10 December 2015

Baby Boomers: the lucky generation and the mess they leave behind


In his recent column, the Washington Post’s Robert Samuelson looks at inter-generational politics in America. He questions the sustainability of unfunded entitlement programs and bemoans the fact that most politicians, including many of the 2016 presidential candidates, find entitlement reform too radioactive to talk about. And for good reason! The Boomers have enjoyed decades of progress and are now looking forward to an enjoyable retirement. Woe onto him who’ll stand in their way.

The “Me generation,” as Tom Wolfe called it in reference to its supposed narcissism, refers to an age cohort born between 1946 and 1964. As they retire, the Boomers may want to reflect on how lucky they have been. The Nazis were defeated, communists contained, the economy has been booming, living standards rising, the social safety net widening and personal liberties expanding.

To get a sense of the improvements that the Boomers lived through, I chose to look at the period between 1964 and 2014. I have done so, because many useful and reliable datasets start in the 1960’s and most have been updated to 2014. Also, 50 years is a nice chunk of time – short enough to remember and long enough to draw potentially significant observations.

First, the baby boomers saw their inflation-adjusted and purchasing power parity-adjusted income rise by 155 percent, from $21,343 in 1964 to $54,512 in 2014. Counterintuitively, while incomes rose, the number of hours worked declined from 1,929 per worker per year to 1,763 per worker per year. Put differently, people work 9 percent less, but earn over two and a half times as much as they used to.

Tupy graph 1Tupy graph 2

Another dramatic improvement concerns life expectancy, which rose from 70.2 years to approximately 79.3 years. (The World Bank’s dataset I have been using is not updated with 2014 figures, but the CIA estimates that U.S. life expectancy in 2015 was 79.7 years.) By historical standards, a 13 percent increase in life expectancy over a period of 50 years is astonishing. Life expectancy hovered around 30 years from the Stone Age until about two centuries ago. As late as 1900, it was 50 years in the most advanced parts of the world, such as Europe and the United States.

If life expectancy strikes you as a bit of a clumsy measure of well-being, consider that, according to the Social Security Administration, a woman born in 1964 can today look forward to an additional 35 years of life; a man to an additional 32 years.

Tupy graph 3

The baby boomers are also fortunate to have access to a much better healthcare than previous generations. That is especially important, because the likelihood of illness increases with age. To illustrate my point, I have chosen two serious illnesses associated with men and women respectively – prostate and breast cancer. Between 1964 and 2010 (the last year for which the International Agency for Research on Cancer has data), death rates for prostate and breast cancer declined by 30 percent and 33 percent respectively.

Tupy graph 4

But wait, it gets better. Beginning in 1966, the taxpayer started to pick up more of the Boomers’ healthcare expenses. Today Medicare, Medicaid and other government programs cover over 40 percent of all national health expenditures.

At HumanProgress, we have been documenting the falling prices of everyday products, such as television sets, microwaves, refrigerators, dishwashers and so on. Here I will illustrate the increase in the living standards by mentioning the declining price of just one big-ticket item – a motor car. In 1964, the cheapest car made by the Ford Corporation was the Falcon, which sold for $2,176. The average annual wage of a blue collar worker in 1964 was $2.50, which means that s/he had to work 870 hours to buy a Falcon. In 2014, Ford’s cheapest car was the greatly safer, prettier and environmentally friendlier Fiesta. It sold for $14,100 or 691 of labor at $20.40 an hour. That amounts to a real price reduction of 21 percent.

The Boomers were not only lucky, but also gluttonous. They saddled future generations with a massive debt of over 18 trillion dollars and unfunded liabilities ranging from $54 trillion to $86 trillion. Electoral politics, as Samuelson writes, has created “an informal consensus that the government, whatever else it does, should protect every cent of Social Security and Medicare benefits for the elderly.” But, as Herb Stein put it, “If something cannot go on forever, it will stop.” That surely applies to America’s ever-worsening fiscus and the ultimate reckoning with the lucky, but greedy “Me generation.”

Marian L. Tupy is a senior policy analyst at the Cato Institute’s Center for Liberty and Prosperity. He is also the editor of www.humanprogress.org