Business

70% of Vermont 64 or older: the impact

Good for volunteer groups, bad for employers

Chart created by UVM Legislative Research Service

by Kevin Chu

This is part three of a four-part series by the Vermont Futures Project that explores how population changes can impact key aspects of the Vermont economy. In part one and two we discussed the importance of age composition and workforce participation on the Vermont economy.  Part three looks deeper into how a changing Age Dependency Ratio may impact the Vermont economy.

Vermont Age Dependency Ratio Trends

The Age Dependency Ratio measures the ratio of the traditional working-age population (age 20 to 64) to the combination of the young (under age 20) and older (over age 64) people. The Age Dependency Ratio is created by dividing the combined populations under 18 and over 64 by the 18-to-64 population. The Age Dependency Ratio serves as a measure of societal economic strain because both younger and older people use more public services such as pensions, health care and education. Essentially, it is a measure of the number of people who are net contributors to public services compared to the number of people who are net beneficiaries. This ratio is a useful indicator of the burden placed on the working age population as it supports the young and old to care for their needs.


As evident in the U.S. Census Bureau chart above, Vermont has had a relatively stable dependency ratio from 1900 to 1950 at just under 60%. This jumped from 1960 to 1970 but then dropped back to about 50% by the 1990’s. In 2010 the Age Dependency Ratio in Vermont rose to 54% while the US average was 59.1%. By 2022 this ratio in Vermont increased to 61%. Projections indicate this ratio will climb back to about 70% by the 2030’s.

Economic Impact

Economists have found Age Dependency Ratios to be a good predictor of economic growth. When ratios are high, a larger percentage of people are out of the work force so there is a smaller percentage of people covering the costs of public services. As Vermonters age and the working population stagnates, the proportion of active wealth producers declines. The elderly often pay lower than average tax revenues when they exit the labor force. This can have a significant impact on the state’s economy and government’s tax collections.

Of course, there are always some exceptions to economic patterns so it would be a mistake to classify everyone over the age of 65 as being dependent on public services. Some people work well into their typical retirement age and some over the age of 19 are not active in the workforce, but broadly speaking, economists have found Age Dependency Ratios to be predictive of economic growth. When ratios are high, you have a high percentage of people out of the work force and a small percentage of people covering the costs of education, retirement, and health care.

In addition, a growing Age Dependency Ratio can create a downward economic spiral, as diminished economic growth then translates to a slower rate of government revenue growth. Due to the increased Age Dependency Ratio, Northwestern University economist Robert J. Gordon estimated that inflation adjusted gross domestic product per capita will decline to an annual rate of 0.9% for the next several decades. A slower rate of economic growth will challenge the sustainability of government programs.

Workforce Impacts

Sandwiched between the young and old is a shrinking percentage of Vermont workers that are in a demographic tug-of-war. As the Age Dependency Ratio increases, Vermont will be forced to juggle competing demands with limited resources. Who will be paying the taxes to maintain public spending on schools, hospitals, courts, jails, and roads? Slower economic growth also means fewer jobs for those working-aged people bearing the primary burden of maintaining the social welfare state through their taxes.

Potential Positive – Civic Engagement

Older populations tend to have higher participation rates in their local communities by voting, helping with non-profits and engaging with other community groups. The age dependency trend might lead to an increase in volunteerism and community involvement. Currently, Vermont ranks 16th in the nation with a 36% volunteer rate. This results in 16.1 million hours of activity that is valued at $390M. Vermont’s older demographic offers a valuable resource to non-profits and local communities in the wake of the declining work force.

The Years Ahead

Every single day between now and 2030, more Vermonters will reach their average retirement age of 65.3 and put more strain on the health care and pension systems. The rate of health care spending increases have exceeded the rate of economic growth for decades now and consumes an ever growing portion of incomes. The slowing of revenue due to the growing Age Dependency Ratio is likely to coincide with dramatic pressure on government budgets. As more Vermonters change from being a net payer into benefits to become a net beneficiary of these programs, there will be many economic decisions to make.

This four-part series by the Vermont Futures Project of Barre is exploring the link between Vermont population change and the economy.  In part four, we will discuss how consumption patterns are projected to change as the working age population shrinks in Vermont. Republished from the Vermont Chamber of Commerce December newsletter. 

Categories: Business

19 replies »

  1. What is missing from the study are the huge numbers of deadbeats resulting from all the covid panic largesse free money which continues to this day. Biden said the pandemic was over. Why are all his loyal minions not going along? Vermont officials refuse to end the panic

  2. Isn’t his chart misleading? Isn’t the cohort that is 64 years or older just the total of the bar minus the portion that is under 15 yo? e.g., in 2030, it’s 40% over 64 and 30% under 15, NOT 70% of Vermonters over 64. I am missing something or the headline may beed to be revised?

    • It’s currently 61%; projections are it will hit 70% by 2030 but that’s just a projection so yes, the headline is incorrect. Although I dunno; it feels crazy high to me but perhaps we really do have 61% age 65 plus now??

  3. No worries. Evidently about 99% of those 65 and up got the vax- just gotta wait for them to “die suddenly “ and Vermont’s demographics will change quickly.

  4. Those of us over 64 are restricted on all aspects. There is absolutely no one out there that will help us get fuel assistance, food assistance without filling out a tremendous amount of paper work only to be denied. We are on FIXED INCOMES there is no more money than that coming in.

    • The use of “fixed income” is a false flag. There are many workers who are on a fixed income. Work a 40 hour week with no overtime? Fixed income. Salaried employee? Fixed income. On the other hand there are many jobs where the income varies depending on hours worked or services provided.

      What the term “fixed income” is really directed at are those people living on social security or with low paying jobs where they are most susceptible to inflation.

  5. Who in their right mind wants to have kids with the average insufferable Vermont lefty feminist woman? Yikes. No wonder the demographics are shifting older.

  6. When your biggest budget goes to the population that doesn’t work (medicare, Social Security, etc.) somethings gotta give. I’m tired of paying some old freeloaders health bill! So I can live my life in a terrible way, and when I’m older, the GOVT will pay for it? Get outta here with that nonsense.

    • Today’s senior citizens paid into social security and Medicare their entire working lives; these benefits are owed them. I think you are conflating them with younger freeloaders who choose to receive all manner of handouts rather than work. And I’m sure you don’t realize this but someday you too will be old.

      • I don’t buy it. The amount of money put in by the people who are using the benefits today doesn’t cover the expenses. It’s a flawed system. The only people that like Socialied Security are the freeloaders using it.

      • This is so tired. Payments out started the day payments in started. So the first recipient was ‘paid out’ without ever putting a cent in.

        And that continues – current payers in are paying out for current beneficiaries. There is no ‘personal pot’ for them to draw upon. So, current payers in are ‘owed’ nothing – only what they are granted by a future Congress. Now, given the fact that the number of payers per extractor is declining, the model is unsustainable without some combination of:

        Increases in contributions (higher social security contributions by employees and employers)
        Reductions in benefits (decrease benefits for all)
        Means testing (decrease benefits for the wealthy)
        Delayed eligibility (older retirement age)
        Increased immigration of those <40
        Euthanasia of the old

        Pick your least objectionable combo.

      • How about the Gov’t just gives you your hard earned money, and you put it in a savings account yourself? I would like to believe that the average Joe can manage his retirement money better than Uncle sam.

  7. I’ve had enough of paying for some senior citizens poor health choices. we spend too much on the elderly. they are not poor or disadvantaged. Theres no reason why they can’t be a contribution to society and the tax coffers, instead of being a net negative on the state.

  8. There are too many people over 65 in Vermont that still believe Bernie’s progressive democrats are filled with love and acceptance. My 90 year old neighbor and his wife are lifelong progressive Democrats and if you say anything they will shut down the conversation and leave so it never gets discussed. He just got another booster shot, I think that was #5. I can’t convince him to stop—doesn’t he wonder why he had an episode of A Fib with the last booster? Apparently not. They can’t bring themselves to believe their government would do anything to harm them their children and/or grandchildren as they get led to slaughter. And they wonder why their 30 year old grandson won’t hold down a job…..It’s called Marxism and the governor is their puppet.
    Mary

  9. this conversation around social security really riles me …I am there, worked since I was 14 on the books and farmed (no pay there, it was our responsibility…unheard of with youngsters these days; and yes there is the occasional exception)…
    but I PAID THAT MONEY IN and my EMPLOYERS PAID IN, if the POLITICS (im gonna include all of them D, R. P. I because what one group didnt think of another did) or OUR GOVERNMENT powers that be; had left it alone……..ie; not stolen from it, the system would be working just fine…….Now a problem; and folks who are not eligible yet dont want to pay……well all this does is create MORE DEVISIVENESS which by the way is EXACTLY where the current “lawbreakers” (not lawmakers anymore) want us to be…….against one another, that way, not looking at all the corruption, money laudering, stock buying/selling, hand washing ect that has been going on unnoticed or under the radar (we trusted…..yup not a smart move, time to make accountability a priority for all elected, appointed ect officials)
    The older neighbor grew up with a government that worked for US the taxpayer…..from I dont know…after Kennedy on it seems to have gone down hill for us uphill for our “elected” and appointed representation (Im not affiliated with ANY party…MOST make it work to their personal advantage..because we were asleep at the wheel)
    This is why we have that bill of rights and a Constitution; I’m writing my letters the old fashion way (and email..) and I would hope that we might all of us no matter where you are politically do the same…….inundate with words that relay just how much this is affecting our lives, what you want to see, how you want to see leadership behave and how or what you want to see to those who abuse the system and us the taxpayer………It’s out of control and we have to begin somewhere; lets do it TOGETHER

    • Much divisiveness indeed. Perhaps that’s the point? Get each generation pointing fingers at each other and accusing them of greed. And definitely see how younger Americans are being told it’s all the boomers fault; of course Biden, Pelosi, Bernie etc aren’t even boomers as they are members of the generation older than the boomers but that’s not well known I don’t think. And of course Millennials are also demonized for other reasons, and many tagged as millennials are actually the younger Gen Z. But all of this blame and finger pointing keeps us separated and not focused on who(our elected officials) are mostly to blame.

  10. The Democrats, Progressives and 70 percent of Vermonters believe the state has a compellibg interest in ending the lives of 1300 unborn Vermonters every year. Any wonder why we have a shortage of young people to get things done?

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