Is the Sinking U.S. Birth Rate a Problem?

The sinking U.S. birth rate has a lot of people worried.

To refresh your memory, the U.S. birth rate – measured as the number of births per 1,000 women aged 15 years to 44 years – has been sinking without interruption since 2007. The most recent birth rate measure of 56.0 in 2020 is a 19.4 percent drop from the 2007 birth rate of 69.5.

The birth rate decline has been widespread across demographic groups. Percentage decreases in birth rates from 2007 to 2020 by demographic group are: 64 percent for women age 15 to 19 years, 41 percent for women age 20 to 24 years, 23 percent for women age 25 to 29 years, 5 percent for women age 30 to 34 years, 38 percent for Hispanic women, 17 percent for non-Hispanic Black women, 11.5 percent for non-Hispanic White women, 18 percent for women without a high school diploma and 18 percent for college-educated women.

The consequence of a persistently low birth rate becomes clearer with the help of another demographic measure, the total fertility rate. Adding the birth rate at each age from 15 to 44 years yields the number of births per 1,000 women through their reproductive years. Dividing that figure by 1,000 yields the total fertility rate: an estimate of the average number of children a woman will have in her lifetime.

The total fertility rate necessary for a population to replace itself from one generation to the next – that is, the total fertility rate that generates zero population growth (ignoring immigration and emigration) — is called the replacement rate. The replacement rate for wealthy countries such as the U.S. is a total fertility rate of 2.1.

In 2007, the U.S. total fertility rate was 2.1. By 2020, the U.S. total fertility rate had dropped to 1.64.

The upshot: if current birth rates persist, the U.S. population will age and ultimately shrink.  Immigration could change the picture, but that would require ditching the restrictive immigration policies put in place several years ago.

What has people worried is today’s children are tomorrow’s workers and taxpayers. Fewer worker-taxpayers constrains both economic growth and the ability of federal, state and local governments to provide public services. Especially at risk: Social Security and Medicare.

Is the worry warranted?

No. After 44 years of wallowing in economics like a hog in slop, I’ve come to regard predictions of economic crisis as the sasquatch sightings of the college-educated. It takes more brain power to concoct a tale of capitalism’s next imminent crisis than to blow out a yarn about the hairy thing you saw for certain roaming the woods last night. As for reliability, tough call.  Sasquatch sightings might have a slight edge.

Oddly enough, sustained low birth rates are more likely to increase the labor force in the future than reduce it.

Consider the 64 percent decrease in the teen birth rate. The surest route to years spent out of the labor force and in poverty is becoming a single mother as a teenager. If the current low teen birth rate persists, it will bring a sizeable drop in the poverty rate and a sizable increase in labor force participation for years to come.

Lower birth rates translate to greater labor force participation for women in their 20s and 30s, as well.

Further, labor force participation rates for people age 65 years and older having been on the rise since the late 1980s. Today, one-third of 65 to 69 year olds and one-fifth of 70 to 74 year olds are in the labor force.

Low birth rate?  Not a problem.