July 12 2013
Patrice J. Lee
Liberals who support President Obama's economic policies, the policies that have given us such an amemic "recovery," should start worrying.
The only way our current entitlement programs can be sustained is for succeeding generations to shoulder the burden.
The recession, however, is imperiling that. Yes, we can now add low birthrates to the list to effects of our current economic woes.
According to recent analysis by the Centers for Disease Control, birthrates have hit an all time low and that is driven in part by the economic downturn. The usual suspects are at play: unemployment and underemployment.
In another twist, we’re hearing from Americans in their critical child-bearing years that the recession and weak recovery have created so much financial uncertainty that they are prompted them to postpone starting families.
The recession has officially been over for four years, and there are plenty of signs that the job market and the housing market are improving. But Alice Schoonbroodt, an assistant professor of economics at the University of Iowa who has studied fertility and the economy, said many people likely still feel like their financial situation is precarious.
“It takes nine months,” Schoonbroodt said. “You need to be confident … that in the foreseeable future things are going to be good.”
In the United States, births among women ages 15 to 44 dropped six per thousand over the past five years, from 69.3 births in 2007 to 63.2 births per 1,000 in 2012. To put this in context, birthrates in the mid to late 1950s (i.e., the Baby Boomers) –one of the highest birth periods in recorded U.S. history– was approximately 120 births per 1,000. Our generation has a lot of catching up to do.
Now, birth rates have been on a decline since the Baby Boom era for factors other than the economy. As IWF has covered, many women have chosen to delay life decisions such as marrying and starting families to pursue educational and professional pursuits. That choice is a demonstration of how far women have come in the workplace.
The Millennial generation is coming to an age that they can shift to the front burner the life activities they left simmering on the back burner until they felt they were in a good financial or career place. As we reported, a recent study indicates Millennials may be done postponing marriage leading to a mini nuptials boom over the next few years.
But even more, unfolding in front of our eyes is an important lesson: economic uncertainty drives the decisions of private entities.
The uncertainty of the economy’s future performance is directly tied to federal tax and fiscal policies. So when Congress and the President “kick the can down the road” on the budget or deficit, that can hits the private sector right between the eyes.
Small business owners like corporations decide whether to hire a new worker or purchase a new piece of equipment based on their projections about revenue and tax implications. Similarly, experts find that middle class couples are calculating their ability to afford raising a child in the face of a shaky economic recovery and uncertain job market with a stagnant 7.5% unemployment rate. The Department of Agriculture pegs the cost of raising a child at around $235,000, and that’s before college costs.
It’s understandable that couples will be cautious about starting a family because they fear being one paycheck away from homeless with another mouth to feed. This doesn’t bode well for our growth as nation and says something about the faith Americans have in our leaders to govern.
So, what if Congress passed a balanced budget that the President signed setting tax and regulatory policies which businesses could then use to set projections for several years?
I suspect the accumulated decisions of private businesses would have a stimulatory effect across the economy. Instead of weak economic growth each quarter and stagnant unemployment each month, we’d see a boom in sustained economic activity that would encourage couples to stimulate activity of their own and perhaps cause a baby boom.