US Birthrate Continues to Decline as Economy Continues to Expand

What in the world is going on?

Ten years ago, the birthrate in the United States was abysmal, but not surprising. Birthrates tend to decline as economies contract, and birthrates invariably recover as economies expand. The US economy was clearly in the dumpster as we headed into 2009 and, sure enough, the US birthrate followed right along. But now the economy is on fire, but the US birthrate is continuing to plunge. That is unusual. It appears that Americans are less enthused today about bringing children into the world notwithstanding a booming economy.

Is that a problem?

Not at the moment, but if the trend continues, sooner rather than later, it will be a problem…a big one.  Following the baby boom after Second World War when the birth rate peaked at 3.7 births per fertile woman, the birthrate did begin to decline in America. However, we held pretty steady at just about 2.1 births per fertile woman, which was just enough to keep us from falling into population decline. The birthrate in America was actually much better than most other Western industrialized nations, virtually all of which were experiencing declining birthrates. While we were doing better, the difference between the 2.1 birthrate we were achieving and the 1.7 birthrate the western European nations were achieving was entirely a function of the higher birthrate among families that had immigrated to the United States. America was, as it is today, the preferred destination for most people looking for a better life. Immigrant families were clearly fueling American growth. Young growing families furnish homes, buy clothing and washers and dryers, and toys and food and just about more of everything typical households need. Young families comprise what we used to call the age of acquisition.

Meanwhile, those bouncing baby boys and girls who were born in the years following the Second World War are now more apt to be limping rather than bouncing as they line up for Social Security, Medicare, and Medicaid. We’re not coming close to replacing those baby boomers with new births of future wage-earning workers. That will become a major problem in the years just ahead.

The U.S. birth rate in 2018 was a record low of 59 births per 1,000 American woman, which is the lowest rate since 1909 when America began keeping such records. No one really knows why this dogged decline in the birthrate in America is persisting, especially given the rosy economic reports we’re currently enjoying. Karen Benjamin Guzzo, associate director of the Center for Family & Demographic Research at Bowling Green State University in Ohio, who studies such questions opined, “people feel just really uncertain about the future, and that generally does not bode well for having kids. They may be employed but working part time, or going to school and working, or trying to pay off student loans.”

We don’t presume to know the reason why American families are not choosing to bring children into the world at the same rate as in the past, but economic uncertainty, the current chronic political warfare endemic to the country and the anger that permeates what passes for news commentary can’t be helping.

Here’s the cold hard fact: Our population is no longer renewing itself. Our current birthrate of 1.76 births per woman, is simply below the 2.1 births per woman needed to maintain a stable population. We are now officially an aging society, in which the proportion of the population over age 65 exceeds the proportion under age 15. Think about that.

Why is that important?

Well, consider Social Security and Medicare for beginners. The cost of these programs must be paid for through taxes tied to income. As unpalatable as it may be, rethinking changes in Social Security eligibility must be on the table. We really will have to raise the ages for both early and full Social Security retirement. Lower birthrates today will translate to lower workforces tomorrow, which in turn probably translates to diminishing tax revenues. Think of what this means for those in the workforce on whom we will depend to provide the taxes to cover the cost of Social Security and Medicare.

There were about 3.1 taxpaying workers per Medicare recipient in 2015, a number projected to drop to 2.3 by 2030, according to the Medicare Board of Trustees. Members of the baby-boom generation (born between mid-1946 and 1964) are now aging into Medicare at a rate of about 10,000 people a day, a rate that will continue until 2030. Over the next 15 years, Medicare’s enrollment is projected to increase almost 50 percent— rising from 54 million beneficiaries today to more than 80 million beneficiaries in a mere decade. A continued decline in the birthrate in America is going to create a structural nightmare for the funding of Social Security, Medicare, and Medicaid.

In the run-up to the 2020 election, when every politician will be promoting his or her bag of goodies and debating whether or not we’re making America great again, someone had better ponder—“Why are Americans having fewer children, and what does that portend for the future, and what in the world are we going to do about it?”