The doom-loop of a falling fertility rate

Growth is good. On that, most of us agree.

Sure, there are some agrarian localists on the right and antimodern environmentalists on the left who pine for a smaller, simpler world in which we make do with less as well as fewer — fewer cars, fewer smokestacks, fewer cities, fewer carbon dioxide molecules, and yes, even fewer people. But they are very much in the minority.

Most of the rest of us consider growth — economic as well as demographic — incredibly important, if perhaps for somewhat different reasons. Nationalists believe in greatness for the political community, and they view growth of all kinds as a means to that end. Mainstream environmentalists understand that combatting climate change will have to involve advances in technology that are driven by a mixture of growth-fueled economic dynamism and public investments paid for, in part, with revenue generated by economic growth. And liberals recognize the crucially important role that economic growth plays in making possible a rising standard of living — and how giving people at all levels of the economic hierarchy hope for personal, familial, and community betterment diminishes the allure of antiliberal political movements on the far left and far right.

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That's why the recent news that declines in the U.S. fertility rate over the past decade and a half are continuing, and may even be accelerating, is so distressing.

Replacement-level fertility — the number of babies each woman, on average, needs to have in order for the country's population to hold steady — is 2.1 births per woman. As recently as 15 years ago, the U.S. was bucking the trend of many peer nations in Europe and Asia in averaging about 2.1. But since 2007, the year before the start of the financial crisis and the extended recession that followed, we've fallen off a cliff. By 2019, the average number of births per woman had fallen to 1.71, and last week the CDC announced that the number dropped to 1.64 in 2020. That most recent downtick may be partly driven by the COVID-19 pandemic, but it's not divergent enough from recent trends to suggest there will be a reversal once the pandemic passes.

For now, the American population continues to grow, in part because of our relatively high levels of immigration. But we're growing at the slowest rate since World War II, and even this anemic level of growth will soon come to an end if the fertility rate doesn't bounce back.

And that could point toward an economically troubling future.

In such a world, the median age of the population would rise over time, with fewer young people available to work relative to the increasing number of retirees. The shrinking workforce would act as a drag on productivity and economic growth, leading us at first to generate wealth at a slower rate than we've grown accustomed to, and eventually to grow poorer over time. Meanwhile, fewer people would be paying into social programs (Social Security and Medicare) struggling to support ever-greater numbers of the elderly, placing those programs under increasing strain and necessitating tax increases or additional deficit spending to cover costs, with both of those possibilities adding to the economic drag. And of course, those economic struggles could further discourage people from having children.

That's the doom-loop of a falling fertility rate — and countries around the world, from Italy and Spain to China and Japan, are in danger of falling into it, along with the United States.

The trend would be less alarming if there were obvious things we could do to reverse it. But there aren't.

I'm cheered by growing bipartisan support for making it easier for people to afford children, and I don't have strong views about whether the Biden, Romney, or Hawley plans take the right approach. Any of them would be a positive improvement. But none of them is likely to do very much to increase the fertility rate. (Efforts in other countries to incentivize childrearing with pro-natalist policies have had, at best, marginally positive results.) That's probably because the factors driving people to opt for smaller families are much more powerful than other considerations. People across the world tend to start families later and have fewer kids when they are wealthier, better educated, and have easy access to reliable birth control, and the prospect of receiving a government check or a tax break isn't enough to act as a countervailing incentive for most people.

This challenge leads some people, often economists, to suggest that the best, and maybe only, viable response to declining birth rates is for countries to increase levels of immigration, especially from regions of the world with a lot of excess (above replacement-level) births. If a country's population is stagnating or declining from a lack of births, it can be increased by letting more people settle and work there. And if the immigrants' own rates of reproduction exceed that of the native-born population, the positive demographic result might even extend beyond the first generation. (After the first or second generation, immigrants tend to assimilate to American economic and social norms in favor of smaller families. This is precisely what's happened with Hispanic immigrants over the past several decades.)

That sounds like a reasonable proposal — at least until you recall that our historic moment is marked by the rise of political movements that are passionately opposed to immigration. The left may denounce those drawn to such movements as racists, but hurling insults is unlikely to change their views. This raises the possibility that the one thing that could meaningfully produce population growth would also further catalyze the far right and potentially destabilize the country politically.

And so we're left with the possibility that there may be no way to break out of our demographic decline — at least in the short-to-medium term.

Unless another possibility presents itself, that is.

As I noted above, a declining population and rising median age will tend to drive down economic productivity and growth and could eventually make Americans poorer, in the aggregate, over time. But as I've also pointed out, increasing wealth tends to contribute to declining birthrates. What if declining wealth removes that disincentive toward procreation, producing a self-correcting uptick in the birth rate once again? What if, in other words, a poorer America of the future turns out to be a more fertile America, just as the the poorer America of the past tended to have much higher birth rates than we see today?

Since economic downturns tend to be correlated with declining birthrates, such a shift might never materialize. (It may be that demographic and economic growth, as well as demographic and economic decline, are each mutually reinforcing.) That wouldn't mean we're destined for a continuous downward slide. But it might mean that there is little or nothing that any person, party, or government can intentionally do to slow or reverse the trend.