The TEXPERS Blog

Life expectancy is increasing, but not for everyone

Photo: iStock/RawPixel

By Allen Jones

TEXPERS Communications Manager

Although the average life expectancy of all Americans dropped slightly after decades of increases, data indicates that higher income earners are enjoying extraordinary longevity.

Between 1980 and 2015, life expectancy for all sexes and races in the United States increased roughly five years, from age 74 to age 79, according to data from the U.S. Centers for Disease Control and Prevention. However, mortality rates, especially among lower-income earners, have increased due to a number of causes of death, including opioid overdoses, creating a slight dip in life expectancy.

One demographic group, however, is living as much as 15 years longer than the rest – rich Americans. A research study released in April 2017, indicates the steepest life expectancy increases occurred among those with higher incomes. According to “Inequality and the health-care system in the USA,” published by The Lancet research journal, a widening economic inequality in the U.S. is “accompanied by increasing disparities in health outcomes” – meaning poor people are dying younger than the rich.

Since 1980, life expectancy for men at age 50 has diverged for the top and bottom income quintiles, says Peter Orszag, vice chairman and managing director at Lazard Freres & Co. LLC, a financial advisory and asset management firm based in Houston. Orszag spoke about the economics of retirement as a keynote speaker at the National Institute on Retirement Security’s annual conference held Feb. 27 in Washington, D.C.

He presented research he found by the CDC, U.S. Bureau of Labor Statics, and various researchers. His findings closely align with The Lancet study. For example, in 2010, the bottom quintile of 50-year-old men could expect to live roughly another 26 years, according to Orszag’s presentation. That same year, higher-income 50-year-olds could expect to live approximately an additional 38 years – more than a decade longer than their poorer cohorts.

“Life expectancy for the highest-earning 1 percent of men is now approximately 15 years longer than the lowest-earning 1 percent,” Orszag says.

The result, he says, is programs such as Social Security and public pensions, are becoming less progressive on a lifetime basis and more people working into their later years. He referenced a 2015 study, “The Growing Gap in Life Expectancy by Income.”

“The top quintile earns about $130,000 more in entitlement benefits at age 50 compared to the bottom,” Orszag says. “Why is this happening? We don’t have full answers.”

There is, however, a striking difference in stress and optimism across demographic and socioeconomic groups that could help explain the differential trends in life expectancy. It’s a little subjective, Orszag says, but the evidence is accumulating rapidly.

“You would think we have less inequality than in Latin American countries, but it is bigger in the U.S.,” he says.

According to a 2015 study based on Gallup World Poll data, American households across income quintiles had more stress than Latin American countries. Even among high-income earners, 42 percent of U.S. households reported experiencing stress on the prior day compared to 30 percent of the richest Latin American households. The poorest wage earners had the most stress in the U.S. and among Latin American countries. Of the Gallop Poll respondents, 48 percent of the poorest households in the U.S. reported experiencing stress on the prior day compared to 34 percent of the poorest Latin American households.

The stress of poverty can be toxic and is often very different than the stress the rich experience. Stress is bad for social mobility, according to a 2016 report by the Brookings Institution, a nonprofit public policy organization based in Washington, D.C. There is a high cost to being poor such as lack of health insurance, unstable employment, and other factors, according to Brookings researchers. Higher-wage earners often have better jobs that allow them to have more control over their schedules as opposed to those who have lower paying jobs with more rigid work hours and also are unable to afford child care and other necessities higher-income earners can afford.

“For the U.S. poor, for example, common problems such as a sick child or a broken down car can result in the loss of a (typically low-quality) job and then a new spiral  of associated problems, often exacerbated by lack of health care and other kinds of insurance,” according to the Brookings report. “There can also be longer-term costs.”

Stress can have a negative impact on a person’s health, mood and behavior, according to the Mayo Clinic, a leading U.S.-based nonprofit clinical practice, education and research organization. Stress often manifests through illnesses such as headaches, muscle tension, chest pain, fatigue, stomach upset and sleep problems. Stress also impacts mood, producing anxiety, irritability, depression, and a feeling of being overwhelmed. And, it can impact behavior, such as overeating, angry outburst, drug or alcohol abuse, tobacco use, social withdrawal, and other problems. In turn, stressed out people are spending more on health care costs.

More health care expenses, coupled with low wages and lack of entitlements, means a greater number of older Americans often are working longer than wealthy retirees. And that is evident in population and labor force statistics.

Aging is changing America at a rapid pace. The U.S. Bureau of Labor Statistics traced labor force participation rates by age groups in 1996, 2006, and 2016 as well as projected participation rates in 2026. Among the findings, the participation rates of persons age 65 and older increased each decade.  

In 1996, Americans 65 and older made up 12.1 percent of the labor force. By 2016, the age demographic made up 19.3 percent of the U.S. labor force. The participation rate of those 65 and older is expected to increase to 21.8 percent of the U.S. labor force by 2026.

The bottom line: Life expectancy is still on the rise, but not for everyone. Poor people are having to work longer while spending more on health care. That creates an increase in stress levels, which often leads to shorter lives.