7

Those Transformative Baby Boomers

WHAT ARE FOUR primary business sectors that perhaps experienced some disappointment with the Silent Generation in recent years, but need to keep their eyes on the younger members of this generation going forward, but also, more important, on the fast-approaching Baby Boomers? Can you guess what they might be?

That’s right: retirement, healthcare, assisted living, and death care.

If you got at least two of these, you’re doing pretty well. If you got all four, you are definitely thinking like me. All four of these business sectors make money off of aging populations, and (all things being equal) the bigger the population, the more money they stand to make.

And guess, what? The aging population is poised to get bigger—much, much bigger. As mentioned in Chapter 6, the years 1933 to 1936 mark the smallest U.S. birth years for the entire 20th century, which suggests that the country currently has the smallest crop of elderly folks aged 80 to 84 we’ve seen in a long time.

However, two factors might belie this thought: one being the incredible advances made in healthcare over the past thirty or so years, which have significantly boosted life expectancies, and the other being immigration, although data suggests that immigration did not boost the ranks of this “smallest-birth-years” cohort to any significant degree. So, even though the cohort is small, it’s unclear whether it is so small that it’s been causing financial hardship for the above-mentioned businesses. Perhaps a bit . . .

But these business sectors better not get complacent because there is a slow-building wave approaching, and it’s turning into a tsunami. The evidence for this oncoming tsunami is all around us, but we can start at the beginning by looking at its birth.

Recall from the last chapter that I explained how the latter stage of the Silent Generation birth years was marked by increasing births, with 1943 serving as a mini-peak, followed by a two-year birth number decline of about 200,000. And what happened in 1945, the second of the two-year pause in rising birth numbers?

That’s right—Game on! Hello Baby Boomers! (Though with only about 2.8 million births that first year.)

However, the 3.47 million births registered in 1946 broke 1945’s birth numbers by more than 650,000, and within five years were breaking those 1945 birth numbers by over 1 million per year.

There’s evidence of these expanding numbers all around us. For example, the number of retirees receiving Social Security benefits jumped by more than 5 million from 2009 to 2014.

But why not just consult the U.S. Census Bureau to see examples of this growth spurt? As of 2014, the U.S. Census Bureau counted 2,572,527 people age 68. Guess how many 67-year-olds? Almost a million more, at 3,485,502. So, if you sell something that every 70-year-old just has to buy when he or she turns 70, your sales are about to soar to the stratosphere like one of Elon Musk’s experimental rockets. And those sales will likely stay up in that generational stratosphere for at least the next twenty years until the Gen Xers start hitting 70. And they might even stay up at that level given the Gen X immigration population.

There’s little doubt that the Baby Boomers made an impact with their numbers alone. Never before in American history had birth numbers surged in such a dramatic fashion; never before had America’s youth population expanded so quickly nor encompassed such massive numbers. And the rise of the Baby Boomer seemed to go hand in hand with the rise in America’s prosperity, with the Boomers seeming to serve as both a driver of economic growth and as a benefactor from it.

By the time the boom in baby making tapered off in 1964, the Baby Boomer population represented about 40 percent of the population. This population was so big that Time magazine named “The Generation 25 and Under” as “Persons of the Year” in 1966.

Along with the rise of the Boomers came the rise of shopping malls, supermarkets, fast food, discount megastores, and suburbia in general. The Boomers arrived with the rise of the automobile and extensive expansion of America’s road and highway system, including construction of the Interstate Highway System, the largest U.S. public works project to date. The Boomers arrived in step with technological advances such as nuclear power, antibiotics, jet propulsion, and synthetic fibers, and with a vast expansion of modern conveniences such as disposable diapers, air-conditioning, automatic washers, high-fidelity record players, and, of course, television.

These Boomer kids grew up in lockstep with the rise of American Consumerism, and while their G.I. Generation and older Silent Generation parents started to splurge on the newfangled household gadgets, the Boomer kids consumed toys such as Hula-Hoops, Barbie dolls, Frisbees, and coonskin caps by the millions. A 1958 article—“4,000,000 a Year Make Millions in Business”—in Life magazine asserted that the 4 million or so kids being born per year were making America recession-proof.

But when those Boomer kids started reaching adulthood, enough of them began to resist the cultural and socioeconomic norms that by the late 1960s and early 1970s America was in constant turmoil as Baby Boomers revolted against the Vietnam War and agitated on behalf of numerous other social causes. The Boomers seemed to have all but abandoned the cultural ethos of their parents and rebelled against them with a soundtrack of alien-sounding music, rampant drug use, sexual promiscuity, and outlandish clothing and hairstyles. G.I. and older Silent Generation parents across the country hardly recognized their children anymore.

But size is in the perception, and the majority of Boomers did not tune out, turn on, and abandon American society (though a fair number briefly flirted with it). If they had, America would not likely have been able to maintain its long-standing position as the world’s largest economy.

Boomers have always been oversized. As a generation they proved to be equivalent to the “Supersize” or “Big Gulp” soft drink sizes introduced in the 1990s by fast-food restaurants and convenience stores. Boomers are bigger than big, and I’ve long noticed that their impact on markets is always far more disproportionate than their already massive size, in influencing both expanding and shrinking markets. When the Baby Boomers exited the Japanese sport motorcycle market of men ages 16 to 24, the market was not reduced by 11 percent, the difference in native-born population size between the Boomers and native-born Gen Xers. No, it fell precipitously by about 80 percent and then disappeared almost entirely. It’s like markets have a mind of their own and rise and fall on demographic suggestion.

Levi’s jeans were very popular with the Silent Generation. My three older brothers, all Silents, lived in them. When the Boomers aged into adult-size jeans in the 1960s, Levi’s popularity took off like an Apollo moon rocket launch. The sale of Levi’s didn’t increase by 50 percent, the approximate difference between their numbers and those of the Silent Generation. No, sales increased geometrically. Levi’s sales volume increased to $8 billion at their height in the early 1990s. Why? Because a market multiplier somehow takes over. When the Baby Boomers stopped wearing Levi’s in the late 1990s, sales plummeted by 75 percent, not by the 11 percent that marks the difference between them and the native-born Xers.

Here is where I am going with this line of thought: The Silent Generation is currently consuming everything that 70- to 80-year-olds would normally consume, and they are doing it commensurate to their population size. I believe that when the Baby Boomers age into the footprint left behind by the Silent Generation, everything elderly will be put on steroids. I really do not think that we, the United States, are ready for the magnitude of marketing, political, economic, cultural, and commercial changes that are going to take place as the Baby Boomers become elderly.

America certainly wasn’t ready for them when they started reaching adulthood.