by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The latest Bloomberg Businessweek offers this over-the-top headline: “The 23-Year-Olds Will Save America.” (The online version here comes with a different take on that theme.) Despite the exaggeration, the article reminds us of the critical role young adults will play in the years to come.
Millennials do have one big thing going for them: numbers. At 4.3 million, 23-year-olds are now the single largest age group in the U.S. According to U.S. Census data, there are more people in their twenties (44.5 million) than in their thirties (41 million), forties (41.7 million), or fifties (43.8 million). This is good news for twenty-somethings, who will benefit from their overall size through the economic growth they’ll create. It’s even better news for the economy, which will need every penny of taxes they pay and consumer demand they generate to offset the impact of 70 million baby boomers entering retirement. “The tragedy is that these young people will have to carry the enormous burden of the retiring Baby Boom for the bulk of their working lives,” says Milton Ezrati, senior economic strategist at the investment management firm Lord Abbett. Without them, though, the future would be dire. “They will mitigate what would otherwise be a much greater strain on the economy.”
If not for this bulge of young people, the U.S. would look a lot like Japan and Europe, which both lack a relatively large number of young adults to offset graying populations. While all three had Baby Booms after World War II, only the U.S. saw its birth rate increase in the 1980s and ’90s after two decades of decline. “This youth bulge is what makes the U.S. special right now,” says Torsten Slok, chief international economist at Deutsche Bank (DB). “Though they may not be as well-off on an individual basis, their sheer size will help overcome that. The simple act of adding more workers will by itself create more wealth.”
Given this group’s critical role, it would be wise to pay attention to public policies that set obstacles in their path.