The Economic Well-Being of Elderly People and Children in a Changing Society

By Ozawa, Martha N. | Social Work, January 1999 | Go to article overview

The Economic Well-Being of Elderly People and Children in a Changing Society


Ozawa, Martha N., Social Work


Social policy in the 20th century has been a triumph for elderly Americans. Starting with the Social Security Act of 1935, the federal government has taken a strong leadership position to ensure income and health security for elderly people. The Old-Age Insurance program, enacted in 1935, and the Supplemental Security Income program, enacted in 1972, created a strong and effective safety net. The 1965 amendments to the Social Security Act established Medicare - a publicly financed health insurance program for elderly people - and Medicaid, which allows low-income elderly people to supplement Medicare. In addition, the Employee Retirement Income Security Act of 1974 (ERISA) (P.L. 93-406) provided greater security for private pensions.

All these programs were developed and expanded before the 1970s, when the U.S. economy was still growing and productivity was improving. At the same time, demographic conditions were such that there were ample workers to support the elderly population. During the past quarter of a century, however, the situation has changed. As the elderly population has grown, the population of children has shrunk in relation to the other age groups. In the meantime, U.S. society has become more diverse, and the globalization of the economy is pressuring political leaders to downsize the scope of social welfare expenditures. Thus, the United States is facing challenges on two fronts at the same time: to maintain its obligation to support the growing population of elderly people and to invest in children to prepare for the increasing international economic competition in the coming decades.

Under these dynamically changing circumstances, it behooves policymakers to engage in a balancing act to provide for the growing elderly population on the one hand, and to invest in children on the other hand. Future social policy for elderly people, therefore, cannot - and should not - be developed independent of social policy for the rest of the population, especially children.

This article addresses the changing economic status of the elderly population, but pays attention to tile changing economic status of the rest of society, especially children. Furthermore, it discusses social policy for elderly people in the context of demographic changes that are taking place in the United States.

Demographic Changes in the United States

The U.S. population is aging at a relatively rapid pace, although not at fast as the populations of other industrializedcountries, such as Japan and Germany (Koseisho, DaijinKambo Seisakuka, 1990;Ozawa & Kono, 1997). Theproportion of people age 65and over will increase from 12.8 percent in 1995 to 20.7 percent in 2040 and then decrease slightly to 20.4 percent in 2050. In contrast, the proportion of children in the population will shrink from 26.2 percent in 1995 to 23.4 percent in 2050 (U.S. Bureau of the Census, 1993).

The diversification of the population is taking place in tandem with the aging of the population. During the next five decades, the U.S. population will be 52.5 percent white, with the rest of the population composed of Hispanics, African Americans, Asians, and American Indians. In 2050 white children will be in the minority (42.3 percent). The largest increase in the proportion of children will be among Hispanic children (from 13.7 percent in 1995 to 28.1 percent in 2050) and Asian children (from 3.8 percent in 1995 to 10.1 percent in 2050) (U.S. Bureau of the Census, 1993). In contrast, the change in the racial-ethnic composition among elderly people will be less drastic than among children. Fifty years from now the white elderly population still will be a large majority (66.9 percent in 2050, compared with 85.3 percent in 1995) (U.S. Bureau of the Census, 1993).

In the meantime, the total dependency ratio (the number of children and elderly people divided by the number of working-age people, multiplied by 100) will begin to increase as the baby boomers begin to retire. …

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