A woman touches her baby’s hand. (Photographer: Krisztian Bocsi/Bloomberg)

What’s Discouraging Millennials From Starting a Family?

(Bloomberg Businessweek) -- It made perfect sense when American women reacted to the recession of 2007-09 by having fewer babies. But we’re nine years into the second-longest expansion on record, unemployment is well below average, and yet the birthrate hasn’t rebounded. The number of births in the U.S. fell in 2017 to its lowest in 30 years. What’s going on?

One possible explanation is that the economy’s good health masks continued hard times for men and women in their 20s and early 30s, who are responsible for most baby-making. “This young generation, millennials, I think they still feel pretty uncertain, as if they can’t afford to make this big long-term commitment” to raising a family, says Karen Guzzo, a sociologist at Bowling Green State University. “They have these standards: ‘I want to live in a good neighborhood. I want to have a house. I want to be able to have good child care and take time off from working.’ ”

The 3.9 percent unemployment rate in April seems to indicate that jobs shouldn’t be a problem for people considering parenthood. But the share of twentysomething men who are employed still hasn’t fully recovered from the blow of the recession. As of April it was down 2.4 percentage points for men age 20-24 (to 68.4 percent) and 2.2 percentage points for men age 25-29 (to 83.7 percent) compared with the last business cycle peak, December 2007, according to the Bureau of Labor Statistics. Some of those young men who aren’t employed are in school; some would take a job but aren’t actively searching. In any case, the drop in the employment-to-population ratio is an important number because “in the fertility literature, the No. 1 determinant is the husband’s employment status,” says Steven Lugauer, an economist in the University of Kentucky’s Gatton College of Business and Economics.

The share of young adults living with their parents—an arrangement that makes it awkward to start a family—hasn’t declined in the recovery. The share of men age 25-34 living back home rose more than 5 percentage points from 2007 to 2017, reaching 19.6 percent, the highest since record keeping began in 1960. For women in that age group, the share rose 3.2 percentage points, to 12.5 percent, also a record, according to the U.S. Census Bureau.

It’s probably no coincidence that many are drowning in debt. The amount of student loan debt owed by people under age 30 rose 75 percent from 2007 to 2017, to $377 billion, according to the Federal Reserve Bank of New York.

Student loans, coupled with high housing prices in many markets, have helped push down the rate of homeownership among people under age 35, to 35 percent last year from 42 percent in 2007, says Jessica Lautz, director of demographics and behavioral insights at the National Association of Realtors. For many young couples, no house means no babies.

For demographers, a key question is whether young women who aren’t having babies now will catch up by having more when they’re older. Some of this seems to be happening: The only two age groups with higher birthrates in 2017 than in 2007 were those 35-39 and 40-44, according to National Center for Health Statistics data released on May 17.

But each year that goes by in which birthrates stay the same or fall makes a rebound less likely, says Gretchen Livingston, a demographer at the Pew Research Center. Despite advances in reproductive technology, “some women won’t be able to catch up” even if they want to because they’ll be too old to have babies, Livingston says.

Mathematically, the problem is that the birthrate for women age 20-24 is six times as high as that for women 40-44, so it would take an unrealistically big increase in births among the older cohort to make up for declines in the younger age group. If too few babies are born, there won’t be enough workers in the future to support the growing number of retirees.

The situation is more acute in other countries. China, which dug itself into a demographic hole with its one-child policy, is planning to scrap all limits on the number of children a family can have, people familiar with the matter told Bloomberg News. But the move may be too late. “The policy shift will hardly boost the number of newborns in China,” says Huang Wenzheng, a demography expert at the Center for China & Globalization, a Beijing-based think tank.

Germany, meanwhile, has seen birthrates climb to their highest levels in 20 years because of an influx of immigrants and family-friendly policies. A 2013 law gives parents of children as young as 1 the right to day care. “Women see that they can have a baby and still continue their careers,” says Martin Bujard, research director at the Federal Institute for Population Research in Wiesbaden. The U.S. can and should boost its own birthrate with more family-friendly policies, says Bowling Green’s Guzzo.

The continued slide in the U.S. birthrate might indicate that would-be parents are pessimistic about their prospects, not just current conditions, says Kentucky’s Lugauer. A February research paper he co-authored with Kasey Buckles and Daniel Hungerman of the University of Notre Dame found that in the U.S., fertility appears to be a leading economic indicator: “The growth rate for conceptions begins to fall several quarters prior to economic decline,” they wrote. Asks Lugauer, “What is it that people are seeing that makes them hesitant to expand their family?” —With Chris Reiter

©2018 Bloomberg L.P.

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