Americans Aren’t Making Babies, and That’s Bad for the Economy

(Bloomberg Businessweek) -- Pandas and white rhinos aren’t the only creatures that are unsuccessful at mating in captivity. The folk wisdom that humans will copulate when left with nothing else to do—dubbed the blackout babies theory—surfaces regularly in the immediate aftermath of disasters, but the baby boom never materializes..The Covid-19 pandemic spawned predictions that stay-at-home orders would eventually deliver a baby bump. Yet far from having more children than usual, Americans are expecting fewer..In bedrooms across the U.S., couples are making decisions that, in the aggregate, could prove as consequential for the long-term health of our economy as those taken by policymakers in Washington. Fewer children now means fewer consumers, workers, and taxpayers in the future. In other words, a smaller economy than otherwise—though also a smaller environmental footprint, which brings its own rewards..Wolfgang Lutz, an Austrian demographer, warned in 2006 that European nations were at risk of falling into a “fertility trap” in which there are fewer women alive to have babies; smaller families become the social norm; and low population growth reduces economic growth, fostering a pessimism that further suppresses the birthrate. It appears that Denmark, among others, has taken Lutz’s message to heart. A public service announcement urges older Danes, “Send your child on an active holiday and get a grandchild within nine months.”.At the time Lutz raised the alarm, the U.S. seemed well clear of such a trap, with a total fertility rate of 2.1 children per woman, what demographers call the replacement rate, vs. 1.5 for the European Union. Now that the U.S. rate is below 1.7, that’s no longer assured..Unromantic as it sounds, planning a family is a numbers exercise that factors in the age of the would-be mother, access to affordable child care, college costs, income, and job security. Toss in a national health emergency and an economic crisis that invites comparisons to the Great Depression, and the benefits of parenthood no longer pencil out for many. The Guttmacher Institute surveyed about 2,000 American women in late April and early May and found that 34% wanted to delay pregnancy or have fewer children as a result of the pandemic. That outweighed the 17% who said they wanted children sooner or more of them..In June the Brookings Institution released a study predicting the U.S. is headed for “a large, lasting baby bust.” Its researchers forecast there will be 300,000 to 500,000 fewer children born in the U.S. in 2021 than there would have been absent the crisis, which amounts to a decrease of roughly 10% from 2019. That means the number of babies never born is likely to greatly exceed the number of Americans who’ve died from coronavirus, which is approaching 150,000. The effect on population will be longer-lasting as well: Many of the babies who aren’t being born would have lived into the 22nd century..“A lot of people I know at work and friends are saying they don’t want to have children until this is over,” says Tori Marsh, director of research at GoodRx Inc., a price-comparison and coupon site for prescription drugs based in Santa Monica, Calif. Marsh, 29, postponed her wedding, which had been scheduled for November, because of the pandemic. “It is definitely pushing back the timeline” for babies, she says..If couples fully make up for lost time by having more children later, this drop in the birthrate will end up being just a blip. But demographers predict that many, if not most, of the births that are delayed will never be made up. “There is this Panglossian narrative that delayed births will tend to recover, but statistically it doesn’t happen,” says Lyman Stone, chief information officer of Demographic Intelligence, a consulting firm whose clients have included Procter & Gamble and JPMorgan Chase..Lack of time is the most important reason the birthrate is unlikely to revert back to trend once the pandemic is over. While young women will still have plenty of years to give birth to their desired number of children, older ones will need to space births more tightly to reach their targets in their remaining fertile years. Some will run out their biological clock waiting for baby-making conditions to improve..“Every time that people decide to push back when they’re going to have their first kid or their next kid, some proportion will end up not having the child at all,” says Karen Guzzo, a sociology professor at Bowling Green State University and acting director of the Center for Family and Demographic Research. For couples who are already parents, says Guzzo, “the longer you wait to have your second or third child, the harder it is to, say, ‘Oh, I’m ready to have babies again.’ They say, ‘You know what? My family’s complete, I’m happy with what I have.’ ”.In the second half of the 20th century, the pattern in the U.S. and elsewhere was that fertility tended to fall during recessions and then bounce back when the economy recovered. Demographers expected that to happen after the 2007-09 recession, which at the time had been the deepest since the Depression. “People put off having children during the economic downturn and then catch up on fertility once economic conditions improve,” Pew Research Center wrote in an October 2011 report..But the pattern broke. The post-recession rebound never came even as the U.S. economy staged the longest expansion on record. Birthrates for women in their 20s, which had dropped 25% or more during and shortly after the recession, kept falling, and they stayed flat for women in their 30s. “Had prerecessionary fertility patterns been sustained through 2019, there would have been 6.6 million more births, and nearly 3 million more women would have had their first child over the last 11 years,” says Kenneth Johnson, a sociologist and demographer at the University of New Hampshire’s Carsey School of Public Policy..Early indicators point to the birthrate moving down another notch in this recession. The Wedding Report Inc. says its surveys show that slightly over 60% of weddings scheduled for 2020 have been postponed until later this year or 2021. That’s bound to delay some couples from starting a family..Also, when the pandemic broke out, birth control providers reported an increase in sales from people stocking up in case of shortages. Some sources have also seen a bump in demand for long-lasting forms of birth control. The Pill Club Holdings Inc. logged a 65% increase in June in new patient requests for Annovera, a vaginal ring that prevents pregnancy for up to a year. In the U.S., contraception has generally been available to those who need it, in contrast to the situation in poor and middle-income countries where disruptions in access to birth control may result in as many as 7 million unintended pregnancies in just half a year, according to an April estimate by the United Nations Population Fund..Planned Parenthood Federation of America Inc. has seen an increase in demand for abortion pills, according to Dr. Gillian Dean, senior director of medical services. She says several women have come to her for help to end “pregnancies that they would have wanted to continue were it not for the economic fallout of the pandemic.”.With almost 18 million Americans out of work as of June, it’s no wonder many couples might not be in the mood for procreating. Demographer Sergio DellaPergola has documented a tight statistical correlation between optimism and fertility in Israeli society. The Bloomberg U.S. National Economy Expectations Diffusion Index, which gauges consumers’ economic outlook, crashed below 30 in April and May from 57 in February, recovering to 38.5 in July..Not everyone will wring their hands at the thought of all those missing children. Some environmentalists may view the U.S. birth dearth as good for the planet. Each American consumer is responsible for about three times the amount of greenhouse gas emissions as a Chinese consumer, according to a 2019 report by the United Nations Environment Program. A 2017 study from Sweden’s Lund University published in Environmental Research Letters found that having fewer children is the best thing that people in rich countries could do for the planet—far more effective than buying an electric car or refraining from air travel..On the other hand, each child who’s wanted but not born is some family’s quiet tragedy. Surveys such as the National Survey of Family Growth show that the average American woman wants two children or possibly three. Depending on how long it lasts, the Covid-19 crisis may compel many women not to fulfill that desire..For the economy, fewer future workers will entail a bigger burden on each one to support future retirees. Every two-tenths decline in the total fertility rate (that is, two fewer children per 10 women) necessitates an increase in the Social Security payroll tax of about 0.4 percentage point, according to a table in the 2020 annual report of the trustees of the Social Security trust funds..Slow or negative population growth tends to depress economic dynamism, some economists argue. In a research paper published in January, Charles Jones, a professor at Stanford University’s Graduate School of Business, posits that so-called natalist policies, such as offering couples financial incentives to have more children, could spell “the difference between an Expanding Cosmos of exponential growth in both population and living standards and an Empty Planet, in which incomes stagnate and the population vanishes.” It’s worth noting that countries including Hungary, Poland, and more recently Russia have had little success in reversing declining fertility rates with subsidies..Even when the pandemic is over, many of the factors that have pushed down fertility rates in the U.S. will remain in place. Those include the penalty to women’s careers for having children and the high cost of child care, education, and health insurance. Child care is particularly salient for couples who already have one child, because they’re more aware of how problematic it is, says Bowling Green’s Guzzo: “In some states child care is more expensive than college.” As important as child care is, pandemic-related federal aid given to the sector has been less than the sum given to Delta Air Lines Inc., University of Michigan economist Betsey Stevenson told Politico Magazine..Any attempt to divine the future of fertility is complicated by the fact that there are different ways to measure it, and sometimes they contradict each other. One indicator that’s pointing strongly negative is the number of births, which hit a 35-year low last year and is likely to be even lower this year. Another is the total fertility rate, which is a snapshot of the birthrates for women of all ages in a given year. It has fluctuated wildly over the past century. It was 3.31 at the end of World War I, fell to 2.15 during the Depression, rose to 3.68 in 1957, fell to 1.74 in 1976, then rose to 2.12 in 2007. At that time, just before the financial crisis, the U.S. rate was among the highest of the wealthy nations. A total fertility rate of about 2.1—the replacement rate—is what’s required to stabilize the population over the long term. But the 2007 peak in fertility was short-lived. The rate fell in the last recession and kept going down after it, falling to 1.89 in 2011 and hitting 1.68 last year..The fact that the total fertility rate has fluctuated widely suggests that there’s at least a possibility its next move is up. That’s what the Social Security trustees are banking on. Their 2020 annual report, which was prepared before the pandemic, makes an intermediate projection that the total fertility rate will rise to 1.95 by 2029 and then stay there through 2095, the end of the forecast period. In an emailed statement, Social Security Chief Actuary Stephen Goss cited the surveys that women want two or more children. That “suggests that the current reduction in the total fertility rate will not be permanent,” he wrote..Setting aside the current crisis, it’s possible that today’s twentysomething women intend to have babies at later ages than their mothers or older sisters did. If so, that wouldn’t be reflected in today’s low total fertility rate. The total fertility rate is a tricky concept. It’s the number of children an imaginary woman would have over her lifetime if her likelihood of having a baby in each year of life matched what the birthrate is now for women of that age. (For example, at 16 she experiences the birthrate of today’s 16-year-olds; at 38 she experiences the birthrate of today’s 38-year-olds.).In contrast, the easier-to-understand completed fertility rate measures how many babies women actually have over their reproductive lives. That number has stayed high. Today’s women who are 49 years old have had 2.1 children on average, which is a bit higher than the 49-year-olds of a few years ago..Certainly women who are undergoing fertility treatments are as determined as ever to have children. Eva PenzeyMoog, 31, a user experience designer from Chicago, says some of the older women in her infertility support groups “are literally in a race against the clock to collect as many eggs as they can before they’re gone.” Julie Crist, 39, and Rachel Anderson, 31, of Bristol, Conn., who have a 19-month-old son, are trying for another child via in-vitro fertilization. “Sometimes we ask ourselves, ‘What the heck are we doing?’ The world is so weird,” says Anderson. “You can call it naïve. We want kids.” —With Alexandre Tanzi and Maeve Sheehey Read Next: A Decade of Progress for Working Women Evaporated Overnight.©2020 Bloomberg L.P.

Americans Aren’t Making Babies, and That’s Bad for the Economy

Across the U.S.,couples are making decisions that, in the aggregate, could prove as consequential for long-term health of economy.

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