Count the people
Demographics can be used to answer many questions and make useful predictions.
If you’re looking for answers to perplexing questions—like what’s the future of Social Security, will China dominate the world, or how many apples can we grow and sell in the future—the first approach is do the math.
The answers, interestingly, are that Social Security will get financial support from a huge new generation, China will weaken rapidly in the near future, and apple sales will be vigorous and rising. And, by the way, the future of Walmart is dismal.
Apple industry leaders were captivated as they listened to a presentation by demographer Kenneth Gronbach during the U.S. Apple Association’s Outlook and Marketing Conference in Chicago.
Gronbach operates Connecticut-based KGC Direct, a marketing consulting company that does pretty much what the title of his best-selling book suggests. The title is The Age Curve: How To Profit from the Coming Demographic Storm.
While individual behavior is not easy to predict, he says, groups of people are more predictable. And they tend to group into generations of like-minded people. “To predict the future, do the math,” he said. “Count the people. More is more.”
All people go through the same life cycle, he said. They’re born and nurtured, get jobs, raise families, reach their peak earning power at 40 to 60 years (the “heavy lifting” age), then retire, later to move into old-age homes, and then die. How many people are doing any of those things at any given time determines the size of the market for apples, motorcycles, medical care, rest homes, and coffins.
Many people don’t realize that the United States has the highest population growth rate of any industrialized nation. In fact, the country is not “graying.” Gronbach is optimistic about America’s future and the emerging Generation Y.
Much attention has been focused, for nearly 70 years, on the postwar baby boomer generation, a huge generation that created waves, ripples, and crises from diaper and school shortages to a soon-coming huge demand for medical care and retirement income. In the wake, diaper demand crashed and communities faced agonizing choices over which schools to close.
In this huge generation, 78.2 million Americans were born between 1947 and 1966. In the GI Generation, born from 1905 to 1925, 56.6 million Americans were born, and the next generation, the Silent Generation, was smaller still. Between 1925 and 1945, only 52.5 million Americans were born.
Following the baby boomers came Generation X, smaller, at 69.5 million. These folks, born between 1965 and 1985, came into a booming Boomer economy where they could choose any job they wanted. But Generation Y, born from 1985 to 2005, is huge—100 million in size. Now age 7 to 26, they are looking for jobs that aren’t there, kids can’t find summer work, and the economy is slowly adjusting.
One adjustment made during the people shortage of Generation X, which left menial jobs begging, was the immigration—legal and illegal—of some 40 million Latino people. We automated our factories and sent menial jobs to China, spurring its rapid development.
A fan of America
Gronbach is extremely optimistic about the future of the United States and, in fact, all the countries on the North and South American continents.
He is a huge fan of the new Generation Y. They have—and need to have—a work ethic. They will be good employees. They are, and will need to be, creative and entrepreneurial to find work. They are not bigoted or racist. They don’t see color. “If you’re a bigot, get over it,” he said. “Our kids will intermarry. They’re the Baby Blenders. By 2025, the next generation won’t have any redheads.”
Even more important, this large generation will provide the basis for the financial health of Social Security and the health care system.
Gronbach is also a fan of Latinos, of which the United States now has 60 million. He likes their work ethic and their focus on family values. Half of the births now occurring in the United States are Latinos. It is important that they are brought into the system and not be kept marginalized, he said.
Do Latinos eat apples? You bet they do. And there are lots of young people joining in, as current growth in fresh-market sales attest.
“The best days are ahead of us,” he said. Why? “We’re the only industrialized nation in western culture that had kids. Generation Y is bigger than the boomer generation. Generation Y is going to be the most productive generation in our history.”
China and Walmart
Gronbach is not optimistic about the future of China or Europe, or Japan either. China, in 1979, began a one-child policy to limit family size and population growth—and prevented 400 million Chinese children from being born. As a consequence, he said, China is going to decelerate as fast as it advanced.
“China’s future labor force is gone,” he said. “Manufacturing is already returning to America.” Because China depended on the family as its form of Social Security, the short-term prosperity gained by small families will not be there for the aging.
China benefited from the large U.S. baby-boomer population, for whom they manufactured things that the U.S. quit manufacturing when the small Generation X came into the work force. The boomers also benefited Walmart, which sold these products “cheap and deep,” with no selection.
“Try getting a modern young American to shop at Walmart,” Gronbach said. “Walmart is done.”
Russia’s population also failed to grow, and it, like China, will suffer a missing generation of laborers. The Europeans have also greatly reduced their population growth and are filling the gap with immigrants from North Africa. “The Muslims will not assimilate,” Gronbach said. Trouble ahead for Europe.
Japan’s population has also stopped growing and is aging.
Not everything will be perfect in America, Gronbach agrees. More young people and a shortage of jobs means more crime, and America already has more people in prison than any other country in the world. That’s a problem that needs to be addressed. Young people also have more traffic accidents, so emergency rooms, get ready. But we need to embrace Generation Y, he says.
And the market for apples? “The best days are ahead of us,” Gronbach said.