April 20, 2015

Written by Sandy Stuart

A few days ago I was looking over some back issues of the Economist magazine before recycling them.  The March 20th issue caught my eye. It had a “special report” section that had to do with U.S. population demographics, notably our aging population, and the wave of Hispanic immigrants. Whenever I see information on demographics, I snap to attention. During my years as an investment manager (I am now retired) I have found it remarkable that demographics receive so little attention. I attribute this to our short term focus. We Americans tend to focus on the end-of-quarter or end-of-year figures. We miss great opportunities “down the road”.

This particular article focused on Hispanics and seemed to make good sense. It brought to my mind the question, “Are the immigrating Hispanics a threat or an opportunity? I realize most of our readership is mid Atlantic. Latinos are generally off our radar screens. However, for the first twenty-five years of my existence El Paso, Texas, was my home. I watched as Latinos multiplied until bilingual skills became essential! Now that is true for most of the southwest, Florida and California. Multiplication continues big time.

For those of us who pay attention to demographics, the graying of the U.S. population comes as no surprise. It has been obvious for some time and is usually expressed in concerns about the social security system which is, unfortunately, “pay as you go”. That means there is no “trust fund” that has been building up with excess revenues collected. Rather, the pensions are to be currently funded by taxes levied on the active work force. That used to work when there were four to six times as many workers as retirees. We are entering an era when there are only one or two workers for each retiree. That can’t work.

We are not alone. The other rich nations have the same demographic problem. It seems that as people become wealthier, they lose interest in having children. They have too few kids to replace themselves in the work force. On the other hand, poor folk in developing countries continue to have a high birth rate. By having a bunch of kids, poor folks figure that at least one of their six or seven kids ought to be successful and care for their aging parents.

You may have noticed that currently countries like Japan, England, France and Germany are lagging the U.S. economically. Why? Because we have a younger work force, but most of these youngsters are immigrants and their children. The median ages of whites, blacks and Hispanics are, respectively, 42, 32, and 28. But the median age of American-born Hispanics is only 18!

The challenge is to provide the necessary training and educational opportunities for those bright-eyed Hispanic kids so that they can help replace the white retirees. This is quite a challenge. Performance measurements for Hispanic children are pretty miserable. Hopefully, whatever improvements we make to bring Hispanics up to scratch will also help our young African American population.

So the answer to the question asked about whether the immigrating Hispanics are a threat or opportunity is, “YES” (or both). U.S. whites are solidly enroute to becoming a minority and we need good replacements to help us compete in the global markets. Kids are showing up in the immigrant pools and they provide the opportunities to address the demographic problem. They also comprise a threat because if we don’t provide opportunities for them, crime could balloon as unemployed teens look for outlets for their youthful energy. Intelligent immigration and social policies are urgently required.

The major challenge for the U.S. is to reach our underperforming kids. This is not as simple as just spending more money on schools. It is your author’s opinion, forged by 77 years of observation, that weak families beget our troubled youth. If we can figure out how to strengthen families, we will be well on our way to straightening out our troubled youth.

In closing, I should mention that, while the Economist article focused on Hispanics, we are a nation of immigrants. Asian Immigrants have been performing very well and usually at the high-earning end of the spectrum. They have strong families and an incredible work ethic. Many come to the U.S. for a college education. It seems our colleges and universities are top notch and draw lots of talented students world-wide. And many aspiring foreign graduates remain here after graduation to exercise their new knowledge. They love the opportunities our economy and political system offer. They help our demographic problem, but we need input from all races. Hispanics seem to be the most immediate source of help.


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