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Why America is about to Start Freaking out about Babies

The United States has long had an unexpectedly high fertility rate. We're quite a bit above some peer nations like Japan, Korea, or Germany, and fairly close to places like France and Sweden. That's remarkable because the U.S. spends virtually nothing on child benefits. France has made advising Korean and Japanese elites about how to boost their childbearing into something of a cottage industry, and the take home message is: Swamp parents with cash and benefits, regardless of marital status. But in the U.S., that doesn't seem to hold.

However that situation is something of a coincidence, and it's highly likely the U.S. birth rate is going to trend down as time passes. When it does, the stewards of serious bowtied policymaking in Washington, D.C. are going to start freaking out.

So why has the U.S. birth rate been so relatively high? In short, immigration and teen pregnancies. Many immigrants come from higher-birthrate countries like Mexico, and so tend to have more children on average. Meanwhile, the U.S. teen pregnancy rate has long been extremely high by industrialized standards — both helping to put the U.S. fertility rate at 2.12 children per woman (roughly replacement level) as of 2007.

However, all those things are rapidly changing. The birth rate among U.S.-born women fell by 6 percent in the first years of the recession — but among immigrants it fell by 14 percent. What's more, birth rates in immigrants' origin countries, particularly Mexico, have also been falling for years. Teen pregnancies have also been trending sharply down for years; falling by roughly two-thirds among all racial groups since 1990.

Overall births have since bottomed out, but much of the increase was older women who had clearly been putting it off for economic reasons. Ultimately a secular decline in the U.S. birthrate seems extremely likely. Right now it's sitting at 1.87, and I'd bet that it will eventually land somewhere around Germany's 1.38 within a decade or two. The reason is that without paid leave and other benefits, having children is a terrific pain in the neck even for rich people.

You might be thinking: Well, that doesn't sound so bad. There are "too many people" in America anyway, and population growth is a serious strain on resources. That's true up to a point, but as I've argued before, when it comes to rich nations whose birthrate is already pretty low, the efficiency of a society matters much, much more than the absolute number of people. French carbon dioxide pollution per person is less than one-third that that of the U.S. — meaning that equaling their emissions would have a greater effect on climate change than cutting the population in half.

What's more, a sharp collapse in the birthrate of a society means enormous political strain. The retired, non-working share of the population will grow, and the share of workers supporting those retirees will shrink. In theory, so long as productivity growth is chugging along, it should be possible to thread that needle and give more to workers and retired people, but in practice it will mean more fighting between creditors and debtors, as can be seen in Japan. (It's also worth noting that U.S. productivity growth has been terrible of late.)

That doesn't mean we should aim for explosive birthrates, of course. Replacement level is a good goal, since it seems pretty hard to hit even for nations with very generous child benefits.

This is where the self-serious D.C. wonk brigades come in. According to standard economics, human beings are one of two major inputs to economic production (the other being capital) — so if the population starts plummeting, economic output is going to take a beating. And for the very serious thinkers at the Brookings Institute and elsewhere, that's the mortal sin to beat them all — so they'll soon be theorizing about what to do. (For example, Germany's need for future labor is a major reason behind their relatively generous response to the Syrian refugee crisis.)

The big question of the future will be whether the spreadsheet crowd can get clear of their traditional desire to enforce conservative social norms with family policy. These were the same people behind welfare reform, one major goal of which was to boost marriage rates (at which it failed utterly), so it's likely they'll be tempted to condition new family benefits on marriage, having a job, and so forth.

But the lesson of France and Sweden is that this will likely fail. Generous family benefits that pay out regardless of family status — like a universal child allowance, for example — seem to work much better than more conservative policy in Germany. There are a lot of social factors behind why people get married and have children, and benefit conditionality simply doesn't have much purchase on them. But what we can do is make sure that any child born in this country has a decent standard of living.

Source: The Week

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