America today are nonwhite. So are 4 in 10 members of the Millennial Generation — but just 1 in 5 members of the Silent Generation and about 1 in 4 Baby Boomers.
  • They vote differently. In 2012 Obama won 60% of the Millennial vote and just 44% of the Silent Generation vote. This young/old voting gap was just a few notches below its historic peak of 21 percentage points in 2008. Throughout the 1980s and 1990s, the age gap was either small or nonexistent. And in the 1992 and 2000 presidential elections, oldsters actually voted slightly more Democratic than youngsters.
  • Their economic fortunes have diverged. In 1984 the typical household headed by someone 65 or older had 10 times the net worth of the typical household headed by someone under the age of 35. By 2011 that ratio had ballooned to 26:1.
  • Their families are different. In 1960, 6 in 10 twenty-somethings were married. Today just 2 in 10 are married. And in 1960 just 5% of children were born to an unmarried mother. Today 41% are.
  • Their gender roles are converging. Until a few decades ago, becoming a man meant becoming the family breadwinner. Today some 4 in 10 children have a mother who is either the family’s sole or primary breadwinner, up from 11% in 1960. Nearly 60% of college students are women, and in a knowledge-based economy that pays no premium for male strength, women are now nearly half of the labor force, leaving many young men struggling to find careers and life scripts — and many young women faced with a choice of “marrying down” or staying single.
  • They have different ideas about the role of government. Six in 10 Silents prefer a smaller government that provides fewer services to a bigger government that provides more services. Just a third of Millennials agree.

Generations Apart

Generation gaps are hardly a novelty. Nearly two centuries ago Alexis de Tocqueville marveled that in America “each generation is a new people.” More so perhaps than any society in history, our country has always embraced change, making it a hothouse for young adults who have a different worldview from their parents and grandparents.

But the current gap is unusually large — and potentially fraught. If ever there was a moment to gird for a generation war, now would seem to be it.

Ten thousand Baby Boomers will be turning 65 every single day between now and 2030. By the time everyone in this giant-pig-python generation has crossed the threshold into old age, our ratio of workers to retirees will be at a record low — about two to one — and our two big safety net programs for older adults, Social Security and Medicare, will be broke. The only way to rescue them will be with big tax increases, big benefits cuts, or both.

These are the most popular programs the federal government ever created. For a good reason: They are wildly successful. Without them, nearly half of our seniors would be poor. Because of them, about 1 in 10 seniors live in poverty, the lowest share among of any age group.

Small wonder that nearly 90% of Americans say they are good for the country. Given how politically polarized the public is these days, that’s an amazing number. My colleagues at the Pew Research Center joke that you can’t even get 9 in 10 Americans to agree their mother loves them.

But the public also knows about the looming insolvency problem. The latest Pew Research survey found that half of Millennials think that by the time they are ready to retire, they’ll get nothing from Social Security. Another 4 in 10 say they’ll get reduced benefits. Just 6% expect to receive full benefits. Absent changes to the financing of these programs, they’re right.

This raises a question of generational equity. Today’s young are paying taxes to support a level of benefits for the old that they themselves have no chance, under current policy, to receive when they grow old. And they’re doing so in an era when the economic fortunes of young and old have diverged dramatically. On any economic measure one uses — be it income, wealth, debt, poverty, employment, unemployment — the old have been prospering relative to the young for the past three or four decades.

One of the ways all societies sustain themselves is through a compact between the generations — I take care of you when you’re young; you take care of me when I’m old. Families have always done this. And starting in the middle of the 20th century with the creation of the social safety net, the government began doing it, too. But this is compact that has to be modernized when the underlying demographics shift.

In tomorrow’s America, yesterday’s math simply won’t work. Back then we had many more workers per retiree, fewer people living to be very old, an economy that seemed to generate new jobs on autopilot and health care costs that hadn’t escalated beyond control.

Gray vs. Brown

The politics were easier, too. Back then, except for the gray hair and crow’s feet, young and old looked and thought alike. No more. Driven mainly by the big wave of Hispanic and Asian immigrants who began arriving half a century ago, America is about to become a rainbow nation. In 1960, our population was 85% white, By 2060, it will be 43% white.

“The question is, how do we re-imagine the social contract when the generations don’t look like one another?” asks Marcelo Suarez-Orozco, an immigration scholar who is dean of the UCLA Graduate School of Education.

Political analyst Ronald Brownstein worries that the challenge of modernizing the social safety net will split the country along a great “gray-brown” age-and-race divide that could “rattle American politics for decades.”

I’m an optimist — not, however, a blinkered one. So, let it be said that the pessimists have a pretty strong case, especially when one considers that Washington, DC, is so gridlocked that neither political party is willing to work toward the inevitable policy comprise — a mix of benefits cuts and tax increases that protects the most vulnerable.

The longer we postpone this reckoning, the more the burden of any solution will fall on the Millennials —already on track to become the first generation in modern history to have a lower standard of living than its parents.

By 2022, more than half of the federal budget will be going go to Social Security, Medicare, and the non-child portion of Medicaid, up from 11% in 1960 and 30% in 1990, according to an Urban Institute study. Meantime, the growth of these programs will continue to crowd out spending on infrastructure, education and research — the very kinds of investments that would help ensure prosperity for future generations.
The federal government today spends nearly $7 per capita on programs for seniors for every $1 it spends per capita on programs for children. According to one cross-national study by the OECD, this is the most lopsided generational skew in spending priorities among any of the world’s most advanced counties.

To be sure, Social Security and Medicare don’t provide their largesse to seniors only; they bring support and peace of mind to everyone who loves, cares for and depends on seniors — which is to say, everyone.

There’s another reason. More than any other government program, they give expression to the idea that as a nation we are a family, all in this together. In our heterogeneous nation, their universality is a vital part of our social cohesion.

And so the challenge: How to keep faith with the old without bankrupting the young and starving the future?

Family matters

There’s nothing in our findings to suggest that young and old are spoiling for a fight. A war needs combatants. Our generations, despite their differences, tend to like and respect each other.

In their attitudes toward the social safety net for seniors, the young are every bit as supportive as the old. Like middle-age and older adults, most Millenials say the government does too little, not too much, to support seniors.

The irony, of course, is that older voters, who are benefiting the most from entitlement programs, tend to favor the small government philosophy of Republicans. While young people, who skew more Democrat than any living generation, favor programs that benefit them the least.

Come the inevitable day when entitlement programs for seniors are trimmed, families will have to reclaim some of the caregiving ground they’ve surrendered to the state. These challenges will be daunting, because the architecture of the American family has changed dramatically since presidents Roosevelt and Johnson built these programs in the 20th century.

We are now a society in which more than 4 in 10 children are born out of wedlock, and in which a teenager has less chance of being raised by both biological parents than in any other country.
Between non-marriage, divorce and short-term cohabiting unions, family life here is subject to a vast amount of churn.

Our nuclear families now share the stage with a wide assortment of stepfamilies and kin networks. What impact will all this have on the bonds of intergenerational family obligation? If fathers aren’t around to take care of children when they are young, who’ll take care of these absent fathers when they’re old? Will they become a generation of elderly orphans?

“Over the course of our lives we’re accumulating more and more kin to whom we owe less and less,” says sociologist Andrew Cherlin, who believes our society is entering uncharted waters.

Families are famously adaptive and resilient, but their future is hard to divine. Will kin networks replace nuclear families? Might friends become the new family? Can marriage mount a comeback?

How Americans respond — in their public choices as well as their private behaviors — will go a long way toward determining whether the generations spend the coming decades at war or in harmony.
And that, in turn, will help shape our nation’s destiny in the 21st century.

Excerpted from “The Next America: Boomers, Millennials, and the Looming Generational Showdown” (PublicAffairs) by Paul Taylor and the Pew Research Center.