Population Pyramids, Economics, Ageing, Pensions, Demography and Misunderstanding Data Sets

Interesting article ‘The end of the population pyramid’  but one would suggest that it’s no longer a ‘population pyramid’ inverted or otherwise, while ‘pro-natal’ or positive eugenics policies and working age population data require more scrutiny, especially when backgrounded by antipathy in Australian (UK and US ) media and politics towards post 1970s ‘immigration’, influencing older monocultural voters (ditto Hungary etc. to avoid ‘immigration’ central to conservative political messaging, even to the point of conspiracy theories like round ‘Soros’).  

For example, constantly conflating increased temporary churn over via the NOM (since 2006) from students etc. with permanent migration yet there is no strong if any correlation, then worse, blaming the same ‘population growth’ for environmental degradation (allowing fossil fuels and regulation off the hook AKA strategy of  ZPG supported by Rockefeller Bros, Ford and Carnegie Foundations in the ’70s, and with the mantle passing to Kochs and similar groups).

The world, especially including more educated and empowered women in the developing world, have already decided to have fewer children reflected in sliding fertility rates to below replacement; not aware of any research showing substantive outcomes from pro-natal policies except bringing plans forward on having children, to be followed by a fertility dip?

Population data cannot be compared easily in a global context due to different definitions, collection methods and presentation, while demographers use multiple types of population data sets to base their e.g. workforce analysis on, related to dependency ratios and pensions.  

For example, in some cases economists are using some dubious methods in arguing the case against offering an increase in the SCG super contribution guarantee by claiming a binary i.e. would preclude any wage rises; also claiming increased sustainability of the state pension by claiming a low(er) dependency ratio by falsely presenting plenty of workers to support a future of pensions only (no need for super).

However, ‘statistics 101’, it appears that the forecasts or projections of the general or ‘estimated resident population’ counting 15-64 year olds of ‘working age’, but not parsing through or filtering out the significant numbers of ‘temporary residents’ caught up in the NOM who have limited and/or no work rights vs. citizens and permanent residents with no restrictions.

If the latter is presented well, then the ‘population pyramid’ is not just inverted, but without temporary ‘churn over’ it would look more like an upright arrow with a very chunky head and slim body below it to support….. which portrays the issues ahead for working age in supporting the tax base and increasing numbers of aged dependents, how? 

Australia’s retirement income system generally comes up in the top 5-10 globally, due to superannuation and pension means testing.  However, many in Australia including both conservative MPs and those of the left, are being led into a cul de sac in both denying the benefits of industry super funds looking after members’ interests and for reduced or more restricted immigration hence access to Australia for temporary residents.

Worse, younger Australians’ futures are and will be thrown under the bus due to LNP and lesser extent the Labor Party, catering to ageing electorates with middle class welfare, low or no taxes and for now, a more nativist and insular view of the world due to Covid and our nativist conservative media oligopoly favouring the LNP and radical right libertarian policies.

From Inside Story Australia:

‘The end of the population pyramid: Fears about a declining birthrate reflect a twentieth-century view of how the economy works

1 June 2021 John Quiggin 

News of a sharp fall in births during 2020 has provoked a fresh wave of hand wringing about the implications of an ageing population. The decline can’t be attributed solely to the pandemic — most of the babies born in 2020 were conceived before the virus took hold — but it appears to have accelerated as the impact of the pandemic has been felt.

Some of the worries are prompted by old-fashioned, not to say primitive, concerns about birthrates as an indicator of “national vitality.” But they mainly reflect a twentieth-century view of the economy that is deeply embedded in our ways of thinking and economic measurement, even though it is now almost completely obsolete.

Underlying this view is the notion that “a surplus of young people” is needed to “drive economies and help pay for the old,” as the New York Times put it in its report on the 2020 figures. But this model of the economy only emerged in the twentieth century, and it looks likely to end in the twenty-first.

For most of human history, old people were expected to work as long as they could, just as children were put to work as soon as they were able. The very young and the very old depended on their families to support them.

That changed radically with the emergence of the welfare state at the end of the nineteenth century. Children were excluded from the workforce and required to attend school until the official leaving age, typically around fourteen. Governments paid for schools but generally required parents to support their children in other ways, as they’d done in the past.

At the other end of life, the new system of age pensions meant that old people (most commonly those over sixty-five) became entitled to public support, sometimes subject to a means test. Pensions were paid out of taxes or contributions to social security schemes.

Either way, the cost was borne by the “working-age” population, generally defined as fifteen to sixty-four. With a high birthrate, the age distribution of the population was shaped like a pyramid, with a large working-age population at the bottom supporting a small group of retirees at the top.

Underlying the pyramid was the idea that physical work predominated. Young, strong and needing only on-the-job training, workers would leave school at fourteen and immediately start contributing to the economy. By sixty-five, they would be worn out and ready for retirement. The more young people the better.

To see what’s happened to that assumption, we need only look at the US data on employment by age. At the turn of the twenty-first century, the pyramid concept looked reasonable enough. Around 60 per cent of young people aged sixteen to twenty-four were employed, compared with barely 30 per cent of those aged fifty-five and over.

By 2019, though, before the pandemic, the gap had largely closed. Just over 50 per cent of people aged sixteen to twenty-four were employed, compared with 39 per cent of those over fifty-five. While many of the jobs held by young people are now part-time and low-waged, older workers are typically earning just below the peak they reached at around age fifty. The figures suggest that average earnings per person are already higher among the old than among the young.

The modern economy is quite different from the one assumed by the conventional population pyramid. To become a productive member of the community, young people need academic or vocational post-school education, and that requires large-scale spending by government or parents, or through loan schemes like HECS. Even as the proportion of young people in the population has declined, developed countries like Australia and the United States have been able to maintain or even increase the proportion of national income allocated to education.

A return to high birthrates over the next few years would create the need for a large increase in education spending. The pay-off in terms of a more productive workforce would not be fully realised until the second half of this century, when the expanded age cohort entered the prime-age workforce in their late twenties and early thirties.

At the other end of the age distribution, official retirement ages have been abolished, and the eligibility age for the pension has been pushed to sixty-seven, with further increases in prospect. For a significant group of manual workers, physical exhaustion still makes retirement a relief. The undervaluing of older workers persists, pushing many into retirement whether they want it or not. But working past sixty-five is an increasingly attractive economic option for a large group of white-collar workers.

A realistic model of the future workforce is one in which productive workers are mostly aged between twenty-five and seventy. Given that life expectancy will never be much above ninety-five, the typical person will spend about half their life in the working-age population and the other half evenly divided between education and retirement.

In other words, despite the concerns expressed since the 2020 population figures were released, the age distribution associated with a lower birthrate is unlikely to cause major problems in how people in countries like Australia are supported during the years they spend out of the workforce.

Meanwhile, a lower birthrate is having an unambiguously beneficial impact on the size of the world’s population. The world is already overcrowded, and the growing population is straining the capacity of the planet. Even with falling birthrates, the world’s population is certain to rise between now and 2050.

By 2100, the total figure might return to the current level of eight billion, or perhaps a little fewer. The idea that we should push people to have more children in order to lift this number, rather than make marginal adjustments to the economic institutions we have inherited from the twentieth century, is simply nonsensical.’

For more articles about Ageing Democracy, Demography, Economics, Government Budgets, Immigration, Pensions, Statistical Analysis, Superannuation, Taxation and Younger Generations click through.