COMMENTARY — Our posterity: ‘Total Age Dependency Ratio’ means we need each other, and wiser education policies
Published: April 11th, 2016
OKLAHOMA CITY – There is nothing quite like an analysis, whether it makes one feel good or bad, that returns again and again to the same conclusion – supported by a combination of the best evidence available and careful reasoning.
In a speech to the monthly meeting of the Oklahoma School Choice Coalition, Matthew Ladner gave an attentive audience that kind of analysis.
He asked listeners to “imagine me as a visitor from the future.” This particular visitor is senior advisor for policy and research at the Foundation for Excellence in Education.
In his recent address in our fair city, Ladner the visitor from 2030 “looked back” at 2016, with a federal debt over $19 trillion, and unfunded entitlements that reached $55 trillion.
Gazing ahead and using demographic data drawn from the Census, Labor data and other sources, Ladner pointed out, “10,000 Baby Boomers will reach retirement age per day until 2030, whereupon all surviving Baby Boomers will be age 65 or older.”
In just 14 years, the number of children between the ages of 5 and 12 will be roughly equal to the number of adults ages 65 and older. Lest anyone shrug to say “So what?” remember that health care is already the fastest growing portion of this and every other state’s budget.
To be specific, “Increased Medicaid spending” – driven by an aging population — “is going to cost you decreased spending somewhere else in the picture.”
Ladner, who spoke at the Advance Center for Free Enterprise, on the west end of the Oklahoma Council of Public Affairs’ campus south of the Oklahoma state Capitol, looked at demographic trends a slightly different way in a previous article for OCPA:
“Economists have established that age demography has broad societal impacts. They have developed a measure of age-demographic strain called the ‘total age dependency ratio.’ The basic idea is that young people are too young to have entered the workforce, and elderly people exit the workforce in large numbers when retiring.”
These numbers don’t lie. Transformation will come to Oklahoma and to America, whether or not defenders of the policy status quo want it.
Speaking of that status quo, “we have to adapt to a changing environment. The education system will have to adapt. Change is not optional, it’s going to happen.”
So, Ladner asks rhetorically, “Will we plan ahead, or bumble into chaos?” In short, how are we doing at educating the workers and taxpayers of tomorrow?
There are various means of answering that question, but few Oklahomans are satisfied with the outcomes we’re getting.
Consider the percentage of Oklahoma students scoring “Below Basic” and “Proficient or Better” on the NAEP fourth grade reading exam between 1998 and 2013. Ladner reported in a prior analysis, “In 1998, students scoring ‘Below Basic’ outnumbered ‘Proficient or Better’ readers 34 percent to 30 percent. In 2013, Below Basic readers outnumbered Proficient or Better readers 35 percent to 30 percent.” For eighth-graders, he documented, performance has been pretty static and unsatisfactory, through 2015.
To sum that up, “we have endured a lost decade, and are halfway through a second.”
Ladner says, “Things don’t look to get any easier over the next decade and a half.” Oklahoma’s student population will become increasingly diverse in this period, and the state population will age profoundly. That combination of diversity and aging is something to ponder.
Think of that combination as hitting the day after tomorrow, in the broad scope of things. Sure, in the present decade, Ladner reports, there are enough people in the workforce to “service” the system’s needs. But demographics is in its own way like a law of nature. It is is immutable.
In 2010, Ladner stressed, “62 of every 100 Americans were ‘riding the cart.’ By 2030, it is going to be 80 of every 100.”
Those young and middle-age workers of 2030 are the cohort now in Oklahoma K-12 schools.
In the following, think of the terms “payers” and “consumers” as merely descriptive (as previously with “diverse” and “aging”).
Ladner has written, “Working-age people (ages 18-64 in the U.S. Census calculation) are the primary payers of taxpayer services, while children and the elderly are primary consumers of major state services. Economists have documented that high age dependency ratios serve as a drag on economic growth, which impacts state revenue growth.”
Steady as she goes. Again from Ladner: “The age dependency ratio contains the implicit assumption that the working-age population will be, well, working. Note, however, that many of the working-age Oklahomans of 2030 sit in Oklahoma classrooms right now. These are the same people who will struggle to pay the taxes needed for health and education spending in the near future.
“The 2013 fourth-graders mentioned …, for instance, will be in their mid-20s in 2030. The fourth-graders from 1998 will be in their early 40s. Both cohorts had only 30 percent of proficient readers in fourth grade.” (emphasis added)
The single most important policy choice facing policymakers right now – and it has been so for the last few years — “is to improve the quality of the K-12 system.” He said on April 7, “Unless you have a system that allows parents to choose the best education for their own children, you can’t have the best system possible.”
Ladner is steady, and consistent, a persistent fellow. His counsel is unchanging, if stated with some intensification over the past four years:
“The age dependency ratio contains the implicit assumption that the working-age population will be, well, working. Note however that many of the working-age Oklahomans of 2030 sit in Oklahoma classrooms right now.” Once more, with feeling, concerning the students of 1998 and those of 2013-15:
“Both cohorts had only 30 percent of proficient readers in fourth grade.”
I agree “it is an unambiguous blessing to have multiple generations of Americans alive at the same time, but the American social welfare state is not prepared for it at either the state or federal level.”
Think of “total age dependency ratio” as an academic’s way of describing a process that is simply unfolding. We don’t have to overthink this. But also think of it as a demographic fuse, one that when it runs its course could shred our social, economic and cultural fabric. Unless it doesn’t.
The children of today will soon – in the blink of an eye, as any grandparent can tell you – be the new “us.” They will be the workers whose efforts drive the economy, pay the bills and provide the financing for essential social services, unless they are not adequately equipped to do so.
For ourselves and for our posterity, we should love them enough to do better.
NOTE: Elected to the Oklahoma Journalism Hall of Fame in 2015, McGuigan was in 2013 designated one of the state’s best reporters by The Washington Post blog, “The Fix.” He is a certified public school teacher.