Doug Anderson, SVP, Research & Development, The Nielsen Company

SUMMARY: Population growth in the United States is slowing. Projections from the Nielsen Company, the Pew Research Center, and the Census Bureau all agree that year over year population growth will struggle to reach 1% for decades to come. In these projections the vast majority of population growth is slated to come from new immigrants who have yet to arrive and from children they have yet to conceive. New data show that the number of immigrants entering the U.S. has been substantially downwardly impacted by the recession. If growth from immigration remains suppressed, then the U.S. will certainly grow even more slowly, and in some near future years, may actually drop in population.

From the heights of the Baby Boom, growth rates have declined with the exception of the period from 1990 to 2000, when there was unprecedented growth among persons of Hispanic ancestry. Current 2009 and projected 2010 data show that this trend has not continued and future projections show an ever declining growth rate. However, these projections are based on assumptions about immigration and fertility rates formed before the current recession. If those assumptions are shown to be false over the long term, then the growth rates will decline even more.

The Pew Research Center projections show that 82% of all U.S. population growth from now until 2050 will come from new immigrants. Since immigrants tend to be younger and to have higher fertility rates than the native U.S. population, they account for a disproportionately large share of growth among children and families. Without a continuing influx of new immigrants at the rates projected before the recession, there will be no growth in the numbers of children and families. In fact, these key market segments will decline in absolute numbers from year to year, and will cause the U.S. population overall to age even faster than has been projected.

Declining birth rates
Birth rates have historically been impacted by tough economic times. Drops in the birth rate were recorded after the 1973–1975 and the 1980–1982 recessions in the U.S. Similar drops have been seen throughout the more developed world during periods of uncertainly about the economy. For most of the 2000s, the U.S. saw record numbers of births—a trend broken by provisional data recently released by the CDC showing a near 2% decline in 2008. Hard hit states like Florida, California, and Arizona have large drops in the number of births.

If birth rates continue to drop into 2009, the impact on long-term population growth in the U.S. could be substantial. “It is certainly too early to tell if this economic crisis will result in a sharp drop in the birth rate, but all the measures and indicators are much worse than in the 1970s”, says Carl Haub, a senior demographer for the Population Reference Bureau.

Downturn in immigration rates
Immigration also tends to slow during bad economic periods. Since new immigrants are so important to U.S. population growth, any downturn in immigration rates is a clear warning sign for long-term growth. The current recession has hit particularly hard in the Southwest, as construction—particularly of housing—has almost completely dried up. The areas and occupations most hard hit are also those with a high concentration of immigrant workers—in particular, foreign born workers from Mexico. The unemployment rate for both native-born and foreign-born Hispanics in the U.S. increased 45% faster from the fourth quarter of 2007 to the fourth quarter of 2008 than did the rate for all workers.

A drop in Mexican immigration
Failing job prospects have had a dampening effect on the movement of workers from Mexico to the U.S., according to a recent report issued by the Pew Hispanic Center and several other sources. Since Mexico is the largest source for immigrants entering the U.S. by a big margin, a downturn will have a strong impact on population growth driven by new immigrants. Since many Mexican workers are unauthorized to enter the U.S., tracking this population using standard government data sources is difficult. However, the preponderance of evidence shows a clear fall in the number of Mexican immigrants—particularly unauthorized ones.

• Data from the Mexican government (ENOE) shows a strong decline in the numbers of persons leaving Mexico: from 547,000 for the year ending February of 2007, to 374,000 for the same period ending in 2008, and 203,000 for 2009. Since the U.S. is the primary destination for Mexicans who leave their country, the 63% decline from 2007 to 2009 should have a similar impact in the U.S.
• Data from the U.S. Census Bureau’s Current Population Survey estimates there were 175,000 immigrants from Mexico in the period from March 2008 to March 2009—lower than any other year in the 2000s, and nearly 37% lower than the average year from 2002 to 2008.
• Data from the Department of Homeland Security (Border Patrol) show a strong decline in the number of persons trying to enter the U.S. illegally—the lowest level since 1973. The 2008 rate was 40% lower than in 2004. Recent higher levels of border enforcement may also discourage people from trying to cross at all. A more difficult crossing plus the difficulty in finding work due to the recession are both clearing slowing unauthorized immigration.

Additionally, an analysis of government data by the Associated Press shows a huge decline in the number of green card applications over the past two years. The government has received about half as many employer sponsored applications in 2008 and 2009 than in previous years. As firms have shed jobs throughout the recession, it has become easier to find citizens who have the specialized skills that, in the past, might have justified sponsoring an immigrant for a green card.  This is likely an early indicator that immigration from India, China, and other countries, who have supplied highly skilled workers to the U.S. market, may also begin to fall.

Clear warning sign for long-term growth
If immigration continues to remain suppressed and fertility rates continue to fall (and note that there is a clear connection between the two as immigrants tend to have much higher fertility rates than the native population), then the demographic outlook for the U.S. could begin to shift.

• Population growth rates, already projected to be at historic lows, will fall lower. Many countries in the more developed world expect to see population declines owing to aging populations and low fertility rates over the coming decades. Without new immigrants and the children they will have, the U.S. could see little or no population growth in the near future.
• New, young immigrants both increase the share of the population that is younger, and of course often have children themselves. Fewer immigrants will accelerate the aging of the U.S. population and exacerbate the economic strains that will come from paying for Social Security and Medicare/caid.
• Fewer immigrants also mean slowing growth in ethnic populations (Hispanics, Asians, etc.) in the U.S.
• Finally, the share of households with children—already projected to decline to below 30% over the coming decades—will fall more rapidly and to lower levels.

It may be too early to call an end to the current recession in the U.S., but many economic indicators suggest a corner may have been turned. The stock markets have recovered some of their losses, the rate of increase in unemployment has slowed, and even the housing market has begun to show some signs of life. It will take at least another year or two of government data to determine if immigration and fertility rates remain below recent levels. If both fail to recover, the impacts to the U.S. marketplace—both in terms of growth and composition—will be substantial.

Sources:

• Centers for Disease Control and Prevention—National Vital Statistics Report Volume 57 Number 19—Births, Marriages, Divorces, and Deaths:  Provisional Data for 2008
• Pew Hispanic Center—Mexican Immigrants: How Many Come?  How Many Leave? (July 22, 2009)
• Pew Hispanic Center—Unemployment Rises Sharply Among Latino Immigrants in 2008 (February 12, 2009)
• Population Reference Bureau—Will the Economic Downturn Lower Birth Rates? (January 8, 2009)
• U.S. Census Current Population Survey—tabulations by the Pew Hispanic Center
• Instituto Nacional de Estadistica y Geografia (INEGI)—Encuesta Nacional de Ocupacion y Empleo (National Survey of Occupation and Employment – ENOE)
• The Nielsen Company—Population and Household Projections
• The Nielsen Company—The Low Income Consumer in Mexico
• MSNBC / Associated Press—Petitions for U.S. Worker Green Cards Plunge (August 6, 2009 / www.msnbc.com)

SUMMARY: A likely future for the U.S. in the year 2020 and beyond is a country split between the aging Baby Boom still with substantial political, economic, and social power, and a young, fast-growing multi-cultural population with far less political and economic clout. Beyond the clear demographic trends, the starting points for this divide can be seen in the growing generation gap that can be measured in the attitudes and behavior of Americans today.

In 1969, a Gallup poll found 74% of Americans thought there was a generation gap. That gap manifested itself throughout U.S. society in the social and political upheavals of the 1960s and early 1970s. Things

settled after that and 10 years later in a CBS/New York Times poll, only 60% saw a generation gap. Today, 30 years on, a Pew Research Center poll finds that 79% of Americans think there is a generation gap. While the 1969 gap was driven by widely varying points of view between younger and older Americans about the war in Vietnam, race relations, and women’s rights, today’s gap is centered around a different set of issues.

The Pew poll finds that Americans of all ages believe that differences in values make up most of the generation gap. Differences in morality, ethics, politics and beliefs/religion are frequently mentioned by younger people, while older folks are much more likely to say there are big differences around a sense of entitlement—that younger people want everything handed to them. Interestingly, only 8% of 18–29 year-olds and 5% of all other ages, mention differing levels of reliance on technology as being divisive, despite the fact that adoption and use of technology wildly varies across generations.

You’re old when…
Did you ever wonder what life would be like when you grow old? While the perception of “old” varies by age group—18–29 year olds think you’re old when you turn 60!—the generation gap of 2009 is focused primarily on the ability of younger persons to understand the large group of aging Baby Boomers.

Younger people exaggerate both the challenges of growing old and the benefits. For example, 57% of younger persons expect to have some memory loss after the age of 65, while only 25% of those aged 65+ actually experience memory loss. Likewise, 87% of 18–64 year olds feel that older people have more time for hobbies and other interests, while only 65% of persons over the age of 65 actually find that extra time in their lives.

Secular states
Religion plays a more central role in people’s lives as they age—and is a clear dividing issue between younger and older Americans today. Less than half of those aged 18–29 (44%) say religion is an important part of their lives, but that percentage escalates by about 10 points with each increasing age increment—54% of 30–49 year olds agree, 61% of those aged 50–74 feel the same, and 70% of persons 75+ believe.

Similar patterns of church attendance can be seen in the Catholic faith. Many younger Catholics consider religion important, but attendance at Mass falls off substantially compared to older persons. There is, however, a slight increase in weekly Mass attendance for Millennials born after 1981 compared to those born between 1961 and 1981. Around one-third of U.S. Catholics are Hispanic, with many of them concentrated in the younger ages—the up-tick may be due to the influx of younger Hispanics into the church.

The gloom of the boom
For three decades, data from the General Social Survey, conducted by the National Opinion Research Center at the University of Chicago, have shown the Baby Boom generation to have experienced less happiness than other age cohorts—new data from Pew show this is still the case. Their consistent gloomy attitudes have separated them from both preceding and subsequent generations of Americans.

Baby Boomer’s rate their overall quality of life lower than other age cohorts—they worry that incomes won’t keep up with inflation, that it is harder to get ahead today than it was 10 years ago, and that their standards of living don’t exceed that of their parents at the same age. Fewer Boomers expect to be able to live comfortably in retirement than members of other age cohorts.

These findings are surprising considering the fact that Boomers have the highest incomes of any age cohort, the highest home values, and the highest net worth. In today’s recession, however, they also have the most to lose and have been hit the hardest by the collapse of the housing and equity markets. Many are financially stretched still supporting children, their parents, or both.

Why are the Boomers the gloomiest generation? One possible explanation is supported by published sociologist, Yang Yang. Her work suggests that the roots of the issue may lie in the size of the Baby Boom generation. Because of the unexpectedly large size of their cohort, Baby Boomers have had to compete with each other for admission to schools, for jobs, etc., and this added level of competition has increased the level of stress in their lives and lowered their overall levels of happiness.

Technology and media
Whether young people feel it differentiates them from older persons or not, adoption of technology and use of both traditional and new media varies substantially between older Americans and new emerging youth

markets.

Average monthly television viewing time varies strongly by age. Although younger persons still watch a substantial amount of television—over 150 hours per month for persons age 25–34—their viewing is dwarfed by that of older viewers. Persons over the age of 65 watch 38% more TV hours per month than those aged 25–34.

While time-shifted television programming via a DVR accounts for a relatively small share of viewing, the highest levels of adoption are among 25–44 year olds, who watch time-shifted programming 24% more than 45–64 year olds and over four times more than persons aged 65+.

The Internet is a more ubiquitous medium with persons over the age of 35—averaging more than 40 minutes a day from home. Younger persons spend somewhat lower amounts of time online from home in an average day, but are the strongest adopters of other forms of technology—such as the mobile telephone. In 2008, the average teenager sent or received over 35,000 text messages a year—about one message every 15 minutes, 24 hours a day, 365 days a year. That’s 163 times more than the average person aged 65+.

Young persons are also much more likely to have abandoned their land lines in favor of an all mobile life. The chart below shows the distribution of persons by age based on how they make use of land and mobile telephone lines.

The U.S. in 2020 will be a very different marketplace from 2009, and the roots of that change are everywhere. The aging of the Baby Boom is inevitable. And in much the same way as they have redefined what it means to be young and to be middle aged, they will also redefine what it means to be old.

Other demographic trends that will shape the future are also present today—growth in Hispanic and Asian populations, with the highest shares among younger people, and falling fertility rates and falling family sizes. Beyond demographics, the gap between the generations, while clearly defined in differing usage of media and technology, has deeper roots too—in values, outlooks, and political perspectives.

Sources:
Center for Applied Research in the Apostolate (Frequently Requested Catholic Church Statistics) – Georgetown University

Baby Boomers: The Gloomiest Generation (Pew Research Center – Pew Social & Demographic Trends Project June 25, 2008)

Yang Yang—Social Inequalities in Happiness in the United States, 1972-2004: An Age-Period-Cohort Analysis—American Sociological Review April 2009

Growing Old in America: Expectations vs. Reality (Pew Research Center—Social & Demographic Trends Report June 29, 2009)

How Teens Use Media —The Nielsen Company, June 2009

A2/M2 Three Screen Report—The Nielsen Company, 1st Quarter 2009

So what will be different in terms of consumer spending in just 11 years?  A weakened Social Security system and underfunded private pension plans will make it difficult for a large number of retirees to maintain their current standard of living. From now until 2020, the Struggling and Lower Mid affluence groups will be the only ones to gain share, pulling households from all other groups.  Household sizes will decrease.  Consumer spending will grow modestly over the next 11 years, but actually fall after 2020.  And the changes that occur after that year – both in terms of demographics and spending – will require marketers to dramatically change the way they do business if they hope to continue to grow.

Read an in-depth look at the demographic changes projected to take place in the U.S., and the challenges and opportunities for manufacturers in the July edition of Consumer Insight.

The report looks at issues related to the baby boom and beyond, breaking down the global challenges for marketing to an aging audience. 

A Global Phenomenon
The U.S. is not alone.  During this same period, Japan’s over-65 population will double, while parts of Europe will reach a 1:1 ratio between working-age and pension-able citizens.  Even developing nations will face unprecedented mid-century surges in their elderly: India’s over-65 population will nearly triple alongside a six-fold spike in Chinese citizens celebrating their 80th birthdays.
 

Immigration
Between 2000 and 2006, immigrants accounted for 43% of population growth in the U.S. (60% when considering first- and second-generation children).  In order to maintain its current worker-to-retiree ratio through 2050, however, the U.S. must absorb 10.8 million immigrants per year.  This is roughly equivalent to incorporating a city the size of New York every ten months — a mind-boggling feat that must be accomplished in the midst of fierce competition for immigrants by every other aging nation.
 
Diversity And Demographics
In Italy today, almost 60% of children have no siblings, cousins, aunts, or uncles — only parents, grandparents and, increasingly, great-grandparents.  Similar demographic shifts in the U.S., due to urbanization, baby boom retirement, and a delay in marital age, are likely to prompt a redefinition of the American family. 

As a result, brands and product categories targeting U.S. households with children are likely to experience “demographic drag” from slowed growth over the next 50 years.  Marketers may also need to shift to a more multi-cultural approach in coming years, as the number of minority households with children is projected to outnumber the white majority by as early as 2035.

View Nielsen’s report, “The Aging Globe.”

Read more about multi-cultural marketing in the U.S. in the latest issue of Nielsen’s “Consumer Insight” online newsletter.