In a recent paper published in the Economic Development Journal, James H. Johnson, Jr., Allan M. Parnell and Huan Lian, researchers from the Frank Hawkins Kenan Institute of Private Enterprise, assert that an aging population is an opportunity for economic growth. Johnson, director of the Urban Investment Strategies Center at the Kenan Institute, builds on decades of research into community and economic development and demographic change to outline how businesses, policymakers and economic developers can tap into the power of an aging population.
The U.S. population is growing older. Seniors are living longer, and becoming increasingly diverse by race and nativity. Although the trend toward an older population is frequently viewed as a challenge, Johnson, Parnell and Lian argue that it presents several big opportunities for innovation, business development and economic growth.
Opportunity 1: Innovate Products
Opportunities exist to innovate new products and adapt existing products to meet the needs of the elderly. Many innovators fail to acknowledge that older adults are not homogenous and fail to tap into large portions of the senior market. Innovators who address the needs of these elder sub-groups, including the poor, frail and demographically diverse, will reap rewards as the senior population continues to grow even older and more diverse.
Dedicated business plan competitions and creative financing models are needed to support such targeted innovation, and should leverage the expertise of older adult entrepreneurs. These encore entrepreneurs are more likely to address societal issues, and their ventures have a higher five-year survival rate than entrepreneurial ventures launched by any other demographic group. Thus, investment in encore entrepreneurs who focus on aging will pay large dividends.
Opportunity 2: Purchasing Power
The boomer segment of the older adult population constitutes a $15 trillion market globally, and a $3 trillion market in the U.S. However, to successfully tap into this market, businesses must improve their advertising strategy, portraying older adults in positive, non-stereotypical ways and hiring older adults at all stages of the marketing process.
Businesses should also undertake comprehensive research into the needs of older adults, with a particular eye toward meeting evolving needs posed by demographic shifts. For instance, research shows that nonwhite older adults are much more likely than white older adults to live in multigenerational households, and these households are more likely to remodel than one-generation households. Thus, the demand for new construction that accommodates multiple generations in one household will likely rise as the foreign-born older adult population continues to grow.
Opportunity 3: Senior Care Workers
By 2025, 1.2 million additional senior care workers will be needed to accommodate the growing older adult population. Filling this need will prove challenging for several reasons. Many senior care workers are single mothers of young children, rely on public transportation and/or face cultural and language barriers.
Current immigration policy presents additional challenges relating to foreign-born senior care workers. The federal government presents no clear path to citizenship for law-abiding undocumented immigrants and proposes to reduce by one-half the flow of legal immigrants into the U.S. Current proposed legislation would prioritize well-educated, highly skilled workers, not those individuals who would likely fill senior care jobs. Such legislation would exacerbate the existing shortage of senior care workers.
Still, this growing need for senior care workers poses a large opportunity for HR staffing agencies who are able to recruit and retain home care and institutional care providers.
Opportunity 4: Age-Friendly Modifications
Major modifications to all types of property are required to accommodate the aging population. Mixed-income, multigenerational communities are one option that can create a host of positive economic and social outcomes. First, these communities can offer affordable, age-friendly homes and thus serve as an antidote to gentrification. Second, by constructing such homes around a community center, these neighborhoods can promote social interaction and combat elder abuse and isolation. Third, age-friendly communities can become major retirement destinations and facilitate tourist activity. This will drive business development and employment growth, all while boosting the local tax base.
Based on the opportunities outlined, the Kenan Institute researchers have developed several recommendations for business executives and policymakers:
- To fill the need for senior care workers, Congress must implement comprehensive immigration reform and enforce the recent Department of Labor ruling that homecare workers must benefit from the same labor protections as other employees.
- Policy prescriptions and funding proposals relating to infrastructure should reflect the World Health Organization’s planning guidelines for creating age-friendly communities.
- The federal government should create an aging in place social innovation fund for ventures that help vulnerable older adults age in their homes and communities.
- The federal government should create a guide for age-friendly building upgrades in the multi-family rental market. This guide should include links to state and federal programs incentivizing or subsidizing such upgrades. Many older adults, particularly those who are cost-burdened by housing, are renters, and are dependent on landlords to make modifications.
- Property and casualty insurance companies and their building owner clients should forge alliances to facilitate aging in place for older adult tenants. All parties will financially benefit by investing in age-friendly renovations.
- The federal government should increase funding for the USDA Section 504 Home Repair program that provides grants to rural, very low income, elderly homeowners, and expand the program to urban areas. Partnering with nonprofits such as Habitat for Humanity and churches will facilitate this expansion.
- Steps should be taken to preserve and expand Medicaid, which so many older adult households rely on for long-term support and care.
- The Medicaid Home and Community-Based Waiver Program should be leveraged to invest in training the in-home relatives of older adults as non-medical caregivers, and pay them for their labor. This is likely a much cheaper option than relying on institutionalized care.