Baby Bust, Social Programs and Immigration
– By Howard Sierer –
The United States needs more working age adults today and the shortage will inevitably grow in coming years. This demographic reality will have major impacts on the nation’s social programs and immigration policies.
Americans are having fewer children with the birth rate dropping dramatically over the last 50 years. In 1964, the annual birth rate per 1000 people was 19.66 but has declined to 12.009 per 1000 people in 2024. For those still fretting about overpopulation, this “baby bust” would seem like good news. But in fact, it threatens both our social fabric and the economy.
Several factors have influenced the birth rate decline among those in today’s prime child-bearing years, with birth rates falling well below replacement level. First, raising children is an expensive proposition. The Brookings Institution estimates that raising a child from birth to age 18 costs on average $310,000 but added the caveat that “your mileage will vary.” A second factor: increasing numbers of women want to find fulfillment in professional work and the paychecks that come with it.
As a result, people over 65 years of age will outnumber children under age 18 by 2034, a first in U.S. history, according to projections released by the Census Bureau. This watershed will be the latest marker of the nation’s aging, which has accelerated as baby boomers move into their senior years.
Both political parties seem to believe the government’s response should be income redistribution, thinking that it’s so expensive to raise children that the government should subsidize families. The left wants universal child care, paid parental leave and a larger child-tax credit. Some on the right support much of that agenda and would add payments for women who exit the labor force to raise children.
Yet it’s not clear that subsidizing larger families will help based on programs enacted around the world. The New York Times ran an article entitled “Why China’s Shrinking Population Is Cause for Alarm” that pointed out that financial subsidies there have had very little impact on birth rates. Singapore’s fertility rate has declined since the 1990s to about 1.2 births per woman, even after decades of government payouts to encourage more children. (A fertility rate of 2.1 is required to maintain a steady population.)
Japan (fertility rate: 1.4 versus 1.7 in the U.S.) is welcoming immigrant workers after trying everything else. Years-long maternity leave in Nordic countries has failed to increase fertility rates that have remained below replacement rate for decades and now average less than 1.5.
Financial support for families in our country have often caused more damage than good. Government programs have consistently undermined family stability by reducing the incentive to raise children in a home with two parents.
Social Security, instituted in the 1930s, was followed by Medicare in the 1960s. Both were intended to provide a basic level of support for the relatively small proportion of the population over age 65 at the time. Congress couldn’t resist sweetening both programs’ benefits over following decades while life spans have increased dramatically. As a result, there aren’t nearly enough young people to fund promised payments. Both programs are dominant portions of the nation’s federal budget and both are headed toward insolvency in the next decade.
We in the United States have a solution – our only solution – staring us in the face. I have long advocated opening our doors to far-greater legal (please note the word “legal”) immigration. We have an advantage over most countries in the world: there are hundreds of millions, perhaps a billion, people around the world who would come here if given the chance.
Unfortunately, our existing patchwork of immigration laws favors immigrants with family already in the country. Instead we need to implement a merit-based system similar in concept to the Canadian system implemented in the 1960s. Its program ignores family connections, race, religion and ethnicity and instead considers only age, education, job skills, language ability and other attributes that define immigrants’ potential economic contributions. The result: Canada has the most prosperous and successful immigrant population in the world, despite having a per-capita immigration rate three times higher than the United States.
Merit-based immigration does not mean admitting only graduate engineers and doctors although we certainly could use more of both. We need farm workers, construction workers and a variety of others with skills that match our current labor shortages. A quick scan of today’s job openings – there are 1.4 openings for every unemployed person in the country – would be a decent description of needed immigrant skills.
The alternative is bitter, intergenerational conflict as seniors demand the social benefits they assumed they had earned, while working-age adults rebel at the dramatically higher taxes they are asked to pay to support those seniors. Even a smoothly functioning political system – and ours is not these days – would not be able to fight the demographic reality that has been unfolding for decades.
The solution is simple: increase legal immigration to overcome the baby bust.
