WSJ What’s News - Americans Are Having Fewer Babies Than Ever. What Can Be Done About It?

Episode Date: October 13, 2024

This spring the U.S. fertility rate dropped to another historic low. And a potential American baby bust has become a campaign issue. WSJ Chief Economics Commentator Greg Ip answers your questions on the causes and consequences of the falling fertility rate in the U.S. And reporter Liz Whyte explains what policies the presidential candidates are proposing and how they may—or may not—make an impact. Charlotte Gartenberg hosts.    Further Reading How America’s Baby Bust Became an Election Issue  Why Tech Elites Want Us All to Have More Kids  More Cash for Kids Is Popular. It Might Not Be Wise.  Suddenly There Aren’t Enough Babies. The Whole World Is Alarmed.  Why JD Vance Worries About Childlessness  Learn more about your ad choices. Visit megaphone.fm/adchoices

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what's happening in our world. Both presidential candidates are pitching tax incentives that could encourage people to have children. That's after the U.S. fertility rate dropped to historic lows this spring. But could these incentives work? You've got questions. Let's get to it. Fertility is falling all over the world.

For women over all levels of income, education, and labor force participation. The total fertility rate in the US, which is how many children a woman is expected to bear over her lifetime, fell to 1.62 last year. That's the lowest on record and well below the 2.1 replacement rate needed to keep populations steady without immigration. Across the globe, many government leaders see this as a matter of national urgency. They worry about shrinking workforces, slowing economic growth and underfunded government retirement programs like Social Security. In the U.S., it's becoming a campaign issue.

Former President Donald Trump has called collapsing fertility a bigger threat to Western civilization than Russia. Meanwhile, Vice President Kamala Harris's Opportunity Economy Plan outlines measures for support for new parents as well. Before we get to how the baby bust became a political issue, what could a quickly dropping fertility rate actually mean for the country?

Here to help us parse all this is WSJ Chief Economic Commentator Greg Ip. Greg, declining fertility rates aren't new. In fact, fertility in high-income nations fell below the replacement rate in the 1970s. But why are fertility rates going down so precipitously lately? You're right that falling fertility is not new. And as best as we can tell, there isn't any single reason other than that just for a broad range of social and economic reasons, families just want fewer children these days. Raising children is time intensive, it's expensive, it always has been. And nowadays, a lot of families just have other things they also want to do and so

they are compensating by having fewer children so that they can give the children that they have all the attention they deserve and still have time for the other things they want to do with their lives. So a variety of reasons and I want to ask you about one in particular that a number of WSJ readers asked about, abortion. We know abortion rates in the US have ticked up over the past year or two, but can we point to any effects that abortion policy might have on the country's birth rate? You can't really identify any link between abortion availability and fertility rates. Abortion rates in the United States, as best we can tell, have

actually been declining for a very long time and At the same time the fertility rate has been going down. All right, Greg Why is a potential baby bust a problem listener? Joanne Vogelpole from st. Louis, Missouri called in with this question if we have less population here in the u.s And even across the world isn't that a good thing? So we're putting less demand on our resources I mean naturally as well as financially. So the issue we've been hearing for many years is that the global population is getting too large. So isn't a smaller US population a good thing?

There's a couple of myths associated with that point of view and one of them is that a larger population necessarily degrades the environment. But that's not really true. Just to take one example, the amount of energy that we need to consume, whether as electricity or burning fossil fuels, in order to generate a dollar of GDP has declined steadily over the last 20 or 30 years. And our economy has become less energy intensive. Moreover, the situation we're looking at now is not just the population growing more slowly, but actually starting to drop. The United Nations now, for the first time, sees that within a century, the world population

will peak a few billion from where it is now and then start to decline. And so at that point, you really are starting to run out of people. Right. So the global population will start to shrink. I want to talk about here in the United States, why is a baby bust in the U.S. a problem? It's a problem because as elder people retire, they expect to have their pensions paid for and they expect to have things like their health care provided. Well, who's going to do the work that generates taxes that pays for those things? It has to be the younger people. But if there are fewer younger people there to do the work that generates taxes that pays for those things. It has to be the younger people.

But if there are fewer younger people there to do the job because the birth rate dropped and therefore the labor force is smaller, you can see that that situation is not sustainable. So that's the first thing. The other thing is that ultimately the amount of economic output that our economy generates is a function of the number of workers

and how productive they are. If the number of workers keeps dropping, the economy will invariably start to get smaller. We've seen that in Japan where economic growth has been very close to zero for many years. In the end, your economy will disappear. And that doesn't strike me as sustainable. Yeah, I think part of that is this question of if people stop having kids who's gonna take care of us? That either has to come from the native-born labor force, people who are basically born a few generations ago, or from immigration. That was actually the exact point that Joanne Vogelpole also brought up. I want to play you the other part of her question. I realize we need tax

dollars to go into the system. Does that not make it more attractive to bring immigrants into the country? So Greg, how might an increased immigrant population offset some of these issues or not? Well, if your native-born population is shrinking, then as a matter of arithmetic, the only way you can sustain your labor force is to allow more immigration. That's just math. So the effect on the productivity of the economy and the ability to support government services

depends a little bit on the nature of that immigration. We know, for example, that skilled immigrants over their lifetime contribute more in taxes to the government than they withdraw in the form of services. Less skilled people, people without a high school degree, they are less likely to generate the taxes that pay for a lot of services,

more likely to use services. But even the lesser skilled immigrants are contributing because there are businesses out there. Look at the meatpacking industry, for example. They depend heavily on immigrants because a lot of native-born Americans simply will not do those jobs, at least for the salaries that are being offered. And so absent immigrants, that industry would invariably have to shrink.

All right. That was WSJ Chief Economic Commentator Greg Ip. Greg, thanks so much for being here. Thanks a lot. Coming up, the fertility rate has become a political issue. In fact, the presidential candidates are campaigning on it. But what are they actually proposing? And how do these policies stack up against what we've already seen? That's after the break. All right, here to walk us through the policy and politics of a potential baby bust is DC

based WSJ reporter Liz White. Let's jump right into the politics. Liz, you wrote about this recently, but the fertility rate has recently become a campaign issue. What's going on? The falling birth rate in the US isS. is definitely a rallying cry on the right now. There's actually a real concern

reflected that we are at a very scary point with our birth rate and it just reflects that people are unhappy and they don't feel confident that they can give kids a better life. It reflects a kind of economic malaise and a lack of hope in the future.

And the people who talk about this a lot are the smartly group of Silicon Valley It reflects a kind of economic malaise and a lack of hope in the future. And the people who talk about this a lot are the smartly group of Silicon Valley tech entrepreneurs. You have Elon Musk tweeting about it. Very dedicated religious believers who believe that children are a blessing and they want to have a lot of them. And then also, you know, immigration opponents who are worried about the nation changing in a big way and want to see America solve some of its labor woes by just having more babies and not importing workers. The national discourse on this has taken off

in the campaign because more and more people are seeing this as a central issue for conservative politicians to be talking about. We do think about this as sort of being at the forefront of a conservative policy agenda, but both sides of the aisle are talking about this now. How are politicians treating this issue? Let's start with the Democratic side. When you hear liberal politicians talk about the birth rate, they most often will bring it up in terms of immigration, like this is why we need immigrants in our country. For example, Vice President Kamala Harris, her newborn tax credits, she doesn't frame them as this is a solution to the falling birth rate. They're very much

framed as this is a way to provide economic opportunity for all. On top of that, you do have a very small movement on the left saying, we can't let this issue be dominated by conservatives and we do need to talk about the good of children and what they're for and how we need to just not abandon the thought of having a next generation. So it's on both sides of the aisle. I know we've heard the very meme-ified comment from vice presidential candidate JD Vans about childless cat ladies, which was actually from 2021 before the campaign. I sort of want to move beyond the rhetoric and hear what are the candidates now proposing.

So on the Trump side of the equation, Vance has floated $5,000 per child tax credits in interviews, but we haven't seen that as an official announcement from the campaign. Trump has talked about subsidizing or forcing insurance to pay for in vitro fertilization. And then on the Democratic side, Vice President Harris has proposed tax credits per child, but also a $6,000 per newborn tax credit. And that is part of her plan to boost economic opportunity. She doesn't frame that as we're going to help the falling birthrate. How are they going to pay for these policies? Is there any indication of that? I mean, I think if you talk to our tax reporters at the Wall Street Journal, that's the question

of the day. But we've recently reported that according to a recent analysis, both candidates' overall tax proposals would end up increasing the deficit. And so I think the answer is time will tell. We don't really know how or if they are able to pay for it. How are voters responding to these proposals? Our sinking birth rate is not yet an obvious public policy problem to people on a wide scale like it is in, say, South Korea, where dog strollers now outsell baby strollers. So it's not clear that people in the US are widely worried about

this in the same way that conservative policymakers in DC are. But we do know that people generally like the idea of child tax credits, and that does come with the caveat that when you ask people about policy proposals that are generous, they usually do favor them until they find out about the cost and what the tradeoffs are. I don't know any one issue voters on the fertility rate. We do already have tax policies meant to encourage childbearing here. What child tax credits are already currently in place? Yeah, we've had child tax credits in the

US for more than 25 years. Currently it's $2,000 per child, though that is reduced as you go up in income. And that $2,000 comes from the Trump administration's Tax Cuts and Jobs Act, which expires at the end of 2025. So if lawmakers don't choose to renew it or expand it, then the child tax credit will revert to $1,000 per child after that. I want to go to a listener question. Jeffrey Page of Rockford, Illinois asked this. If you paid people to have children, how likely is it that people would have kids when they

wouldn't otherwise? There's a lot of mixed data on this, but there are countries where they have done tax credits with that explicit intention or have even handed out cash, like just cold hard cash, not a complicated paperwork thing or anything like that. Just like a baby bonus, like a baby bonus. Yeah. And we've seen kind of mixed data on whether that works. Poland, for instance, pays families roughly $200 per month in cash per kid. One researcher I spoke with concluded that cash bonuses can modestly boost births, but

it ends up being a pretty hefty price tag to get to the point where a country is meaningfully impacting its fertility rate. And there are other things that policymakers can roll out besides paying people in cash. Hungary, for instance, they subsidize minivans and do a bunch of other things, but there's been debate over whether those things have moved the needle. LESLIE KENDRICK-KLEIN Liz White is a WSJ reporter in D.C. Liz, thanks so much for being here. LIZ WHITE Thanks for having me, Charlotte.

And that's it for What's New Sunday for October 13th. Today's show was produced by me, Charlotte Gartenberg, with supervising producer Michael Cosmides. We got help from Anthony Bansi and Deputy Editors Scott Salloway and Chris Zinsley. I'm Charlotte Gartenberg. We'll be back Monday morning with a new show. Thanks for listening.