ECON First believes that business success centers around knowing the economic and demographic characteristics of their primary market area. While business experience, insights and intuition are important, they are substantially advanced by hard data.
An example is the rapidly growing population of households headed by a person 65 years of age or older. Across the nation this “older” cohort of “baby-boomers” is growing four times faster than the general population.
This “older” cohort is a critical consumer component to businesses of all types.
THE BASIC ECONOMICS
Based upon the perception that older generally means poorer, governments provide all types of subsidies to persons and households age 65 and over. Yet the data belies this.
While the 2015 after tax income of the average consumer unit ($60,448) did surpass that of the average “older” consumer units ($42,959), due to differences in household size the per-person spending among “older” households exceeded that of the average households ($25,270 vs $24,179).
Because of Social Security, “older” households have the lowest poverty rate among all household categories. With the booming housing market of the 1980s and 1990s, wealth is highly concentrated in “older” households as well. In 2015 the average consumer unit received $1,737 of income from dividends, interest and property. The average for the “older” households was $3,523.
The estimated market value of homes owned by “older” households was nearly 25% greater than homes owned by the average consumer unit. And the net change in assets during 2015 was 36% higher among “older” households compared to the average consumer. Significant to nonprofits, the charitable cash contribution per person for “older” households during 2015 was 85% greater than that for the average consumer unit.
And there are clear differences in the spending patterns per person between the “older” households and the average household.
Per person “older” households spend more on food at home, including substantially more on fish, fresh fruits and fresh vegetables, while spending just the same on food away from home. They spend far more on utilities such as electricity and fuel oil, and far less on cellular phone service.
Not surprisingly, per person “older” households spend less on new furniture and clothing, and more on major appliances. They spend slightly less on the purchase of new motor vehicles and more on the maintenance and repair of motor vehicles. Twice as much on reading materials, and far more on medical services and drugs.
Demographic data allows one to appreciate the vast differences among market areas in the proportion of residents who belong to the “older” cohorts.
Unsurprisingly, over 19% of the population in Florida is age 65 and over compared to 14% across the nation and just 9% in Alaska.
Local variation is even greater. Among the counties in Iowa, the percent of the population 65 and older ranges from 25% (Ringgold County) to 19% (Cedar County). Over the past two decades the population 65 and older has increased 5% per annum in Jefferson County while decreasing in 18 counties.
Further, “older” households that are aging place, have a far different economic and educational profile than “older” households that are migrating to warmer clients, lower taxes, and other amenities.
Obviously, there are considerable differences in age, race, income, and economic viability among business primary market areas. ECON First specializes in providing the hard data that allows business owners to make more informed decisions regarding expansion, marketing channels, and pricing strategies.
Dr. John E. Stapleford