Seniors Rule in Puerto Rico
SAN JUAN — We’ve all heard it before: “60 is the new 40 and 50 is the new 30.” Turns out, it just may be so, as a recent study on Puerto Rico and the so-called longevity economy shows that mature adults are active and make important contributions to the local economy.
Mature adults 50 years and older are responsible for 43% of Puerto Rico’s gross domestic product (GDB), representing about $25.4 billion, according to a study made public by AARP, formerly the American Association of Retired People. The study also states that 37% of the island’s population is 50 years of age or older, with this demographic continuing to grow in the coming years.
The study, “Puerto Rico & the New Longevity Economy,” includes all economic activity on the island generated by consumers and heads of families who are 50 years and older.
“It is evident from this analysis that people 50 years and older represent a wide segment of our population, and that they are also an asset—not a liability—that contributes greatly to the island’s economy,” said José Acarón, Puerto Rico’s AARP director, who emphasized the need to change the general perception about the mature adult being a burden to society.
The study, carried out by Oxford Economics, estimates that 47% of Puerto Rico’s population will be 50 years and older by the year 2040. Currently, just a handful of municipalities have populations with a median age of 50 or more years: Guaynabo, San Sebastian, Hormigueros, San Germán, Lajas, Patillas, and Vieques. Of these, only Guaynabo is part the San Juan metro area.
“We are witnessing how the other age groups continue to decrease, while the population 50 years and older continues to increase, as well as the economic impact it has on Puerto Rico…. There are several areas for economic development related to aging, not only in terms of contributions of mature adults themselves, but also in the significant number of services they would need,” Acarón said.
Billions in consumer purchasing power
The study reveals that 61% of consumer purchases in Puerto Rico, or $20.7 billion, are associated with the 50-plus population. Of the 14 consumer categories identified in the study, 13 were significantly dominated by this age group.
As to be expected, the biggest expense for people 50 and older is in healthcare, and they are responsible for purchasing 70% of all health services in Puerto Rico.
Next on the list of expenses are utilities—for which they spend 62% of all the money used to pay for electricity and water—followed by entertainment, for which they represent another 62%.
Another relevant category is telecommunications and technology, where, contrary to conventional wisdom, more than half (58%) of all purchases are being made by adults 50 and older.
It should be noted there also has been an increase in spending in nontraditional categories for this population, such as: fashion and personal care, food and recreation.
Supporting two generations at once
The only category where the spending level is below that of people less than 50 years of age is education, where the study found the mature adult spends 47%. Even though the scope of the study does not include the possible reasons for the expense, it could be assumed that mature adults, while not consuming the service themselves, could be paying for a child and/or grandchild.
“We are now seeing the younger generation staying with their parents, even though they could be working, and the ones picking up the tab are, in my opinion, those between 45 and 65, who are supporting their parents and their children. This tends to confirm the hypothesis that the one carrying the economy is this population,” Acarón argued.
The greatest impact 50-plus adults are having in the labor sector—in terms of the number of jobs created—is in commerce, transportation and utilities, with some 107,000 jobs, followed by education and health services (92,000 jobs) and entertainment and hospitality (52,000 jobs). These are the areas where most of the mature adults are working. Other significant areas are professional services and businesses, manufacturing and financial activities.
But despite these numbers, the fact is that the labor-force participation rates for the 50-plus adult in Puerto Rico is significantly less than for younger adults.
Acarón said the study reveals that 41% of total employment, 41% of the income from the labor sector and 41% from taxes and government revenues are directly related to the population 50 and older. By contrast, this means 59% of adults 50 and older are unemployed or out of the workforce.
“If people are retiring at a younger age, here you have the opportunity to tap into a pool of well-prepared and productive people who are not working. We are missing the opportunity to further develop Puerto Rico’s productivity,” Acarón argued.
For the AARP executive, the need to promote “a structural change” that would push people 50 and older to stay productive and provide them with the possibility of retraining so they can stay competitive is evident.
When compared to the United States, the trends in Puerto Rico, except for the labor-force participation rates, are very similar, if not the same. The longevity economy is upending conventional wisdom about how aging affects the U.S. economy and the country itself.
A longer middle age
In its report “The Longevity Economy: Generating Economic Growth & New Opportunities for Business,” Oxford Economics states that “rather than lengthening extreme old age, the 30 years added to lifespans in the 20th century have resulted in a longer middle age—extending the period when workers are at their most productive and creative, and representing a major, often untapped resource.”
The net effect on society is that instead of becoming somewhat of a burden to society, the mature adult continues to “fuel economic activity” longer than earlier generations in the 20th century.
According to the report, adults 50 and older in the U.S. spend $4.6 trillion a year on consumer goods and services, including healthcare. When the induced economic effects of this level of spending are computed, the figure rises to $7.1 trillion.
When compared to the economies of other countries around the world, in terms of their GDP, the $7.1 trillion attributed to the longevity economy in the U.S. ranks third, behind the overall U.S. economy itself and China, followed by Japan, Germany, France and the United Kingdom.
“This activity provides employment for nearly 100 million [U.S.] Americans. In addition, the longevity economy is a huge source for charitable giving, contributing nearly $100 billion annually to a variety of causes and concerns, which represents nearly 70% of all charitable donations from individuals,” the report says.
In terms of taxes, people 50 and older contribute $987 billion in federal taxes, which represents 47% of total federal taxes. On the other hand, they contribute $761 billion in state and local taxes, which in turn represent 56% of all taxes at the state and local levels.
Yes, they are tech-savvy
People over 50 nowadays are more tech-savvy than their previous 20th century counterparts. They are regular users of the internet and social media, and they spend significantly more money online than the younger X and Y generations.
As of 2010, online shoppers ages 46 to 64 spent an average of $650 online over a three-month period, while those between 31 and 45 spent $581, and those between 18 and 30 spent $429.
“The share spent by the older cohort has surely only increased since 2010, and will continue to increase as more [U.S.] Americans with years of experience shopping online age into the cohort. Greater average expenditures, coupled with their growing share of the total population, have pushed online spending by people over 50 to nearly $7 billion per year,” the study estimated.
People 50 and older are also heavy participants in social media networks, with 71% of those between 50 and 65 making daily visits to social media websites, while 59% of those over 65 do the same. As a matter of fact, social media giant Facebook reported that 56% of all online people 65 and older are on Facebook, while 63% of all 50-to-64-year-olds online have Facebook pages.
All this activity is taking place while the labor-force participation rate in the U.S. is declining. The U.S. Bureau of Labor Statistics (BLS) expects the labor-force participation rate to continue to decrease until reaching an estimated 62.5% by 2020.
But while the overall labor-force participation rate is dropping, there is an upward trend for people over 50 years of age. The BLS estimates an increase of about 1% by 2020, reaching 43.5%.
“If additional workers over the age of 50 were to continue working, and their labor-force participation were to exceed the baseline forecast by 2.5 percentage points, this would result in an additional $103 billion in potential economic output in 2020,” the report reads.
Furthermore, these findings seem to corroborate what previous studies have concluded before regarding older, more experienced workers.
In 2013, the Center for Retirement Research at Boston College found workers between 60 and 74 were getting paid more than the average worker ages 25 to 59. This turns into myth the perception that the higher the number of older workers, the less productive a business may be.
“We have to change our perception of the mature adult as being a burden and understand that they are an unstoppable force, for which more opportunities and policies should be created,” Acarón said.