West Virginia is graying faster than most of the rest of the nation. Our median age is just over 42—fourth highest in the nation, after Maine (45), New Hampshire and Vermont (both 43). The national median age is 38.
Aging may be good for wisdom and senior citizen discounts at Shoney’s, but it’s not great for the economy. West Virginia is, unfortunately, a prime example of how an older population is an inhibitor to economic growth.
Moody’s, the research and credit rating company, has just released a report on how the age of a state’s population impacts its prosperity. “Aging populations can lead to a stagnant economy and weak revenue growth for state and local governments,” Moody’s reports.
Here’s why:
–Companies are less likely to relocate to aging states because of the difficulty in finding and retaining working-age people. This has a spiraling effect, discouraging workers from moving to a state where there are fewer economic opportunities.
–Older people use more government services, but pay less in taxes. “Many retired people have lower taxable incomes and spend less, which slows states’ main revenue sources of income and sales taxes.”
–As people grow older, they are less likely to start new businesses. The dearth of startups reduces the economic vitality of a state.
–There is one notable exception to the conundrum; Florida has the fifth oldest population among the states, but a growing economy. As Moody’s points out, many who retire in Florida are financially secure and the state has a steady migration of young people as well as retirees.
Unfortunately, the trend for West Virginia is not encouraging. The Mountain State is going to become even grayer. Moody’s projects that by 2027, nearly one in four (23 percent) West Virginians will be 65 years or older.
Of course there is always hope for the future.
Brookings Institution suggests adopting policies that encourage phased-in retirement so people remain in the labor force beyond the traditional retirement age. That allows the older workers to continue generating tax revenue, while relying less on fixed incomes.
Also, West Virginia may one day enjoy the full benefit of manufacturing related to natural gas production. Those industries will draw workers from other places, giving the state much-needed migration.
And there are “silver” industries which cater to an older population, such as tourism and retirement real estate. West Virginia is trying to make a dent in those areas, but there are already many options for that market.
Those of us who cannot fit all the candles on our birthday cake like to say, “We’re not getting older, we’re getting better.” That positive spin may be good for our personal psyches, but when it comes to West Virginia’s economy, older just means less dynamic and a loss of revenue growth.