What Does America’s “Baby Bust” Mean for the Economy?

More than a year stuck inside did not deliver the “baby boom” that some were expecting. In fact, the number of babies born in the U.S. in 2020 was about 4% lower than it was in 2019, marking the continuation of a downward trend in birth rates among women of childbearing age. 

This so-called “baby bust” has long-term consequences for the economy as Baby Boomers and Generation X continue to age, while Millennials and Generation Z have fewer children. Let’s take a closer look at what’s causing this trend and what might be done to reverse it.

According to the CDC, the fertility rate for American women ages 15-44 now stands at 55.8%, a new low and the continuation of a downward trend that began around 10 years ago. Additionally, there were 53.9 births per 1,000 women in the last quarter of 2020, substantially lower than 57.6 births per 1,000 women in the last quarter of 2019.

Experts are quick to point out that the pandemic might explain some of these changes as the economy crashed during the first two quarters of last year and schools remained closed, but it’s not the only explanation.

“Some of the things that might be driving down birthrates in the long run — like economic insecurity, the cost of health care, housing, child care, and education, and our awful work-family policies — are probably things that were exacerbated in the last year,” Philip. N. Cohen, a sociologist at the University of Maryland, told the Washington Post

Even as the economy comes back to life and schools prepare to fully reopen this fall, it’s not clear that the birth rate will increase along with it, as the longer-term policy issues remain and things like housing prices continue to increase. 

One reason to be concerned about this trend is that the U.S. birth rate is now below the “replacement rate,” or the pace at which a generation can replicate itself. In the long term, this means that there might not be enough workers to keep society moving in a meaningful way by the time the babies being born now reach working age.

America also needs workers to maintain programs like Social Security and Medicare, paying into them with their wages so that older generations can benefit. If the supply side of that equation can’t meet the demand, the government will be forced to reduce or eliminate the programs or come up with other ways to fund them.

Japan has already been feeling the effects of its own baby bust, leading Prime Minister Shinzo Abe to declare the issue a national crisis in 2017 and focus on policies that will encourage the country’s citizens to have children.

Washington Post columnist Catherine Rampell argues that it’s time for the U.S. to adopt a similar stance and make changes that address the underlying reasons why Americans are choosing not to have children.

“First would be a suite of changes that make it easier for Americans to have more kids. They include providing greater income security, so parents can afford to have the number of children they want,” Rampell wrote. “Also, adapting workplaces and other parts of the safety net so parents or would-be parents who want to stay in the labor force can do so more easily.”

The Biden Administration’s American Families Plan makes progress on this front by providing direct financial support to families and extending tax credits for workers with children. Outside of government intervention, changes in the workplace like remote work and more flexible schedules might also create an environment that’s more conducive to having children.

Grassroots Pulse covers public policy and political issues aimed at engaging highly-active policy makers, donors, and grassroots leaders at the forefront of the political process in America today.

Image Credit: Photo by Aditya Romansa on Unsplash

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