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ASU experts discuss implications of declining U.S. birth rates

Concern is growing about how results of the trend will affect a number of sectors

black and white photo of a baby smiling

March 03, 2020

A slew of recent headlines have reported historically low birth rates in the U.S., with the reason being attributed to everything from the aging Boomer population, to new immigration restrictions, to changes in cultural norms.

Regardless of the why, when birth rates dip below what is known as the “replacement” fertility rate of 2.1, the optimal rate to maintain population stability, it can engender concern about a future lack of healthy, young workers needed to maintain economic productivity. A new CDC report just put the U.S. fertility rate at an all-time low of 1.72, as recorded in 2018.

In Arizona, the decline has been even more significant than the rest of the nation, said Tom Rex, an economist at Arizona State University's W. P. Carey School of Business. That’s partly due to the decline in birth rates among Hispanics being three times greater than the decline among non-Hispanic women.

ASU Now wanted to know how this phenomenon might affect the country and the state of Arizona. So we reached out to Rex, to get an economic perspective; Megan Costa, assistant professor in the T. Denny Sanford School of Social and Family Dynamics, for some insight into the sociocultural implications; and Swapna Reddy, a clinical assistant professor at the College of Health Solutions, to learn how it could affect public health.

Steady as she goes

Question: Your research has found that the recent decline in birth rates in the U.S. is not actually as large as  the decline in birth rates between the Boomers in the 1940s and '50s and the so-called “baby bust” of the 1960s and '70s. Does that mean we shouldn’t be too worried about the impact of this most recent decline on the U.S. economy?

Tom Rex: That’s correct. There is usually a relationship between the economic cycle and birth rate. But birth rate has been pretty steady from 1970 through 2007. Similarly, while the number of births is down from the peak in the 2000s, the number is not much less than the figures since the 1980s. The declines in the number of births and the fertility rates are nothing like what was experienced as the nation shifted from the baby boom to the baby bust. Thus, the impacts of the current declines will be small.

Q: Why were so many Hispanics coming to Arizona before the recession? What economic opportunities were here for them then that aren’t here now?

TR: Any time when you have people moving from one place to another, typically you have what is called the push and pull factor: something causing them to want to leave a particular place, but also something attracting them to another place. In the case of Mexico — which until the recession was the dominant source of immigration to Arizona — in terms of push from Mexico, it was quite a challenge for the country to absorb all of its young people into the workforce, because they had such high birth rates for so long. In terms of a pull factor, the U.S. baby bust during the '60s and '70s meant there were less Americans entering the workforce in the 1980s and '90s. Rates of unemployment were low but there were help wanted signs up everywhere, because there were less people to fill jobs. So it was a great opportunity for immigrants. More recently, the economic shock of the recession caused a lot of Hispanics to leave the state due to a decline in jobs like construction. It’s likely that a lot of those Hispanics moved to Texas and other states where jobs in mining and other sectors were growing more rapidly.

Q: Is it always good for the economy when a region’s population is growing?

TR: No, absolutely not. Arizona is caught up in this idea that the only thing that’s important is to get bigger. That’s not what economic development is all about; it’s about improving the prosperity of a region. By the way, Arizona is doing horrible in prosperity. It’s one of poorest states in the country. My explanation for it is that the turning point was 1966, when the U.S. Supreme Court made a decision that affected all states in terms of the way the legislature was elected. Basically, it said both houses of legislature had to be based on population. Before that, that wasn’t the case in Arizona. What that did was it changed the balance of power from Democrats, who controlled Arizona up until that point, to Republicans, who have controlled it since then. So up until 1966, Arizona, despite its frontier status, was quite a bit better for education. Then in 1966, the legislature started cutting taxes, and spending on education went from well above the national average to now far below the national average. And if your workforce is not educated compared to the national average, you’ll see a decline in prosperity. There is such a strong relationship between educational attainment and earning.

Picket fences

Question: How are people’s attitudes about when and whether to have children different today than past generations, and how are they the same?

Megan Costa: More individuals are pursuing higher education and investing in their careers before having children. The increasing cost associated with raising children could also be a factor. And the proportion of childless women is on the rise. But a lot of individuals still maintain that the ideal family size is two children. In class, I like to ask my students — many of whom are very young — how many children they would like to have in a lifetime, and on average, the default is around two. Some recent studies in Europe show that people adjust their ideals over time as they age. But in some ways, “two children and a dog and a white picket fence” is still a very strong ideal. This is an area that is kind of understudied; we don’t really know how and why people adjust their ideal numbers or how happy they are with that adjustment. But there is still a strong social norm toward the two children ideal.

Q: Professor Tom Rex posits that SB 1070 made Hispanics feel less welcome in Arizona, which could be a contributing factor to the birth rate decline. Does legislation often affect birth rate?

MC: There are some classic examples of how legislation can change birth rates. China’s one-child policy is a well-known example. In Europe, there has been some legislation to try to recover from a low birth rate, providing subsidies for children over and above what people are achieving on average, things like additional child care and support from the state.

Q: How might the growing Boomer population affect society/culture?

MC: We’ve already seen some examples of that in Japan, which has a very large elderly population. There are a host of specialized products marketed to the elderly, such as caregiving robots. So certainly, a host of products and services will likely develop due to such a large portion of the population reaching older age, and having very different states of well-being. And there will be observable inequalities based on how those who are wealthy age compared to how those below the median income age.

Q: Are birth rates and educational attainment related?

MC: There’s an excellent Pew report that breaks down birth rates in a couple different ways. First by age, then education. What you see is that among women with a bachelor’s degree, there is an inverse relationship. Some of that comes from the incompatibility, in many ways, between the workplace and childrearing. That is the argument, anyway; I’m not sure if I ascribe to it.

Health innovations needed

Question: What do public health statistics tell us are the reasons for the recent decline in birth rates in the U.S.?

Swapna Reddy: There are a couple of things that we think are causes of this that are really important. First, we’ve seen really sharp declines in teenage birth rates. So that’s a good thing; it’s the result of decades-worth of public health and sex education, and we’re finally seeing very positive results there. Second, we’re also seeing a decline in birth rate for women in their early and late 20s. The question is, are they just not having children or are they delaying having children? What findings show us is that a lot of them are delaying having children until their early or late 30s; there has been no decline in birth rates for women in their early 30s and a slight uptick in birth rates for women in their late 30s.

Q: How might a rapidly aging Boomer population affect our health care system?

SR: So much depends on improvement in technology and health innovations. People are definitely living longer in the U.S., so the question is, how do we deal with that reality? As people age, they tend to become less productive in terms of a workforce perspective, and their health needs obviously tend to increase. The health needs of the elderly at the moment are a challenge to our health care delivery system because their health needs tend to be very expensive. We’re at a very critical point in the country right now, trying to figure out how to insure everyone and what that health care looks like. So what is the ability of a declining population to fill in those gaps in employment, to be able to take care of aging parents and to pay for the costs of health care? Those are questions I don’t know that we have an answer for, because we’ve never seen this; we’ve never had a population this big that’s living this long.

Q: The birth rate decline has also been attributed to a decline in immigration. Is there a possibility public health care and services for immigrants will degrade because of this?

SR: Based on the initial literature and studies, experts are saying that the decline in rates of immigration are directly related to new policies in place in the U.S. that make it more difficult for immigrants to enter the country and access legal safety net programs. So there’s a culture of fear and intimidation that makes immigrants less likely to connect in any way with federal or state services that could negatively impact their immigration status.

Top photo courtesy of Pixabay

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