Cuba’s Success and Problems with an Aging, Declining Population

One of the successes of the Cuban Revolution has been better health care for average Cubans and thus their increasing life spans. Simultaneously, however, the number of younger Cubans has been declining. The result, Cuba has a declining, aging population that is now the oldest in Latin America,

The average life expectancy for a Cuban man is 76.8 years and 81.3 years for a woman, according to 2018 data from the World Health Organization. To address the challenges of this changing demography, the Cuban government has made the following changes:

  • Several years ago, the Cuban government began to progressively raise its retirement age from 60 to 65 for men and from 55 to 60 for women. It also allowed people to collect their pensions and still work.
  • In December 2018, the government raised the minimum pension from 200 Cuban pesos to 249 Cuban pesos, which amounts to less than $10. Many pensioners complain they are barely getting by.
  • Cuba’s Ministry of Public Health provides funding for Círculos de Abuelos (Grandparents Circles), which provide adult daycare for the elderly with meals, games, conversation and socialization.

On the other hand, Cuba’s low fertility rate and birth rate are seen as markers of low confidence in Cuba’s future. The same is shown by high out-migration of younger Cubans looking for a better life and future prospects in other countries. Nor is Cuba attracting in-migration of younger people from other countries for the same reason.

In short, for this aging U.S. gringo, Cuba needs to adopt policies that give younger Cubans solid reasons to believe that their future on the island will be better. And that is not more of the same.

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Whitefield, ‘Circulos de Abuelos’ serve Cuba’s rapidly aging population—the oldest in the Americas, Miami Herald (Mar. 7, 2019); Cuban Realities Adversely Affecting Normalization with the U.S., dwkcommenaries.com (Nov. 12, 2015).

U.S. Needs More Immigrants

With longer life expectancy, increasing numbers of baby-boomer retirements from the active labor force and  a low birth rate that now is lower than the death rate, the U.S. increasingly faces the need to find more workers. The source is obvious: more immigrants.[1]

Barron’s Article[2]

A noted business publication, Barron’s, put it this way, “Across the nation, in industries as varied as trucking, construction, retailing, fast food, oil drilling, technology, and manufacturing, it’s becoming increasingly difficult to find good help. And with the economy in its ninth year of growth and another baby boomer retiring every nine seconds, the labor crunch is about to get much worse.”

“Census Bureau projections show the overall U.S. population, a rough proxy for the country’s demand for goods and services, growing faster than the workforce— which supplies those goods and services— through 2030 and probably beyond. From 2017 to 2027, the nation faces a shortage of 8.2 million workers, according to Thomas Lee, head of research at Fundstrat Global Advisors.”

Another restriction on labor supply is the “people [who] have dropped out of the workforce, owing to factors such as disability, opioid addiction, and prison records that make it hard to snare jobs. The labor force participation rate, which measures the percentage of the adult population that’s working or actively seeking employment, has dropped to 63% from 67% in 2000.”

Washington Post Editorial[3]

A Washington Post editorial opens with this statement: “American employers in an array of industries — manufacturing, agriculture, trucking, home building, energy, food service, retail and others — are warning that a long-brewing labor shortage is reaching crisis proportions.”

While the U.S. needs more skilled and English language-proficient immigrants, the editorial continues, “employers in food processing, retail, landscaping and other industries that rely on low-skilled labor are already desperate for workers.”

“By driving away legal and illegal immigrants even as unemployment flatlines and baby boomers retire, [President Trump] deprives businesses of oxygen in the form of labor. That’s not a recipe for making America great.”

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[1]  The above demographic challenges are not just U.S. problems. See World Faces Demographic Challenges, dwkcommentaries.com (April 3, 2018).

[2] The Great Labor Crunch, Barron’s (Mar. 10, 2018).

[3] Editorial, America needs more workers. Trump’s war on immigration won’t help, Wash. Post (April 8, 2018).

World Faces Demographic Challenges

“The world has made spectacular progress in every single measure of human well-being,” is the cheery synopsis of the new book, “Enlightenment NOW: The Case for Reason, Science, Humanism, and Progress “ (p. 52)  by Harvard University’s Johnston Family Professor of Psychology, Steven Pinker.

Important aspects of this “spectacular progress,” he says, are world-wide increasing life expectancy, declining maternal mortality and declining birth rates (pp. 53-57, 125-26, 273).

Unless I missed it in the 453-page book, however, Pinker does not grapple with the problems created by lower birth rates coupled with longer life spans. Examples of such problems are seen in Iowa and Minnesota in the U.S. and Brazil, Japan and Cuba.

Iowa [1]

For the Wall Street Journal, Iowa is an example of “a problem playing out in many parts of the Midwest, a region with lower unemployment and higher job-opening rates than the rest of the country. Employers, especially in more rural areas, are finding that there are just too few workers.” In fact, if “every unemployed person in the Midwest was placed into an open job, there would still be more than 180,000 unfilled positions, according to the most recent Labor Department data. The 12-state region is the only area of the country where job openings outnumber out-of-work job seekers.”

This problem is associated with low birth rate coupled with and an outflow of people. A net 1.3 million people living in the Midwest in 2010 had left by the middle of last year, according to census data. The area also attracts fewer immigrants than the rest of the country.”

Minnesota [2]

A similar problem exists in Minnesota. Last month, its unemployment rate dropped to 3.2%, compared with 4.1% nationally. This has made it difficult for “manufacturers, construction firms and repair-service firms to fill job vacancies and replace departing retirees try to meet the need for more employees, some firms, “employer associations and cooperating unions are working jointly to expand the labor pool.”

For the tech sector of the economy, last year Minnesota added 3,500 jobs, up 1.4% to 250,000 and constituting around 8% of the state’s total work force. And there is demand for even more such workers.

Minnesota’s need for immigrants is especially pronounced in the assisted-care industry. In late March the Trump Administration announced that it was ending, effective March 31, 2019, the Deferred Enforcement Departure program for certain Liberians in the U.S. One of the largest communities of Liberians lives in Minnesota and at least 1,000  are members of a local union that provides workers for assisted-care facilities.

Brazil[3]

“Retirement outlays already eat up 43% of Brazil’s national budget, and health care about 7%, while two expenditures that are critical to economic development—education and infrastructure—claim only about 3% each.” Its “social security system’s revenue shortfall widens each year as the worker-to-pensioner ratio shrinks.” This problem is exasperated by decisions last century to grant pensions to millions of peasants and informal workers who hadn’t paid [into the pension system]. . . . Rural workers paid about $3 billion in social-security taxes for the 12 months through September 2017, while rural retirees drew about $36 billion in benefits.”

The solutions are obvious. “They can raise the minimum retirement age, increase the number of years that workers must pay into the system, or reduce payouts. The bad news is that such measures tend to repel voters.”

Other Countries[4]

Brazil is not alone.

Japan has a very low birth rate, very high life expectancy and very low immigration. As a result, it has an aging, declining population, which should lead to declining economic and political importance in the world.

Cuba has the same sort of problems. It has a declining birth rate associated with readily available abortion services, longer life-spans associated with good health care and many younger people leaving the island to find greater economic opportunities elsewhere.

 More generally, “throughout Latin America and Asia, decades of falling birth rates and growing life expectancies have produced more retirees with fewer workers to underwrite their care. For government policy makers, this means challenges as burgeoning pension and health costs leave less money for economic development.”

“The United Nations projects that by 2050, the number of potential workers per retiree in upper-middle-income developing countries such as Brazil will tumble from the 2015 figure of seven to just 2.5.”

“Credit-rating firms are getting anxious. Standard & Poors estimates that unless there are major changes to publicly funded pension and health-care systems, population aging will help drive net government debt in the biggest emerging economies to extraordinary levels—307% of gross domestic product in Brazil, 274% in China, 262% in Russia and 341% in Saudi Arabia by 2050.”

Conclusion

The U.S. now has a fertility rate below the replacement rate. It, therefore, needs foreign immigrants to sustain population growth, especially in the rural parts of states like Iowa and Minnesota.[5]

Such immigration also would provide workers to pay into the Social Security trust fund and thereby help to finance the increasing number of older Americans who now draw benefits from that fund and who face rising costs of medical care.

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[1] Raice & Morath, Iowa’s Employment Problem: Too Many Jobs, Not  Enough People, W.S.J. (Apr. 1, 2018).

[2] St. Anthony, Horizon Roofing lures workers with higher pay, training, as industry embraces apprenticeships, StarTrib. (Mar. 25, 2018); St. Anthony, Twin Cities tech employment grew 1.6 percent last year, but many jobs go unfilled, StarTrib. (April. 2, 2018); Trump to end deportation protection for Liberians, StarTrib (Mar. 27, 2018); Koumpilova, Local Liberians rally to salvage deportation protection program, StarTrib (Mar. 16, 2018);Koumpilova, Trump administration announces end of deportation reprieve for Liberians in Minnesota, elsewhere, StarTrib (Mar. 28, 2018).

[3] Kiernan & Magalhaes, These Developing Countries Are Getting Old Before They Get Rich, with Dire Consequences, W.S.J. (Apr. 2, 2018).

[4] See n.3 supra; these posts to dwkcommentaries: The Importance of a Growing U.S. Population, dwkcommentaries.com (Mar. 27, 2017); Projected Cuban Population: Stabilizing and Aging (Sept. 6, 2016); Cuba Addresses Its Declining and Aging Population (Oct. 17, 2016); Cuba Faces Economic Challenges (Dec. 14, 2016); Comment: Cuba’s Economic and Political Challenges for 2017Comment: Cuban Government’s Bleak Economic Assessment for Cuba (Dec. 28, 2017); Economic Problems Bedevil Cuban government and President Raúl Castro (Mar. 23, 2017); Comment: Elderly Cubans Unable To Retire (Mar. 26, 2017); Cubans Want Economic Growth and Opportunity (Mar. 22, 2017).

[5] The Importance of a Growing U.S. Population, dwkcommentaries.com (Mar. 27, 2017).