What the declining birth rate means for US economy


SPRINGFIELD, Mo. — “You really want to encourage people to get married earlier, and have more kids,” said Dr. David Mitchell, professor of Economics at Missouri State University. “That’s really the ultimate solution.”

Birth rates in the United States peaked at around 1960 and have since been in a steady decline.

Currently, the U.S. has about 1.7 live births per woman.

This is below the replacement fertility rate of 2.1 This means that if an average woman has more than 2.1 children, the population would grow.

And if fewer than 2.1, the population would be in decline.

“If the labor force doesn’t grow, there aren’t as many people to employ, that actually has a negative impact on how fast the economy can grow,” said Dr. Steve Mullins, professor of Economics at Drury University.

Dr. Mullins and Dr. Mitchell say the lack of labor force will be one of the big economic consequences for low birthing rates.

“You just have fewer people,” explained Dr. Mitchell. “You have fewer people making goods and services, you have fewer people buying goods and services. If you have lower birth rates, that means future sales of soda, chips, food, cars, higher education, books, all of these things are going to be lowered, you’ll have lowered growth within those things in the long run.”

Dr. Mitchell said one of the reasons for low birthing rates is people are marrying later in life, “And if you’re getting married later in life, you tend to have fewer children. Say 100-year time span, if everyone’s getting married at 20, then you’ll have five generations within that 100-year time frame. If you’re getting married at 25, you only have 4 generations in that time frame.”

And Dr. Mullins said there will also be budgetary impacts for social security, “Right now, the forecast is the social security trust fund be exhausted around 2034. In addition to having a whole bunch of baby boomers retiring which raises the population of people that are being covered by these programs, the number of workers to work pay into those systems is not rising as fast as it was.”

And added that falling immigration levels is also a contributing factor, “Because the current administration is not as pro-immigration as previous administrations, that actually is going to exaggerate or make worse both the labor force growth problem and also the social security budgetary problem.”

But Dr. Mitchell said tax policy can be a potential solution, “One of the things you can do of course is you can do changes in tax policy, we are actually encouraging people to have more children, so, for example, expanding say child tax credits and things like that, those have a tendency to work.”

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