(March 2007) The United States is in the midst of a major realignment of its population as the baby-boom generation ages into retirement and a smaller, strikingly different younger generation prepares to take over.

Demographer Dowell Myers argues that this is a population shift of historic proportions. Unlike earlier demographic change, he says, this one brings the potential for conflict between the generations because of their divergent racial, ethnic, and nativity profiles—the older mainly white, the younger heavily minority and immigrant. Myers, who is at the University of Southern California, contends that the changing times require a new intergenerational social contract, one in which Baby Boomers realize that their futures hinge on supporting today’s needs of the younger generation.

In his new book, Immigrants and Boomers (Russell Sage Foundation, 2007), Myers labels the current trend a third "demographic transition," equating it with two previous epochal transformations of the nation's population. California has experienced this change ahead of the rest of the country, he says, but the nation will catch up.

How This New Demographic Transition Builds on Earlier Ones

The concept of a demographic transition is meant to explain broad changes in the makeup and trajectory of populations, occurring first in developed nations and later in developing ones.

The first demographic transition altered the populations of western and northern Europe (and later the United States), which were being held in balance by equally high birth and death rates. When health and nutrition improved, death rates declined but birth rates stayed high, leading to a population explosion beginning around 1800. Birth rates eventually declined, resulting in the two rates being similar again, but low.

Demographers describe a second transition that began to play out in Europe and the United States four decades ago. A combination of factors, including women's greater participation in the workforce and the growing emphasis on self-fulfillment, drove birth rates down even lower. In some countries, so few children are being born that the population is shrinking.

Meanwhile, life expectancy is growing and the large baby-boom generation is heading out of the workforce. Myers says the third transition is an "epic transformation" in which this huge group is succeeded by a smaller generation that includes a large share of immigrants and their children.

He writes, "The story of this transformation is simply this: A lot of Americans are growing older because of the baby boom long ago. Meanwhile, newcomers—in ever-increasing numbers—are arriving as immigrants, and because of their racial and ethnic differences, the reception they are receiving from the well-established older generation is less than welcoming. Nonetheless, the newcomers are filling vital roles in an undersized younger generation that cannot otherwise replace the retiring baby boomers."

Elderly Population Rising Sharply, and Taxpayer Growth Will Not Keep Up

Myers describes a change that began in 1970, when the nation's foreign-born population was at a historic low of 4.7 percent of the U.S. population. A huge influx of immigrants, including many unauthorized, pushed up the size of the foreign-born population. In California, nearly half the population now consists of immigrants or their children.

This surge of new immigrants leveled off in California about a decade ago, with forecasters predicting a likely slow decline over the next 20 years. Although the foreign-born population still is increasing nationally, it is not growing as rapidly as in the peak years of immigration in the late 1990s.

The next large change to arrive will be the rapid expansion of the elderly generation: From 2010 to 2030, the proportion of the population over 60 will grow from 18 percent to 25 percent in the nation, and from 16 percent to 23 percent in California. At the same time, the foreign-born population will become more settled. By 2030, Myers says, most will have lived in the United States for more than 20 years.

The soaring number of elderly people will affect the dependency ratio, which describes the impact of a nonworking population on a working population. In the United States, where there will be 246 elderly people for every 1,000 workers in 2010, there are projected to be 411 elderly per 1,000 workers in 2030. In California, the comparable ratios are 214 elderly per 1,000 workers in 2010 and 350 per 1,000 in 2030.

But the dependency ratio of minor children will stay the same, about 500 per 1,000 working-age adults.

Those adults, the nation's taxpayers, "will be burdened at both ends" to pay for government assistance to the young and old, Myers says. The workforce will not be large enough to afford the tax bills that will come their way, or to fill the jobs that a strong national economy requires.

Changes Raise Thorny Public Policy Issues

Unlike earlier changes, he says, this demographic transition has political consequences.

The older, mainly white voters who dominate the electorate are less inclined than younger, mainly minority residents to vote for higher taxes that will go to schools or other public services.

Because younger or foreign-born or nonwhite people are less likely to register to vote, the political influence of the older white generation will last longer than its majority status. Although non-Hispanic whites recently became a minority in California, Myers estimates they will be the majority of the state's voters for at least 17 more years.

In addition to confronting the changes needed to keep the Social Security system solvent, Myers said these older voters also should be looking out for the needs of the younger generation who will replace them as parents, workers, and home buyers. Without an attempt to accelerate the integration of immigrants and to expand their educational opportunities, he says, there are substantial questions as to whether this smaller younger generation will have the skills to replace huge numbers of retirees, and to afford the taxes needed to support them.

A key date, he says, will come soon: In 2015, the labor force shortage arrives in full force.

D’Vera Cohn is a senior editor at the Population Reference Bureau.