America's Baby Bust: How The Great Recession Has Jeopardized Our Demographic Health

bigstock-Childhood-Kids-3559278(1).jpg

At the turn of the century, America’s biggest advantage was its relatively vibrant demographics. In sharp contrast with its major competitors — the E.U., Russia, China, Japan — the United States had maintained a far higher birthrate and rate of population growth.

But the 2010 Census showed that in the past decade America’s birthrate slipped below at least one European country (France) and under the pace necessary to replace our current population. Immigration, both legal and illegal, is also slowing, in part due to plunging birthrates in Mexico and other Latin American countries. As one National Geographic report from Brazil has it, women there, too, are saying: “A fábrica está fechada.” The factory is closed.

America’s sinking birthrate is in great part a function of our wobbly economy. The decline, notes the Pew Research Center, largely coincides with the onset of the 2007 real estate crash and the financial crisis the following year.

The recession had a disproportionate impact on people of child-bearing age, who suffered higher unemployment and steeper income declines than their elders. In the process, the U.S. fertility rate dropped from over 2.1 births per woman in 2007 to 1.9 last year, below replacement rate for the first time since the mid-1980s. The 2010 Census found that the number of households that have children under age 18 was 38 million, unchanged from 2000, despite a 9.7% growth in the U.S. population over that period.

Of course many environmentalists would celebrate these numbers, and some nativists as well. But the problem is not that we need more people per se — we need an increase in younger, working-age people to make up for our soon to be soaring population of retirees. Young people are the raw capital of the information age and innovation, and new families are its ballast and growth market.

Yet many developed countries are facing dramatic labor force deficits. By 2050, according to Census projections, there will be 40% fewer workers in Japan then there were in 2000, 25% less in Europe and 10% fewer in China; only projections of higher birthrates and immigration allowed demographers to suggest the U.S. workforce would keep growing.

Without these future workers our already tottering pension system will become even more untenable, as is occurring in Europe and Japan. The bad part about slow population growth is that it depresses the economy, which in turn works against family formation.

Of course, there are others ways to deal with this imbalance of too many retirees and too few workers. One is to raise taxes. The billionaire philanthropist Pete Peterson estimates that most developed countries will need to increase their spending on old age benefit promises from 9% to 16% of GDP over the next 30 years. This would require an increase in taxes of 25% to 40% — even in the already high-tax countries of northern Europe.

Raising taxes to transfer funds to the older generation is already happening in some of the most rapidly aging countries. Japanese lawmakers just voted to double the country’s sales tax by 2015 precisely for this reason. Due in large part to low birthrates and soaring numbers of seniors, Japan is now the most heavily indebted high-income country in the world.

Germany likewise is now considering a special tax on younger workers to fund the pensions of the growing ranks of oldsters. Chancellor Angela Merkel has proposed the 1% income tax as a “demographic reserve” for a workforce that is expected to shrink by 7 million by 2023. “We have to consider the time after 2030, when the baby boomers of the ‘50s and ‘60s are retired and costing us more in health and care costs,” explained Gunter Krings, who drafted the new proposal for Germany’s ruling Christian Democrats.

Higher taxes, or its evil twin, austerity, are unlikely to solve this dilemma. Other issues may constrain family growth — high urban population densities, women’s growing role in the workforce, declining religiosity — but one critical precondition for spurring family growth is to expand the economy. Without growth, the long-term decline of most high-income countries, including the United States, is all but assured.

This turns on its head the commonplace assumption that societies reduced their birthrates as they got wealthier. This pattern was seen in the United States and Europe by the 1960s and, even more so in East Asia, whether governments adopted baby-suppressing (notably China) methods or, more recently, as in Singapore, have tried to promote family formation.

But more recently it appears that declining economics — and strong public perceptions that things will get worse — can also convince people not to have children. In 2010, according to Gallup, most European countries have been expecting harder times; pessimism was particularly strong in Spain, Italy, Greece, the Czech Republic and the United Kingdom. Stories about divorced Spanish or Italian young fathers sleeping on the streets or in their cars is not exactly a strong advertising for parenthood.

In 2011, birthrates fell in 11 of the 15 European countries that have reported numbers. Among the countries reporting declines were Finland and Denmark, where rates had been ticking slightly upwards.

The impact has been even greater in countries like Spain and Greece, where overall joblessness has hit one in four and youth unemployment is roughly 50%. Some of these countries face the prospect of considerable de-population in the coming decades.

“A more pessimistic economic outlook” is one key reason that European birth rates have been depressed and family formation so slow, confirms Austrian demographer Wolfgang Lutz. Overall fertility has fallen to roughly 1.5, well below replacement rate and all but guaranteeing a demographic-based economic crisis a decade or two sooner. Some eastern countries like Latvia now have fertility rates approaching 1.2. Lutz believes that once birthrates fall to these levels, there is no turning back.

Yet it is Japan that perhaps shows this renewed relationship between economics and birthrates most clearly. In 1991 many economists predicted that Japan would overtake the U.S. economy; instead U.S. GDP grew much faster and China supplanted Japan in 2010 as the world’s second-largest economy. As prices deflated and opportunities shriveled, Japanese grew less interested in either starting or growing families.

It could get even worse: Japanese teens seem not only less interested in work but in each other. In what seems an enormous reversal of adolescent nature, 36% of Japanese males 16 to 19 years old have admitted to pollsters having no interest in sex, and some even despise it. The figure is even higher (59%) for females in the same age category. For many, notes Japanese sociologist Mika Toyota, hobbies, vacations, food and computer games are often more alluring than pursuing the opposite — or the same — sex.

It may well be that American birthrates have been more impacted than Europe’s by the recent recession due to the relative weakness of the country’s social safety net. Finnish demographer Anna Rotkirch has pointed out that Europeans have tried to mitigate the impact of recession through generous transfer payments to young families. This may account as well for the fact that France’s birthrate last year surpassed that of the United States.

But without strong economic growth, it seems likely that family formation and birthrates will continue downward everywhere, particularly as economic realities force reductions in state aid. A mindlessly ever-expanding welfare state, trying to enlist more clients, even tiny ones, will diminish private sector growth and usher in even more quickly the onset of “demographic winter.” A lethal demographic cocktail of high taxes, low growth and fewer babies could set the stage for an even greater financial crisis in the decades ahead.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in Forbes.

Childhood kids photo by BigStockPhoto.com.



















Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

According to census programs

According to census programs we have found every year population growth rapidly increases therefore in a slow economy most probably country directly affected due to recession as the population percentage touches high circumstances on basic needs. Therefore we have found different health care problems are facing due to population increase.
kid steals

Geography students in the UK

Geography students in the UK are incredibly lucky - there is a tremendous wealth of fascinating landforms and natural phenomena, right under their feet. Gayvideos

Dlaczego racja egzystuje? W

Dlaczego racja egzystuje? W jakim celu w mediach jedyne co się zapisuje - z wyjątkiem kilkoma wpisami traktującymi gwiazd, jakie dymią nieelektronowe papierosy (papierosy elektroniczne) - to owo że szkodzą, iż powinno się zabronić zielona karta usa ich sprzedaży bądź wciąż przyzwoiciej nałożyć banderolę na ciecze aż do nich wyprzedawane. Bez liku wskazuje na owo iż loteria wizowa dv bezapelacyjnie w środku owym jakimkolwiek stoją znaczne firmy wizy do usa tytoniowe gwoli jakich utraty po owym jak nieelektronowe skręty (elektroniczne papierosy) na sektor są rachowane w mld euro także kraju, na rzecz których wpływy spośród podatku na pety egzystują rozległe.

WE BEGIN TO UNDERSTAND HOW THE RECESSION HAS IMPACTED OUR LIVES

Fewer people are having kids and fewer people are caring for kids. The Santa Monica Property Blog notes that "As births fell from their 2007 peak, the share who care for household children on an average day fell by a full percentage point–from 21.8 to 20.8%."

Best….

Jodi Summers
The SoCal Investment Real Estate Group
Sotheby’s International Realty
jodi@jodisummers.com
www.SantaMonicaPropertyBlog.com
License # - 01343854
**
Faith is like camera film - It's developed in the dark. —Unknown

Govt spending as share of GDP

We are sure that female literacy is a major factor in fertility - meaning that when women learn how to read they have fewer children than other women who cannot read. I suspect, (without good statistical evidence) that in rich countries fertility is negatively correlated to Govt spending as a proportion of GDP - meaning that the more the Government spends the fewer children are born. Of course France contradicts that theory, but I suspect it could be the case in many countries. The reasoning for the suspicion is that the higher Govt spending socialises the economic benefits of children and leaves insufficient private economic benefit when matched against the private economic costs. People respond to economic incentives. We all benefit in our old age if our brothers and sisters had many children, but we do not benefit if we (husband and wife) had many children. Has any good research been done on this question?

Interested

Unemployment

Does it really make sense to complain that there soon won't be enough young people to fill the jobs of the people who are retiring, while in almost the next sentence complaining that 50% of young people are unemployed?

Eros Shrugged?

Great article... the economy has gone south and as capital has gone on strike (total liquid assets over a $1T), so has Cupid as well??
http://tinyurl.com/9nxfgkm
Cheers, RJP

Biology is a pyramid scheme

The biologists and anthropologists should be educating us to the fact that "life is a pyramid scheme." Whether species or nations, as long as there are more young than old, you grow and prosper. Break that pyramid (as Japan, Europe, and USA have done) and you fall into decline. No exceptions. Which should make the old rather afraid. The young will not just "stand there" and pull wagons full of drooling seniors.

Obvious solution is "merger" between societies that are too old with societies that are very young (think middle east and Africa). Mexican immigration into the US was a defacto merger.

But no western politician will have the guts to "open the gates" until it's much too late.

To my fellow "seniors" I say "stop worrying about whether your children and grandchildren will be worse off than you; start worrying about whether they will kill you."

All immigrants not equal

I'm not afraid of my children or grandchildren killing me - I am afraid of illegal Mexican immigrants killing me.

There is a lot of crime in Mexico and the rate of violent crime committed in the US by illegal immigrants from Mexico is increasing.

Wouldn't it make more sense to increase immigration from India where there are lots of well educated and law-abiding young people eager to come to the US, rather than from Mexico where the young people are poorly educated, poorly socialized, and hate the US?

Also, Indians speak English.

Really?

Well that's not uninformed bigotry at all!

India is not a prosperous land of well-educated, obedient young people any more than Mexico is. The difference is that young Indians who are well off and can get a quality education are extremely numerous (though not on a per capita basis) and more likely to occupy high-paying jobs in the US. Statistically speaking, well educated individuals tend be less likely to get in trouble with the law. The difference between your perception of Indian immigrants and Mexican immigrants is solely based on the fact that, because we share a border, poor Mexicans are able to get to the US in order to seek a better life, whereas the only Indian immigrants you seem to meet are the ones who have already had a much greater degree of opportunity in their lives than the average citizen.

Also, Mexicans don't hate the US. They hate gringos like you that were born into lucky circumstances and fight tooth and nail against them even getting the chance at a better life for themselves and their children.

some thoughts

"...This turns on its head the commonplace assumption that societies reduced their birthrates as they got wealthier."

Exactly.

The truth is, I think, that we have just made it so damn hard to have kids in the industrialised world, in terms of both financial cost and personal time costs. The heart of this relates to economic meddling that forces mothers out to work.

Also, every kid who goes to school learns to "be all they can be". Sounds innocent enough until, may be, it effectively means "be career oriented - so, not family oriented".

But look at what's going on. All those old people wanting to retire early on the back of younger generations. Is this democracy at its worst? Is this a majority using political dominance to "steel" from a minority? And will that 'parasitic' majority end up killing off its host?

The real solution, among other things, is to insist that old people do some part-time work to cover their costs. Young people already have far too much on their plates.

Price of admission to State schools

In my opinion the biggest reason that birthrates have gone down is that young women prefer to remain children rather than becoming Mothers.

The biggest culprit is college (and graduate school), which is often little more than a prolonged party for four (or eight) years. This effectively wipes out the twenties - prime child-bearing years.

If the price of admission to college was childbirth the birthrate would go up and the amount of partying, drug use, STDs etc. would go down.

Also, with a bunch of young women together they could help each other with child rearing.

Men would be more likely to accept their paternal responsibilities if the kid was the ticket to college admission.

Some truth in that. We have

Some truth in that. We have created many artificial pressures on young people, and education as we know it is far too extended for far too many people.

But to say, having kids doesn't make for a grown up. A good childhood is what makes a grown up. It's sad, but as it seems the least grown up of us (in real terms) are having the most children. The result is serious social problems from abominable parenting.

The Housing Affordability Connection

In an essay entitled "The Dirt Gap", Prof. Steve Sailer outlined some very pointed statistics about the differences between States in the USA; listing the States in order of house price inflation from 1980 to 2004, and fertility rates among white women; in the 2004 elections, sitting President George W. Bush, won all of the first 26 States with the lowest inflation in house prices and the all of the first 19 States with the highest fertility rates. The statistical significance of this is enormous.

He has written more since that essay, pointing out how the thesis still holds up.

http://www.vdare.com/posts/affordable-family-formation-the-neglected-key...

http://www.isteve.com/2005_Dirt_Gap.htm

http://isteve.blogspot.co.nz/2010/07/dirt-gap-validated.html

It would seem that if you want higher birth rates, one thing you have to do is ensure that urban growth constraint does not make housing unaffordable to the cohort most likely to procreate. One writer (Jennifer Morse Roback, possibly?) recently called massive mortgages "the new contraceptive".

Other reasons?

Thanks that was informative.

There may be other reasons:

http://mormonmatters.org/2008/02/10/mormon-family-shrinkage/

This is an article on why Mormon families are shrinking from 10 children in the 1970s to 5 or 6 today. The same factors probably affect other Americans with smaller families.