The Demographics And Risk Management Tom Gillaspy, PhD Gillaspy Demographics November 2014 Gillaspy Demographics

Gillaspy Demographics

The Demographics And Risk Management

Tom Gillaspy, PhDGillaspy Demographics

November 2014

The Demographic History Of The U.S. After World War II

Roller coaster births--big differences in generation sizesRapidly expanding workforce (youth and women)Suburban growth--central city and rural declineSunbelt growth at the expense of the Northeast and MidwestIncreasing diversity across many dimensions



Some Things Will Always Be True,(or will they)

The fastest growth will be the sunbeltThe suburbs will always growHousing prices will always increaseA college degree is the key to successMarriage is the foundation of the familyHigh school students will always get their drivers license as soon as they can

Convergence of Population Growth Rates

Census Bureau estimates, 2000-09 aligned with 2010 CensusGillaspy Demographics

This Decade, The United States Will Add As Many People 65+ As We Have In The Past Three Decades Combined

Census Bureau forecast 2012 middle series


Early Next Decade The United States Will Have More People 65+ Than School Age

Census Bureau 2012 forecast middle series



Liu and Spiegel, San Francisco Fed, Boomer Retirement: Headwinds for U.S. Equity Markets?, 2011

S&P 500 Predicted By The Ratio Of Middle Aged to Older Adults

US Labor Force Growth Will Be At Record Low Levels Be The End Of This Decade

US Bureau of Labor Statistics forecastGillaspy Demographics

Growth Of The Working Age Population Is Slowing Or Declining In Most Industrialized Nations Which Will Be A Drag On

Economic Growth

US Census Bureau International Data BaseGillaspy Demographics

Percent Of Employers Having Difficulty Filling Jobs Due To Lack Of Available Talent

Manpower Group, 2014 Talent Shortage Survey


The “New Normal” Probably Means• Global economic growth will slow

• Interest rates will rise

• Talent will be the scarce resources

• A single-minded focus on productivity

• Governments will worry about how to pay for past promises

• Government service cuts, courtroom delays, permitting delays

• More frequent disruptive events/innovations with larger impact on business

• A whole new set of challenges and opportunities

• Some will fall due to the Tyranny of Success. New economic leaders will emerge


The Third Industrial Revolution Is Transforming Economic Activity

Advances in robotics, materials, software, bioengineering, and the web are fundamentally changing where and how economic activity takes place.

Innovation is replacing physical capital as the foundation of economic growth.

Physical location will be less important and those bound to it will find competition increasingly difficult.



What Should Keep You Awake At NightCreative Destruction/Disruptive Innovation

Forces for change are heightened during periods of economic stressDisruptive changes are not evolutionarySome game changers will occur There will be big losers as well as winners

Avoiding The Tyranny of Success Will Be Difficult For Both Private And Public Sectors

The impact of disruptive events will increase with the drive to increasingly lean operations. The global imperative to increase productivity will accelerate the pace of disruptive innovation.Conflict between the lean/quality based productivity improvement and the innovation side of the organization will increase.



“Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”

Donald Rumsfeld, US Secretary of Defense, 2002

To this I would add Unknown Knowns, things we know but forgot


Known Knowns(Some Things We Know We Know)

• Population is aging and retirements are skyrocketing.

• Many public and private promises are underfunded

• Population shifts have moved massive numbers of Americans into water short, storm, earthquake/volcano sensitive areas

• Income and wealth distribution is at levels not seen since 1929


Known Unknowns(Some Things We Know We Don’t Know)

• Full impact of global aging• Impact of growing extremes in wealth and income• Impact of large numbers of retirees drawing down

on wealth• Impact of growing diversity and the loss of power

by some groups• Impact of social change in marriage and the family


Unknown Knowns(Some Things We Forgot We Knew)

• Some critically important occupations are dangerously short of qualified applicants

• Rapidly growing areas that are water supply vulnerable may lead to mass migration

• Others?


Unknown Unknowns

• We don’t know, and that is a problem• Likely to be more frequent and problematic in

times of grate change and stress (like today)• However, we can manage for disruptors• Problem with the Tyranny of Success

“I skate to where the puck will be, not to where it has been.”Wayne GretzkyFamous Canadian Philosopher


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The Demographics And Risk Management Tom Gillaspy, PhD Gillaspy Demographics November 2014 Gillaspy Demographics