Baby-boomers' future may need some attention to live up to the dream

The ``baby boom'' generation has changed the structure of society and family life in the United States. But at a two-day meeting of Americans for Generational Equity held here last week, economists, sociologists, and politicians painted a startling picture of the future of America as the baby-boomers mature.

Despite their BMWs and expensive eating habits -- a simplified and exaggerated image -- baby-boomers are far less able than their parents were to pursue the conventional American dream of a home, financial security, and education for their children, says Frank Levy, a professor at the University of Maryland.

Many young people came into the job market in the early 1970s, when the economy was shrinking, and the competition drove down real wages. On top of that, interest rates (and mortgage payments) shot up, putting a house out of the reach of many of them.

Per capita income has increased in the last 10 years, Dr. Levy says, but only because women entered the work force and had smaller families.

Cheryl Russell, editor of American Demographics magazine, contends, however, that women work because they want to, not because they have to. Surveys indicate that only 28 percent of full-time working women would rather be housewives.

The baby-boom demographic changes have important international implications, says Ben Wattenberg of the American Enterprise Institute and co-author of a forthcoming book titled ``The Birth Dearth: The Geopolitical Consequences.''

The United States and the West as a whole are mortgaging their future, Mr. Wattenberg says. Two working parents and small families may boost per capita income in the short run, but shrinking populations will mean a decline in Western economic and cultural dominance over the long run.

To ``replace'' a society (not including immigration), the total fertility rate must be 2.1 children per woman. In the United States, the rate is 1.7. The rates in West Germany, Denmark, Britain, Italy, the Netherlands, and Japan are all below the ``population replacement'' threshold, he says.

But ``capitalism has always been associated with an expanding domestic market,'' Wattenberg says.

Others point out that immigration is offsetting that decline somewhat, thus expanding the US domestic market. But this demographic shift means the government and society will have to accommodate differing needs.

Minorities will make up an increasing share of the work force, says Terry Hartle of the American Enterprise Institute. But because many minority youths grow up in poverty and without proper education, they could end up drawing unemployment insurance rather than contributing to social security.

At this point, baby-boomers are building up a surplus in the social security fund; the surplus is expected to reach $12 trillion by the year 2025, according to Rep. J. J. Pickle (D) of Texas. But by that same year, one 1 in 5 Americans will be 65 or older (vs. about 1 in 8 today); the high proportion of retired people could, if no action is taken, rapidly deplete the social security fund.

Already, says Samuel Preston, director of population studies at the University of Pennsylvania, the social implications of an aging society are being felt as resources are shifted from the young to the old.

Poverty is highest among children under age 14 (17 percent), who cannot vote, and lowest for those 65 and older (4 percent), who have the highest participation rate of any age.

That translates into money and government programs: Half of all nondefense government spending is on programs for the elderly (social security, medicare, medicaid, etc.). Meanwhile, since the early 1970s, the amount of money spent on each pupil has dropped 22.5 percent (after inflation).

The shift in wealth and population is not lost on the business community, which is coming out with everything from shampoo and magazines for people over 40 to discounts on midweek air fares.

But it does not bode well for many mainstream businesses, Wattenberg warns. In real estate, for example, the average first-time home buyer is in his or her mid-20s. By the 1990s, that group will be 10 to 20 percent smaller.

Other consumer product industries, such as autos and computers, rely on young working people to make new purchases. The computer boom in the early 1980s, for example, was almost solely caused by new purchases of new personal computers.

Solutions to potential problems are already in the works -- such as raising the retirement age from 65 to 67, thus increasing the number of workers and decreasing the number on social security. And where the government may fall short, the marketplace is filling in with people pouring money into individual retirement accounts and other private pension plans.

But the solutions go beyond politics and economics, says Dr. Preston, at the U of Pennsylvania. ``If we're going to get a revival of parenthood, we will have to have a change in values.''