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The Graying Of Puerto Rico

Growing Numbers Of Seniors And Shrinking Numbers Of Younger People Will Increasingly Alter Our Society


March 13, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Population shift

Puerto Rico’s changing demographic profile will affect every economic sector


Slowly but surely, the chronological makeup of our society is changing.

The result, in large part of a birth rate that has fallen below the replacement level, the population in Puerto Rico of those aged 0 to 19 is declining by about 10,000 each year. The U.S. Census Bureau projects the youngest segment of our population will continue to decline at about that rate for the next 20 years. This never-before-seen rate of attrition promises to make the face of 21st-century Puerto Rico quite different from the one of the past century, when the number of young people grew significantly.

While the number of young people declines, the number of people 65 and over is increasing by more than 10,000 a year--and within a decade will accelerate to more than 20,000 a year.

With each year that passes the segment of the population between 20 and 64 also grows at a steadily slower rate. Currently growing by more than 20,000 each year, the age group that essentially comprises Puerto Rico’s labor force is actually projected to begin shrinking in size by 2020.

These demographic changes will affect our society--and our economy--in many ways over the next 15 to 20 years. It is already the source of headaches for those who administer the government’s main pension fund ("A Multibillion-Dollar Problem," CB Sept. 26, 2002). As more and more government employees join the ranks of the retired, draw pensions, and live longer lives, the contributions by the remaining active employees will become insufficient. In fact, it is projected the fund will run out of money by 2017.

These trends will also continue to drive increases in healthcare costs and will effect significant changes in the composition of the market for a wide range of products and services, including housing and education.

Not all the changes brought about by an aging population are negative, however. As Dr. John Stewart, a long-time economist at the Puerto Rico Industrial Development Co. (Pridco) noted, the island’s changing demographics means Puerto Rico’s economic development agenda need no longer be driven--as it was for most of the 20th century--by the necessity to create as many jobs as possible for a rapidly growing population of young people entering the work force.

"There’s no doubt the number of jobs we will have to create will decline," said Stewart, pointing to World Bank figures showing the island’s labor force grew by 1.9% between 1980 and 1999 but is projected to grow by only 1.2% (a 37% drop) between 1999 and 2010. The slower growth--and subsequent shrinkage--of the labor pool will thus increasingly ease Puerto Rico’s unemployment problem.

As Stewart and other economists such as Miguel Soto of the Center for the New Economy have noted, the demographic changes in Puerto Rico are part of a global phenomenon. "Puerto Rico is well-advanced along the same trend lines that are being experienced throughout the developed world," observed Stewart.

Prevailing fears during the past century that the world’s population would explode have proved to be unfounded. The deceleration of population growth has accompanied the industrialization and modernization of almost every previously underdeveloped nation.

According to current United Nations projections, the world population is expected to peak around midcentury and then begin declining. The U.S. Census Bureau projects Puerto Rico’s population will peak at just under 4.2 million by 2030 and then start to decline.

The demographic changes in our society are primarily the result of three major developments: sharply declining birth rates, the consistently increasing longevity of the population, and the relatively little immigration into Puerto Rico.

At 2.0, Puerto Rico’s fertility rate (the average number of children per woman) is below the 2.1 considered necessary for replacement of a population. The island’s fertility rate has dropped sharply over the past four decades and is now the same as that of the U.S. mainland. If current trends continue, Puerto Rico’s rate is expected to dip even lower, to a U.S. Census Bureau-projected 1.9 by 2025.

Furthermore, Puerto Rico’s population growth rate between 1995 and 2000, at 0.5%, was actually below the U.S. mainland’s 0.8%. According to Planning Board figures, net migration (the balance after accounting for those who migrate out of Puerto Rico and those who migrate in) doesn’t appear to be significant.

During the past several years, net migration has resulted in between 5,000 and 7,000 new residents each year. "We need to be aware, however, that a significant number of those who are coming in are older Puerto Rican retirees from the States, and that is expected to continue," said Jose Joaquin Villamil, president of Estudios Tecnicos. At the same time, the bulk of those who migrate from the island are young people in the early, productive years of their careers.

At 76.1, life expectancy in Puerto Rico is only a year below the 77.1 U.S. average. According to Department of Health statistics, in the past decade the annual death rate in Puerto Rico per every 1,000 people has been slightly lower than that of the U.S. mainland. That’s mostly because the population in Puerto Rico is younger on average than on the mainland.

The average age of Puerto Rico’s population is 33.3. By 2015, the average age will be almost a full five years older--38.2--and by 2025 it will be 42.1.

As Rosanna Lopez, director of the local government’s Office for Elderly Affairs, noted, the aging of the work force in Puerto Rico will likely lead to adjustments in the workplace, such as more flexible work schedules and additional work incentives, including improved health coverage.

Other good news is that the economic profile of those who are retiring continues to improve steadily. "When the baby boomers [those born between 1946 and 1964] start retiring in significant numbers, the difference will be notable," said Lopez. "They are generally better educated and in a better financial position."

Lopez also suggested that when the first wave of baby boomers starts retiring this decade, they will be more demanding--both as citizens and as consumers. She and others see the island’s senior citizens gaining more importance in the public policy arena and increasingly needing--and demanding--more attention from the commercial and service sectors of the economy.

"I see a need for a lot more and better services to be delivered directly to people’s homes," said Lopez. The government’s top official for elderly affairs said senior citizens generally want to live in their usual homes as long as possible. In order to do so, however, they require efficient and economical transportation services, food and medicine delivery services, and cleaning services, among other needs.

For example, Lopez noted, the average senior citizen takes about seven medications a day. Many elderly could benefit from reliable services and assistance in making sure they receive and take their medicines as prescribed.

The homes of the island’s aging citizens also must be made more "elder friendly" by adding such features as wheelchair-accessible bathrooms, railings, grab bars, and even elevators. Florida state law, for example, now requires all new homes have at least one wheelchair-accessible bathroom.

Living in one’s long-time home isn’t necessarily the best option, though, particularly for those over 85--the segment of the population that’s projected to grow at a faster rate than any other. Many in this age segment might best be served by assisted-living options.

Other than the Ryder communities in Humacao, however, there are few such options in Puerto Rico today. That is why the Legislature is expected to consider House bill 1763 this year, a measure authored by House Vice President Ferdinand Perez that’s designed to provide a package of incentives and a regulatory framework for the development of assisted-living communities throughout the island.

According to Rosanna Lopez, in order to qualify for the program these communities will have to provide meal delivery services as well as cleaning services, recreational and educational activities, assistance with basic daily activities, coordination of nursing services, and 24-hour security and transportation services.

For the segment of the population unable to afford a residence in an assisted-living community, the government plans to build 12 more residential centers in municipalities around the island.

Senior Citizens Have Few Options When It Comes To Housing


There are approximately 406,000 people aged 65 or over in Puerto Rico. That number is expected to reach 500,000 by 2010, according to recent estimates.

The dramatic increase in the elderly population, mostly because of the aging baby boomers, will impact not only the healthcare industry but also the construction industry, which will have to provide the type of housing needed by the older generation.

"We are seeing a lot of people in the older age groups downsizing after their children leave home [empty nest syndrome]," said Mercia Sobin, president of local real-estate firm Coldwell Banker / Isla del Coqui. "They are selling their larger homes and buying in older subdivisions that are centrally located--close to shopping centers, doctors, hospitals, and to their children and grandchildren--with good transportation."

Older folks are either purchasing homes that have already been remodeled or plan to remodel their new homes to accommodate any special needs they might have, such as wider doors, special attachments in the bathroom, ramps, etc., explained Sobin.

In Sobin’s opinion, walk-ups aren’t an option for most elderly because they don’t want to climb stairs and fear being stranded without water or electricity in a high-rise condo.

"The older you get, the less likely you’d want to live on top of a building for fear of hurricanes, power outages, etc. That’s one of the reasons a lot of older people don’t want condominiums," said Sobin. "The big mistake has been building walk-ups without elevators, not just for the older generation but also for young moms with babies, grocery bags, and more."

According to Sobin, elders in their 70s and 80s usually end up in a nursing home, of which she noted there are few being built on the island, unlike on the U.S. mainland. "I think we are tremendously lacking in providing housing and retirement facilities for people 65 and up," she said.

That’s about to change.

Local management firm Dickinson Beckett Corp. (DBC) plans to tap into this underestimated and underserved market by creating and building Las Villitas (Little Villas), an exclusive residential concept for the elderly.

"Most of the existing facilities on the island are converted [renovated] residential structures owned or managed by physicians or by others with a medical care-related background," said DBC President & CEO Miguel Serrano. "Most of the serious facilities have one- to two-year waiting lists for admittance."

Each Las Villitas residence will offer more than 40,000 square feet of accommodation with Mediterranean-style architecture. Each will have 48 air-conditioned rooms, allowing capacity for 96 residents (two per room), with private bathrooms and top-of-the-line furniture and fixtures.

DBC will start by developing the $5.7 million Las Villitas assisted-living facility in Guaynabo’s Camarones sector. Once the concept has been established and the market proven, the company intends to develop sister facilities in Arecibo, Caguas, Dorado, Mayaguez, and Ponce.

According to Serrano, permits, endorsements, scheduling, and other tasks related to the groundbreaking of the Guaynabo residence have already been obtained.

"DBC is ready to begin construction of the first facility as soon as the proposed equity funding is secured," said Serrano. "We are in conversation with the Government Development Bank to secure the needed funding."

Serrano is looking not only at Puerto Rico’s potential for developing his concept but also at the U.S. Hispanic and Latin American markets. "Having been founded by a Hispanic management team, Dickinson Beckett definitely has the insight, expertise, and credibility to exploit this opportunity in Puerto Rico, on the U.S. mainland, and in Latin America," he said.

Global Population Dynamics

Population 2000 (Thousands) / Average annual percent change 1995-2000 / Total fertility rate (average number of children per woman) 1995-2000

Puerto Rico:

3,811 / 0.5% / 2.0

United States:

278,357 / 0.8% / 2.0


39,630 / 0.0% / 1.2


1,013,662 / 1.6% / 3.1

Saudi Arabia:

21,607 / 3.4% / 5.8


6,055,049 / 1.3% / 2.7

Source: U.N., U.S. Census Bureau

Local Universities Preparing For Demographic Changes

Developing night programs, distance education, and more graduate offerings


Local universities such as Sagrado Corazon (USC by its Spanish acronym), Inter American (Inter), and the Ana G. Mendez University System are getting ready for the demographic changes that await them. Realizing the elderly population will increase as the population of those age 0 to 19 decreases, many have already implemented various strategies to respond to this trend. These strategies include creating night or weekend programs and distance education programs as well as expanding the range of graduate degrees offered.

USC President Jose Jaime Rivera said his university developed a Weekend College five years ago. "Students can earn three credits in one month by studying Friday nights and Saturday mornings," he said. Rivera added that USC offers a master’s degree program in which night students can complete their requirements in three trimesters.

Rivera also said USC is developing new masters’ degree programs. Some of the latest offerings are in business administration, human resources, and marketing.

The three universities that comprise the Ana G. Mendez University System--Turabo University, Universidad del Este, and Metropolitan University--have also expanded their offerings for night students, who represent 44% of the total enrollment in the entire system. "We offer graduate and undergraduate degrees for night students," said Francisco Bartolomei, vice president of marketing & student affairs.

Bartolomei added the Ana G. Mendez University System developed an adult education program for night students based on the one at Regis University in Colorado. "When the program started in 1996 it had only 400 students, but today more than 4,000 students are enrolled," he said.

Inter President Manuel Fernos told CARIBBEAN BUSINESS his university has created a graduate degree program for night students as well. "In fact, one-third of our total enrollment is in night school. That’s more than 4,000 students," he said. Fernos noted night students can also go for professional certifications.

Distance education is a growing component of universities’ activities. USC already offers many classes via distance education, whereby students take classes over the Internet. The Ana G. Mendez University System has also been offering distance education for some years through television and teleconferencing methods, as well as via the Internet.

Marketers Cozying Up To More Mature Consumers


A decade ago, people over age 50 weren’t considered worthy of marketing efforts because they were presumed to be loyal to certain brands and unwilling to try new things.

"Now we take everyone into account," said Carlos Carbonell, general manager of Young & Rubicam Puerto Rico. "We no longer make presumptions about brand loyalties based on age."

Data from the U.S Census Bureau are also forcing marketers to reconsider, since they indicate the population 65 and older is expected to grow steadily over the next two decades while the population 64 and younger declines progressively.

Marketing guru Faith Popcorn, known the world over for accurately predicting consumer behavior trends, calls the aging segment of the population WOOF (Well-Off Older Folks).

According to Popcorn, Americans over 65 control 70% of the United States’ disposable income and spend $35 billion a year on their grandchildren alone, making them a powerful consumer group which could shift the youth-obsessed focus of today’s marketing efforts to senior-oriented initiatives.

The shift could prove quite profitable for marketers, whose task of reaching a target audience would be made easier by the more predictable older consumers. "It’s hard to reach young people because their tastes and habits are constantly changing," said Carbonell.

Advertisers thus look forward to developing efforts aimed at older folk, whose habits are less volatile, said Fernando Mendoza, of Premier Euro RSCG. "They’re media consumption is a lot more steady, rendering communication efforts in mass media much stronger," he said.

The tone and manner of advertising is bound to change in an effort to appeal to a more mature audience. "Advertising will have to be more intelligent, informative, classic, and rational," said Mendoza.

Carbonell noted the aging of the population enhances the opportunity to market different kinds of products on a massive scale. "You’ll be seeing a lot more commercials for products such as Depend, Viagra, and retirement accounts," he said. "High-end items such as luxury cars and expensive beauty products will also have a good chance with a consumer base that has greater purchasing power."

Insufficient Medicare Reimbursements Jeopardizing Medical Attention To Elderly

Some hospitals have already begun cutting services; others hanging in there


According to various hospital executives in Puerto Rico, if Medicare reimbursements aren’t raised to 100% as soon as possible, local hospitals won’t be able to care efficiently for the growing elderly population, most of which depends on Medicare to receive medical services.

Some hospitals, however, are continuing to develop geriatric services, including assisted-living programs and care units for Alzheimer’s patients.

According to information published by the U.S. Census Bureau’s International Database, by 2025 Puerto Rico’s population of people aged 65 or more will be increasing at a rate of about 20,000 each year. Meanwhile, the population of those aged 0 to 19 will be decreasing at a rate of about 10,000 each year.

"Each day we have more Medicare patients and a higher life expectancy, which cause medical expenses to soar. Patients over 65 need more complex attention because they suffer from more complex conditions, and they take more time to heal," said Ivan Colon, administrator of Auxilio Mutuo Hospital.

He added this problem is aggravated by the lack of resources. "The insufficient Medicare reimbursements make it difficult to invest in services for the elderly because we lose money on each Medicare case," Colon said. Medicare currently reimburses 75% of medical service costs, whereas hospitals on the mainland U.S. receive 100%.

Geriatric medicine is a headache for hospitals because Medicare reimbursements aren’t enough to cover expenses, said Milton Cruz, CEO of San Pablo Health System. "San Francisco Hospital changed its focus and its name as a result of this. Before, this was a general hospital, but now---under the name Caribbean Pediatric & Surgery Hospital--we have eliminated internal medicine and family medicine offerings as these two areas received many Medicare patients," he said. "This goes to show how alarming the problem with Medicare is."

Ryder Memorial Hospital in Humacao is one of the few hospitals catering to the elderly. It has services for Alzheimer’s patients as well as independent-living facilities such as Ryder Housing for the Elderly, Ryder Village I & II, Ryder Assisted Care I & II, and the Ryder Nursing Home.

The dramatic decrease in the population aged 0 to 19 presents another challenge. According to the hospital executives interviewed, this will cause hospitals to compete more fiercely for pediatric patients. In fact, they say, it is already happening.

This Caribbean Business article appears courtesy of Casiano Communications.
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