The increasingly senior-centric economy: What today’s demographics mean for business in the region
First in a two-part series by Don Fenley and Scott Robertson
This is not your father’s economy. Well, actually, if your father is a Baby Boomer, it is. It is the economy his generation is about to dominate. And few places in America is that more true than Northeast Tennessee and Southwest Virginia.
In examining demographics and economics, it first must be stated that the population is growing worldwide. The simple fact is that worldwide, more people are being born than are dying. In the U.S., the expanding population is reaching old age in greater percentages than in most of the rest of the world right now because the baby boom produced a spike in population, and the first of the Boomers reached age 65 around 2010. Between 1900 and 2010, the proportion of the population age 65 and older increased at an average rate of around three quarters of a percent per decade, but between now and 2030, the rate of increase in the elderly population will be over 3 percent per year. By that point, the rate of population growth related to the baby boom will level off, and by then, about 20 percent of the U.S. population, 72 million people, will be over the age of 65 years.
In Northeast Tennessee and Southwest Virginia, the graying of the population began happening sooner and is happening faster and in greater proportions than in the rest of the country. We are, in effect, a leading economic indicator.
Regionally, beginning last year about 29 local residents began turning 65 every day. That pace continues until 2020. Then it picks up to about 30 a day for the next five years. Depending on whose population data and projections you use, by 2028 one in every four residents of the region will be over 65. That’s two years before the projections for the rest of America.
It can safely be said the first wave of local Baby Boomers has stepped into what used to be euphemistically called their golden years. And if there’s one thing for sure, it’s that they will reinvent what it means to be elderly, and their sheer numbers will reshape the economy.
This isn’t a here-today, gone-tomorrow situation. The status quo has already begun to shift rapidly. And it’s a demographic change of tectonic proportions. The changes are massive and long-term.
GenerationX is going to have to “step up” in ways heretofore unimagined, but the GenX generation is 35 percent smaller than the Boomer Generation. There are simply not enough GenXers to sustain consumptions levels set by the Boomers or to pay the government debts Boomers made. The strain is beginning to show up in the economy and will increase.
Eventually the Millennials who dominate current media attention will become the economically dominant generation. They already outnumber the Boomers because Boomers have a higher death rate. But that’s not how the numbers break down here. Since our region is older than the state or national medians, Boomers still have the largest share of the total population.
Over the next two months, The Business Journal will be looking at what the demographic shift toward a much more senior-centric economy will mean for the region, and with the region as a leading indicator, for the nation.
The region by the numbers
Each generation’s population share for the Business Journal study is what you would expect in some cases, but there are surprises. If population by age is the deciding factor, Northeast Tennessee dominates the board because it has the larger population. But when population share is the benchmarked a different picture comes into view. Even though Northeast Tennessee has the larger population the population share for each generation isn’t much different from Southwest Virginia with the exception of Baby Boomers. Southwest Virginia has slightly higher population share. Unicoi County has the largest county population share of Boomers – 35.9 percent – in Northeast Tennessee. Close behind with 34.4 percent shares are Carter, Hawkins, and Johnson counties. Buchanan County has the largest county population share of Boomers in Southwest Virginia – and the region – 36.1 percent. Russell, Scott, and Washington counties in Virginia each have 35.7 percent shares.
In addition, the graying of the region includes more than just Boomers. Combined with the rapidly diminishing numbers of the Greatest Generation (now in their 90s) the so-called Silent Generation accounts for a little more than 8 percent of today’s regional population. The youngest are 73. They’re called the Silent Generation because they lived in the shadow of the larger Greatest Generation but came before the more celebrated Boomers.
A concern and an opportunity
The changing economic realities that go with a tectonic shift in demographics were not unforeseen. On December 29, 2010, reporters across the nation quoted the Pew Research Center’s declaration of the aging of American. In part, it said, “As the year 2011 begins on Jan. 1, the oldest members of the Baby Boom generation celebrated their 65th birthday. In fact, on that day and for every day for the next 19 years, 10,000 baby boomers will reach age 65.” Yet at the time, most business owners had more pressing concerns, mainly dealing with responding to the Great Recession. Now, however, those realities are driving reaction by businesses.
Health care is already the largest industry in the region. As the population ages, both the opportunities and challenges of that demographic shift will only increase the economic impact of health care.
Older patients create more complex cases. They have more chronic conditions. The importance of preventive health care and managing patient risk rises dramatically.
In January, Holston Medical Group in Kingsport, Tenn., hired the region’s first board certified geriatrician, Dr. Ronna New. “Most of my patients want to remain active and independent, living in their own homes as long as they can,” New says. “So, I help to coordinate their care, because a lot of my patients are seeing multiple specialists who are all doing a very good job treating one particular organ system. A cardiologist is doing a great job with the heart. The nephrologist is doing a great job with the kidneys. But many of my patients do not have one physician who is really looking at the big picture and helping to coordinate that care, helping them to navigate the system of healthcare, and helping to make sure that all the great providers that are caring for them know what’s going on and are communicating. That coordination very much decreases the overall risk to the patient.”
What does that mean to the economy? Decreasing risk decreases costs. Yet this region isn’t the only one where geriatricians are rare. “We have about 7,000 nationwide,” New says, “and we need closer to 20,000. I have big dreams and visions for this region. Being from this area, I would absolutely love to see us with time to be able to have truly a center of excellence on aging in our community.”
The aging population also creates a remarkable opportunity for researchers seeking to anticipate trends in care. Again, because the region’s population hits older ages sooner than the national average, Northeast Tennessee and Southwest Virginia can serve as predictors.
The Ballad Health merger specifically stated that millions of dollars will be spent on research in the region over the next decade. That will create direct economic benefit to the region, in addition to any benefits generated from the outcomes of the research itself.
So why recruit more seniors?
While much is made of the burden the healthcare needs of aging citizens can place on the regional economy, many communities in Northeast Tennessee and Southwest Virginia see seniors as a reliable part of the tax base, with lifetimes’ worth of savings already in hand. In Northeast Tennessee, Carter, Sullivan, Unicoi and Washington counties are all participants in the Retire Tennessee initiative. Those communities actively recruit seniors to move here.
Unicoi County’s Retire Tennessee promotional materials, for instance, tell seniors, “Living here means you keep exploring and getting involved in a place where people are genuinely friendly. You’ll find a reasonable cost of living without income tax. Housing costs are lower, and travel destinations are a day’s drive or quick flight away. From the Cherokee National Forest to performing arts or adventures for families of all sizes and ages—it’s here— ‘where the mountains meet the metro.’”
And Unicoi County Mayor Greg Lynch has sold the county as, “the perfect place for retirees to slow down, relax, and experience the outdoors, all right off I-26.” Carter County is even more direct in its age-based appeal, telling seniors that relocating to Carter County “brings out the inner child.”
Part of the region’s desire to attract retirees is an offshoot of its desire to attract anyone and everyone who might help sustain the economy. The region has a population replenishment issue.
For every 10 live births per 1,000 people, there are 13 deaths. People are living longer, but having fewer children. In addition, young people are moving out of the region in greater numbers than in previous years. This creates what demographers call negative natural population growth. It means, until the younger generation starts staying and procreating at a greater pace, the only way communities can sustain their population is to attract new residents from outside.
One bit of good news on that front emerged just this month. Every county except Johnson in Northeast Tennessee had a 2017 population increase, reversing the recent trend. Sullivan County, which has varied from losses to a small bump in 2016, saw the largest area increase. Estimates for one year aren’t enough to signal a reversal of the population stagnation that much of the region has seen, but do represent a welcome shift from the past years. The Northeast Tennessee portion of the Tri-Cities region has a population of 502,169 based on the latest estimate. That’s an increase of 1,789 resident from 2016. The Southwest Virginia portion totaled 159,322, a decline of 943 residents. The region’s 2017 total population is 661,491, an increase of 846.
Next month: How the region’s businesses outside of health care are reacting to the shift toward a more senior-centric economy.