Effects of Demographic Change on Selected Economic Factors Impacting the Public and Private Sectors in the United States

Abstract

Demographic change markedly impacts economic resources, expenditures, and assets. This chapter describes recent change in household income, expenditures, wealth, and poverty, and reports the results of projections of the same. Real median income was less and rates of poverty were higher in 2010 than 1999 with race/ethnicity specific income lower for minority households and poverty rates higher. Using alternative projection scenarios, this analysis demonstrates that increasing incomes for the growing number of minority households is critical. In the absence of increases in minority incomes, total real mean household income will decline by $3,400, household poverty rates will increase by two percent, and overall net worth will decline by 19%. These changes in household income will impact not only household expenditures and wealth but future tax revenues. Finally, this chapter delineates the effects of race/ethnicity change on home ownership and related expenditures. If current differentials in home ownership continue, rental housing will increase more extensively than owner housing (a 52.2% increase compared to 37.2% of owned households). These changes will lead to a net increase in renter and a decrease in owner housing expenditures. At the same time, the aging of the population will decrease housing expenditures for all household types.