Want More American Babies? Make the U.S. More Livable

(Bloomberg Opinion) -- The U.S. birthrate fell to a record low last year. To get a sense of the implications, I got in touch with the economist and demographer Lyman Stone. He is an adjunct fellow at the American Enterprise Institute (where I also work), a research fellow at the Institute for Family Studies and director of research at Demographic Intelligence. Our conversation, conducted by email, has been edited for length and clarity.

Ramesh Ponnuru: To what extent is the low birthrate we just registered an effect of Covid-19? Should we expect the number to bounce back as the pandemic ends?

Lyman Stone: In a forecast I developed in December 2019 for my clients, I predicted approximately a 1% decline in births in 2020. Instead, we have observed a 4% decline. Attributing the difference to Covid, though, has a problem: Births began to fall well below trend rates sometime between May and August 2020, less than nine months after the pandemic hit America. There wasn't a big change in preterm births or stillbirths, and early data show no big uptick in abortions. So it's extremely unclear what might have caused this decline.

As far as bouncing back, I do expect a post-pandemic recovery, but not a full one. If we've learned anything about fertility over the last two decades, it's that at least some births delayed end up being births foregone.

RP: Should our low birthrate worry us? Or should we perhaps take heart in the possibility that it portends a more sustainable future?

LS: I dislike language about “worry” and “fear.” It’s better to ask whether low fertility is consistent with the things we value.

We know from surveys that Americans actively intend and plan to have 2 to 2.3 children on average, yet at current rates will have just 1.64. We know that Americans say they want to have, or think it's ideal to have, or say they'd be happiest having somewhere between 2.2 and 2.8 children. So it's very clear that low fertility is “bad” in the sense that it is not what Americans say they want.

What other things do we value? One might be having a society that is welcoming to immigrants. But as birthrates fall, far-right anti-immigration parties tend to do better, not worse. So if a traditional value of being welcoming to immigrants is something important to Americans, again, low fertility is a problem, because it threatens the viability of political coalitions that support an attitude of welcome and hospitality. And of course, in a more literal sense, the absorptive capacity of a society with regard to immigrants is related to population size: 1 million immigrants has a very different social significance to a society with 100,000 births than a society with 1 million or 10 million. 

Another thing we appear to value is something like, “Having a dynamic economy with lots of innovation and entrepreneurship, without inherited wealth that dominates the economic landscape.” But I've shown in extensive work that low birth rates directly predict less innovation, lower entrepreneurship and a higher salience for inherited wealth.

So across these three areas where I think Americans have some shared values — namely “we are a nation of families,” “we are a nation of immigrants” and “we are a nation of innovators” — low fertility rates portend a future that isn't consistent with those values.

Oh, and the sustainability argument is absolute bunk.

RP: It sounds as though you’re saying that low birthrates are a problem we can’t immigrate our way out of.

LS: Pitting birthrates against immigration is wrong for three reasons. The first is the political one I mentioned.

The second is supply and demand. The net migration rate into the U.S. has been in decline for several decades. This is because fertility rates are falling around the world and formerly destitute countries are getting richer. There are also more rich old countries that want immigrants. So under any given policy regime, net migration rates into the U.S. are going to tend to decline over the next several decades. More open policies might slow the decline, which would be wonderful, but they can't end it.

Third is ethics. Taking in more immigrants is likely to strip the most talented workers from poorer countries facing the exact same dynamics, but with fewer resources to combat them. It seems much more ethical to work to provide a society that is good for people who are already here, so that at least we can say we're inviting immigrants into real, durable prosperity, not just shuffling around the rate at which specific countries enter into demographic decline, and doing so in arguably a pretty colonial way. And of course, adding more immigrants doesn't deal with the problem that families would still be undershooting their preferences.

RP: Some countries, alarmed by low birthrates, have experimented with different policies to raise them. Have any of them worked? Should any of them be considered models for the U.S.?

LS: “Work-family balance” policies have been attempted as means to boost birthrates in many countries. Most studies suggest that they do indeed boost birthrates. If you provide free child care and maternity leave, it's somewhat pro-natal.

Direct cash transfers for childbearing do a little bit better. Across about 50 empirical studies of pro-natal policies, I find that cash incentives, and especially baby bonuses provided in the year of a child's birth, have somewhat larger effects on fertility rates than child care or parental leave. When you pay people to have babies, they have more babies. This is neither complicated nor surprising.

There are other effects too: Cash transfers tend to reduce abortion rates, and they are associated with somewhat larger increases in fertility among married women than unmarried women. But cash transfers, like child allowances, also reduce workforce participation. That’s part of why they are so effective: They let families rebalance away from the workplace toward the home. But it’s also why many countries avoid leaning on cash transfers.

I think policymakers still have this delusion that the path to high fertility is everybody having an awesome job with great benefits allowing them to be “flexible” for their family, but this just isn't reality. As jobs, even “family-friendly” jobs, turn into careers, and careers turn into essentially religious or spiritual vocations, family is deprioritized and birth rates decline. In empirical studies of surveys across nearly 100 countries, a co-author and I found that this effect was actually as strong for men as for women, so this isn't just about breadwinners. The boss in the movie “Elf” is the bad guy because as far as a child is concerned, a parent's work is always the biggest competition for that parent's mental and emotional energy.

RP: So have any countries successfully turned things around through government programs?

LS: There are extremely few examples of societies recovering from very low birthrates on the basis of policy. But there's a lot of research suggesting that France's historically generous tax and benefit treatment of families contributes to its anomalously high birthrate for Europe. Likewise, a combination of religious policy changes in the Georgian Orthodox Church and a huge increase in cash transfers to parents engineered a massive fertility turnaround in Georgia. Quebec's rollout of a baby bonus alongside other family-focused policies (including child care) pushed Quebec's birthrate from below the Canadian average to above it. And I can cite dozens of examples of individual, well-measured policies having clear effects.

The problem, however, is scale. An extremely cost-effective pro-natal policy is going to cost you $200,000 per extra baby. Less cost-effective policies involve $1 million or more in total program spending per extra baby. To close the gap between current fertility in the U.S. and the replacement rate of 2.1 would cost somewhere between $250 billion and $1 trillion in new spending — per year! It would be one of the largest expansions in government in history.

So we must also tackle cost drivers that don't land on the public ledger. We need to attack housing prices aggressively. A very nice study out of the U.K. showed that when policy measures from the central bank arbitrarily slashed monthly mortgage payments for some families, those families' birthrates rocketed upwards. Student loans matter too. Occupational licensing, and the “informal licensing” or “sheepskin” effect of college education, force young people into interminable waiting periods before they can achieve the stable work that enables family formation.

Dealing with low fertility isn't just about “family policy,” but about making a more livable society for everyone.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review and a visiting fellow at the American Enterprise Institute.

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