Earlier in December, Paul Ryan made a comment after the passage of the tax bill that the birth rate in the United States must be higher in order to maintain long-term economic stability.
“We have something like a 90% increase in the retirement population in America, but only a 19% increase in the working population in America,” he stated in a press conference in Washington. He never specified over what time period the increases took place, and I couldn’t find any specific sources to back up these statistics, but it wouldn’t surprise me if this ratio was accurate. Overall, I have mixed feelings about his message. This issue is more complex than a simple plea to have more children can fix.
To examine what kind of economic impact is made in a country as a result of long-term low birth rates (low, in this context, meaning below the replacement rate of 2.1), we need to look no further than Japan. Japan has suffered from low birth rates over the past several decades and the struggle continues to increase the birth rate. Their fertility rate sits at 1.42 children per woman, far less than the 2.1 needed to keep the natural population stable. As a result, the country has lost a trillion dollars in GDP and the population has declined 1 million people just in the last five years. They have struggled to maintain pensions for an aging population while there are gradually fewer workers to provide them with those pensions. Japan currently has the third largest economy in the world, but with birth rates this low, they’re not going to hold that title for long. It’s clear that, in and of itself, a sub-2.1 birth rate is not healthy for the economy of a society in the long run, but when other factors are considered, a low birth rate is not necessarily a sign of looming economic collapse.
One of the great aspects of the United States that Japan lacks heavily in comparison is our high immigration rates. Even as it has been plummeting in recent years, the US still allows almost a million immigrants into the country every year. Not only does immigration offset low birth rates, but immigrants to the United States tend to have more children than natives. In addition, a higher proportion of immigrants to the United States have graduate degrees and a higher labor force participation rate than American born citizens. As long as competent immigrants make their way into the United States and stay here for generations, low birth rates among American-born citizens is largely inconsequential.
The vast majority of the root causes of low birth rates are almost exclusively social and cultural. Even of the economic reasons for low birth rates, I don’t believe they contribute anything substantial to the cause. Real median household income in the United States topped $59,000 in 2016, according to the Federal Reserve of St. Louis, which is higher than any other year since record-keeping began in 1984. The primary causes of low birth rates are rooted in cultural changes, especially the feminist movement, that have made it acceptable to delay or forego parenthood.
Japan suffers from low birth rates and now their economy is up in question. Perhaps the sole reason the United States has not gone down a similar fate is due to immigration. After all, the United States has held its position as the most powerful nation in the world primarily because we are a nation of immigrants, and as long as we can incentivize hard-working, productive immigrants to bring their families and work ethic to the United States, I don’t believe we need to increase the birth rate to avoid economic disaster.