Home Education Inter-generational Financial Giving and Inequality: Give and Take in 21st Century Families
The Baby Boomers: A Large, Powerful Group?
The nature of the lively public debate about the baby boomers and the potential for inter-generational contract was outlined in Chap. 1. This debate rests on a number of assumptions about the baby boomers. First of all, it rests on the simple idea that there is such a thing as ‘a’ baby boom generation, a large cohort of people born at a particular time with common interests/experiences. Second, there is an assumption that this is a powerful group in both political and economic terms. In terms of political power, there is an assumption that this generation votes for policies that benefit itself at the expense of others. In terms of economic power, the baby boomers are seen as a wealthy group. Having said all this, there is also a concern that this generation will be a ‘burden’ on younger generations as they age. This section of the chapter reviews the evidence base for these assumptions.
So, is there such a thing as ‘a baby boom’ generation? Figure 2.1 shows the number of live births in England Wales from 1938 to 2013. The baby boomers are often considered to be part of a single spike in births that occurred after the Second World War but the number of live births actually increased substantially before the end of the war (between 1941 and
Figure 2.1 therefore shows that ‘the baby boom’ is in fact two baby booms with a small baby ‘bust’ in the middle. Perhaps those born during the two ‘peaks’ (in 1947 and 1964) should, therefore, be considered as two separate cohorts. Indeed, some of those born in the first group could, themselves, be having children during the second peak. The experiences of those born in 1947 and 1964 are also likely to be rather different, calling into question the extent to which we should combine them into one
Fig. 2.1 Number of live births from 1938 to 2013 in England and Wales, ONS statistics (http://www.ons.gov.uk/ons/taxonomy/index.htmPnscKConception +and+Fertility+Rates#tab-data-tables)
‘generation’. However, most of the debate in this field defines ‘the baby boomers’ in this (or similar) ways and so we also use this definition, while also keeping in mind the limitations of this approach.
Figure 2.1 also shows that the birth rate then fell after 1964 to a low of 570,000 in 1977 before topping 700,000 in 1990 and then declining again to less than 600,000 in 2002. The decade since then saw an increase in the number of live births to 730,000 in 2012, and this mini baby boom is likely to be for a number of reasons, including more women currently in their 20s having children; more women at older ages (born in the 1960s and 1970s) are having children that had previously postponed having them; increases in the numbers of foreign-born women who tend to have higher fertility than UK-born women; government policy and the economic climate indirectly influencing individuals’ decisions around childbearing (see Sobotka et al. 2010).
However, the most recent year of statistics shows that this most recent mini baby boom has ended with the number of live births falling in 2013 to 698,512 with a subsequent fall in 2014 to 695,233. This may reflect the impact of recession and more difficult economic times on people’s decisions to have (more) children.
Whether ‘the baby boom’ is in fact two baby booms or not, it is clear that the birth rate has never subsequently reached such high levels, and this means that the generation of people born just before and after the Second World War is a particularly large generation. The size of this generation has led some to assume that it will automatically be a powerful one, politically and economically. But there is much debate about this (Willetts 2010). For example, it could be argued that a large pool of workers entering the labour market at the same time is likely to depress wages as there is more competition for jobs. On the other hand, a large cohort of people could form a powerful electoral force to vote for policies that particularly benefit themselves. However, demographic factors are only one aspect affecting the nature of labour markets and wages, and generations may not vote in blocks as they contain other kinds of interests (not least relating to social class). Before we analyse further the political and economic power of this generation, we should also question the data on the current size of this group as the size of a generation at any particular point in time will depend not only on the birth date but also on the death rate.
Demographic data here show that an extremely important trend over the past 30 or so years has been increasing longevity. People are living longer, and this affects family structures and inter-generational relation- ships. Table 2.1 shows that, in 2002-2006, life expectancy for men, at birth, was 77.0 years. For women, it was 81.1 years. Life expectancy for men, at age 65 (i.e., those born between 1937 and 1941), was 16.7 years (i.e., until age 81.7). For women it was 19.5 (i.e., until 84.5 years). These birth cohorts are not exactly the same as the baby boom generation, but they do show a steady increase in life expectancy at age 65 compared with those aged 65 in 1982-1986 (and therefore born in 1917-1721). Thus,
Table 2.1 Life expectancies at birth and at age 65 for men and women in 1982-1986 and 2002-2006
generations born during and after the Second World War are living longer than those born at earlier times, and this could have implications for supporting such generations later in life (see below).
The figures, however, also point to important differences within birth cohorts. For example, life expectancy at birth increased between 1982-1986 and 2002-2006, but the gap between the life expectancy of those from professional backgrounds compared with those from routine or manual occupational backgrounds also increased (see Table 2.1).
When we combine increasing longevity with the peaks and troughs of fertility over the second half of the twentieth century, we are left with an increasingly ageing population. For example, those baby boomers born in the early 1960s are now in their early 50s (in 2015) and will reach their early 70s by 2035. By that time, the population aged over 65 will account for 23 per cent of the total population (up from 15 per cent in 1985).
But there will be an even greater increase in the proportion of the population who are aged 85 and over. Between 1985 and 2010, this population doubled from 0.7 million to 1.4 million, and it is projected to increase still further to 3.5 million in 2035 (almost 5 per cent of the population from 1 per cent in 1985). And there has also been an increase in the number of centenarians in the UK. In 2013, there were estimated to be 13,780 centenarians (people aged 100 or over) living in the UK. Over the last 30 years, the number of centenarians has more than quadrupled from the 1983 estimate of 3040.
Will the baby boomers become an increasing ‘burden’ on younger generations as they age? Increasing longevity has led some to calculate ‘dependency ratios’ based on the proportion of older people to younger people. But there is obviously a decision to be made about what age thresholds to use. The World Bank produces data on old age dependency ratios measured as the ratio of people older than 64 to the working-age population (by which they mean those aged 15-64). Data are shown as the proportion of dependents per 100 working-age population, with the UK having a ratio of 27 in 2013 compared with 23 in 1983. This is a significant increase but not as much as many other European countries, for example Italy, which had a ratio of 32 in 2013, up from 20 in 1983. However, there are many problems with this concept not least that the presumption is that people, of a certain age, are productive workers and those above that age are unproductive non-workers. But, clearly, some people of ‘working age’ do not work and some people who are over pension age still do. Over time, we have also seen an increase in the age at which most people begin work (as people stay in education longer). These ‘dependency ratios’ are therefore not always particularly helpful but provide some information on the balance of the population in terms of age.
The changes in fertility and longevity discussed above affect the number of people within particular generations at a point in time. Clearly, there was a baby boom (or two) just before and after the Second World War, but many of these people may have died by now, so do we now have a large baby boom cohort in Britain? Figure 2.2 draws on data from the
and Wales, United Kingdom, 2002-2013, http://www.ons.gov.uk/ons/dcp171778_378107.pdf
Fig. 2.2 Numbers in different generations, UK Census 2011 (http://www.ons. gov. uk/ons/publicat ions/re-reference-tab les.html ?ed it ion=tcm%3A77- 270247)
2011 Census to show that there were just under 16 million young people aged 5-25 (Generation Y), just over 17 million aged 25-45 (Generation X), just over 16 million aged 45-65 (in the baby boom generation) and just over 10 million people 65 and over (the war generation and older). Despite the fact that the birth rate was highest for the baby boom generation, and increasing longevity, the baby boomers are clearly not the largest generation and those 65 and over are a relatively small ‘generation’ now.
Generation X is therefore bigger than the baby boom generation, but this younger generation is less likely to vote and exercise its power of size. Three quarters (73 per cent) of 55-64-year-olds and more than two thirds (69 per cent) of 45-54-year-olds voted in 2010,5 compared with only 44 per cent of 18-24-year-olds and 55 per cent of 25-34-year- olds. Figure 2.3 divides the population (according to 2011 Census) into three groups of voters, those aged 20-44, those aged 45-64 and those aged 65+. As we can see, the baby boomers (aged 45-64) are not the
Fig. 2.3 Numbers of people in different age groups and number of voters (using 2011 Census and 2010 voter turnout rates)
largest group by absolute size of these three groups. Indeed, there were ‘only’ 16.2 million of them in 2011 compared with 21.6 million people aged 20-44. So while they are a large cohort compared to previous (and future cohorts), their absolute size is not as great as it is sometimes portrayed to be. However, once we take into account the proportion of each group which voted in the 2010 General Election, the baby boomers were only a slightly smaller political group than the younger voters (11.4 million compared with 12.4 million). And if they join forces with older people (aged 65 plus, who have an even higher rate of voting than baby boomers), they do then outweigh 20-44-year-olds quite considerably.
Walker (2012), however, has disputed the idea of a powerful ‘grey vote’, distorting policies for their own advantage. While he has admitted that older people are a large group and one that is more likely to vote than younger people, he has also pointed out that older people do not vote in a block and so it is not appropriate to talk about a single ‘grey vote’.6 Indeed, while older people are generally more likely to vote Conservative than other age groups, they are similarly likely to vote Labour. They are much less likely to vote Liberal Democrat. Walker (2012) is right, therefore, to point to other cleavages within this group (see below also) which are likely to mean that they have different opinions on many policy issues. But while older people clearly do not vote as a block, this means that all parties need to appeal to older voters if they are to be successful.
Age was certainly a factor in relation to the UK’s vote to Leave the European Union in June 2016 with nearly three quarters (73 per cent) of 18- to 24-year-old voters backing remain compared with a majority of voters aged over 45 supporting leave, rising to 60 per cent of voters aged 65 or over. Once again, the turnout for the Brexit vote varied by age from 64 per cent of registered 18-24-year-old voters to 90 per cent of those aged 65 or over.
As well as being a potentially powerful group, politically, the baby boomers are often referred to as a very wealthy generation. And it is certainly true that the baby boomers, on average, have higher levels of wealth than other generations (see below). But we should expect this to be the case because it normally takes people considerable time to accumulate assets over their life course. According to general lifecycle theory (Modigliani 1988), young people are typically on low incomes and have not had time to accumulate assets. At this stage in life, it makes sense to borrow money, given the likelihood of income increasing in future. Later on, in middle age, incomes are higher and so debts can be repaid and money saved for later life when incomes will fall. In retirement, pension wealth will be used and savings may be drawn on. Lifecycle theory therefore predicts an ‘inverted-U’ or ‘hump’ shape to the distribution of assets across someone’s life. This means that even if people have the same level of lifetime assets, we would expect people in late middle age to have higher levels of assets than other groups.
So we would expect the baby boomers to be the wealthiest generation, and indeed the National Equality Panel (Hills et al. 2010) has shown that median total wealth peaked for those with a ‘household reference person’ aged 55-64 at ?416,000 in 2006-2008. Total wealth includes property wealth, net of mortgages, private pension wealth, financial wealth and physical wealth, that is, the value of cars, furniture and personal items. The generation above this age had far less wealth, at ?172,000 (where pension rights, in particular, are much smaller). And for younger people, wealth was much less (25-34-year-olds owned an average of ?66,000). This is a difference of ?350,000 between those aged 25-34 and 55-64 (i.e., 30 years), and while such differences might reflect lifecycle saving, it seems unlikely that people can save that amount of money, from their income alone, without other factors also operating, such as substantial house price increases, the relative generosity of private pension schemes and so on. It also seems unlikely that the 25-34-year-olds in 2006-2008 will be similarly fortunate (in terms of house price rises and pension generosity etc.) enough to accumulate a further ?350,000 on average over the next 30 years.
Crawford et al. (2015) have also pointed to evidence that later generations may have, on average, lower levels of wealth at each point in their lives compared with the baby boomers and older generations.
Figure 2.4 further illustrates the different levels of wealth between different age groups with more recent data—for 2010-2012. It shows that levels of wealth tended to peak among those aged 55-64 (by age of the head of the household). Private pension wealth reached the highest average levels, followed by property wealth and net financial wealth (savings minus debts). But financial wealth had a much less pronounced relationship with age compared with housing and pension wealth.
The baby boomers are clearly a wealthy generation overall and some are particularly wealthy, individually. For example, the Intergenerational Foundation has estimated that there are 830,000 people aged 60-64 living in households with at least ?1 million of wealth (in terms of housing wealth, private pension wealth and financial wealth) (Leach 2012). There are an additional million (989,000) people aged 65 plus living in similarly wealthy households.
But the focus on age cohorts (or generations) as a whole can be misleading, as there is considerable inequality within these cohorts. The National Equality Panel (Hills et al. 2010) pointed to considerable inequality within every age group. For example, among people aged 55-64 (that is, those who are nearing or have reached retirement), a tenth of households
Fig. 2.4 Median level of assets, by age of household head in 2010-2012 (Source: Wealth and Assets Survey, Crawford et al. 2015 )
still had wealth of less than ?28,000, but a tenth had more than ?1.3 million in 2006-2008. And if we focus on 25-34-year-olds, a tenth had wealth of around ?3500, but a tenth had more than ?250,000. So the ‘lifecycle’ explanation for wealth inequality can only explain part of the overall level of wealth inequality.
As mentioned earlier, this measure of ‘total wealth’ includes private pension wealth, property wealth, financial wealth and physical wealth. For someone at the age of 55-64 to have less than ?28,000 in these forms of wealth is very surprising, and concerning from a policy point of view, given that they have had most of their working life to save up and are on the brink of retirement, a time when wealth of some kind is particularly important.
More recent figures for 2010-2012 show a very similar picture. Among those aged 55-64, one in ten had more than ?1.4 million in total wealth. Another one in ten of those in the same age group had less than ?27,000, even including all their personal possessions (Hills and Cunliffe 2016).
It is clear that some baby boomers were very wealthy in 2006-2008, but some were most definitely not. Indeed, some will be facing retirement with debts rather than assets, not least as endowment and interest- only mortgages come to an end and people have not made provision for paying off the capital owed. Previous research has shown that an increasing number of older people have debts (McKay et al. 2008). This research showed that in 2002, a quarter (23 per cent) of households headed by a person over the age of 60 owed money on consumer credit agreements, as did nearly half of those aged in their 50s. Furthermore, one in eight over60s was repaying a mortgage, as were about half of households headed by someone in their 50s. There were also some older people who owed very high amounts. The study also showed a slight increase between 1995 and 2000 in the proportions of people aged 55-64 who owed money; and a large increase in the proportion of annual income owed in unsecured and secured credit by those aged 55+, with the larger increase being among the over-65s. This is quite a change in the profile of debt which has, until recently, been much more of an issue for people of working age with young families. Given that we would expect (from lifecycle theory) that those on the brink of retirement would have accumulated wealth, it is extremely worrying that an increasing proportion of people are not in this position—or may have not only some wealth but also increasing debt.
Similarly, it is surprising that there are some younger people with such high levels of wealth. For example, in 2006-2008, the top 10 per cent of 25-34-year-olds had total wealth of nearly ?300,000. This is a considerable sum, and it is unlikely that it could have been saved from earnings alone. Family support is likely to have been a feature here, through either inheritance or receipt of lifetime gifts. The bottom 10 per cent in this age group only had ?3500, including all their possessions. Inequalities within generations are therefore extremely stark.
Kohli (2006: 456) has, indeed, argued that the assumed ‘generational cleavage ... masks the continued existence of the class cleavage between the wealthy and the poor’. And he goes further to argue that concerns about inter-generational inequalities function as an ideology: as a way to divert attention away from the still existing problems of poverty and inclusion within generations ... based on class and gender. This view is shared by a number of writers, including Bristow (2015: 183), who argues that “generational- ism has come to the fore as the established narratives of the past have lost their purchase. ’ However, it could be argued that these ‘established’ narratives of class, gender and ethnicity have lost their purchase because they are no longer as relevant as generational differences. This is not a view held by Macnicol (2015), who sees the focus on ‘alleged’ inter-generational inequities as part of a broader political strategy to ‘neo-liberalise old age’ with the overarching goal of attacking the notion of retirement as a social right.
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