Addendum to Ten Questions with Dr. Joseph Chamie
I asked Dr. Chamie three additional questions based on the comments to his first interview. Here are his follow-on answers.
Question: What will the demographics of the US look like in 2050?
Answer: Later this year, sometime in mid-October, the US population is expected to hit the 300 million mark. The growth of the America’s population is expected to continue throughout the 21st century. By 2050 it is projected to grow to about 420 million; and by the century’s end, the projected US population is approaching close to 600 million.
The age structure of the population is also expected to become older. For example, the proportion of the US population sixty-five years or older is expected to rise from 12 percent today to 21 percent by mid-century. Furthermore, Americans are expected to be living longer in the future, with many reaching 100 years or more. Also, today there are about five people in the working ages for every person sixty-five years or older; by mid-century this number will likely be cut in half.
The population will also be more urbanized, with large movements to outlying suburbs and smaller cities, and significant regional shifts to states in the South and West. Over the next twenty five years, for example, the five fastest growing states are expected to be Nevada, Arizona, Florida, Texas, and Utah. In contrast, states in the Northeast and Midwest regions, such as North Dakota, West Virginia, Iowa, Ohio, New York, and Pennsylvania, are projected to experience negative or close to zero population growth over the next quarter century.
America’s population will also likely continue to experience major shifts in its ethnic composition. According to the 2000 census, for example, the top five countries are no longer of European origin as was the case in the past; they are now Mexico, China, Philippines, India, and Vietnam. In addition, greater proportions of Americans will have their ethnic origins from countries south of the US border, especially from Mexico, which now represents close to one-third of the foreign born residing in the US.
During the coming decades, America’s population is expected to remain around four to five percent of the world total. However, its demographic standing among developed countries as a whole will increase from one-quarter today to close to one-third by 2050.
All in all, America’s population is expected to undergo major demographic changes during the 21st century. Given America’s dominant social, economic and political role in the world, these demographic changes will no doubt have significant and far-reaching consequences and repercussions for the country itself as well as for other nations.
Question: If you were an entrepreneur, what kind of business would you start to take advantage of demographic trends?
Answer: Clearly, anticipating America’s demographic future is a much easier task, especially for a demographer, than deciding on what businesses would benefit from these changes. With this caveat, I could offer some very general thoughts on this question.
Over the next four decades, the US population is expected to add another 100 million people. Obviously then, substantially more housing will be needed as well as all the related consumer goods and services.
Also, the expected changes in the age structure of the US population described earlier will offer economic opportunities, especially in areas such as health, nursing and elder services and care; estate, pension and retirement planning; recreation and entertainment; new living arrangements; and of course, new patterns of consumption and investments specific to the tastes and requirements of older persons. With older and smaller families, housing requirements and service needs will also change considerably, again offering economic opportunities.
The changing ethnic composition, especially from Mexico and Latin American countries, will bring about increasing demands for relevant and appropriate goods and services. Accordingly, opportunities will likely arise for those businesses that can cater to the needs of these new Americans in such areas as food, clothing, housing, entertainment, social services, etc.
Question: Then what kind of business would you absolutely avoid?
Answer: As my demographic training provides me with little expertise to answer this question properly, my remarks will be general and, at best, personal thoughts.
With the US population expected to grow by 40% by 2050, the economic environment certainly appears to be a promising one for the business community. This will especially be the case in the “sun-belt” regions of the South and West, and the outlying, distant suburbs of large metropolitan areas as well as smaller cities. In contrast, other regions, in particular some states in the Midwest, may be comparatively less promising for business ventures directly relating to consumer goods and services.
Also, given the ageing of the population as well as large immigrant population, I would avoid businesses and products that are complicated to understand, hard or uncomfortable to use, expensive to buy, difficult to store, and marginal or non-essential. Also, I think that it would be advisable be cautious about involvement with government funded social and health services, which will continue to be growing and as we have seen are likely not to be competitive in reimbursements.
Finally, it is also important to consider the international scene. Europe’s population as well as Japan’s have recently peaked and are now declining. The US remains an exception among the developed world due to relatively high fertility (at replacement levels) and high levels of immigration (1.1 million were naturalized in 2005). Accordingly, as I noted earlier, my preference would be to start a business in the US.
Nearly all of the world’s population growth in the next fifty years will be in the developing world. Today six countries account for half of the the world’s growth: India, China, Pakistan, Nigeria, Bangladesh, and Indonesia. India, which accounts for one-fifth of this growth, is growing so rapidly that one week of its growth is the equivalent to the natural rate of population growth for the EU-25. India is expected to be the world’s largest country in about thirty years. Also it should be noted, that by 2050, the combined populations of India and China will be what the world population was in 1950. As the populations of these two “billionaire” countries continue to develop, enormous business opportunities will also continue to arise.