America Needs to Address the "Baby Bust" and the Aging of Our Work Force

Some problems, like the Covid pandemic, sneak up on us unexpectedly, but others are apparent for years, sometimes decades, before they become a crisis. Democracies like our own often handle the long-term challenges poorly because there are always politicians willing to convince us that we can kick the can down the road without taking actions that might be painful or expensive. Climate change, the nation's crumbling infrastructure, and the coming Social Security shortfall are all good examples of the later group. As a nation, we know what needs to be done to address each but politicians have learned that they don't get reelected by asking us to make hard choices even if they are obvious and will benefit future generations.

Another good example of this phenomenon is America's "Baby Bust," and the aging of our population. Americans have been having fewer and fewer children for decades and we fell below the generational replacement rate years ago. The Total Fertility Rate (TFR) has to be at least 2.1 children per woman for one generation to replace the last. As of January 2020, the U.S. fertility rate fell to 1.73 births per woman, down from 3.77 per woman about 60 years ago. As a result, the native born population will eventually begin to shrink, but before then it will get progressively older. That's a problem.

The Daily Beast: "What happens when the TFR stays below 2.1? A destructive domino effect. Shrinking populations across the world’s biggest economies will lead to rising labor shortages. Fewer workers means less tax revenue to invest in safety net programs that provide benefits like pensions to an aging population that is living longer. This in turn creates massive burdens on our health-care system and also imposes more pressure upon a younger population already stifled with less economic opportunities."

And we have a good example of what this might look like in Japan which has handled their crisis quite poorly.

The Daily Beast: We’re seeing the catastrophic impact of declining birth rates in countries like Japan, where the situation is so dire it’s referred to as a “demographic time bomb.” Japanese experts have created a doomsday clock predicting when Japan will go “extinct.” In Japan, they are now selling more adult diapers than infant ones. An OECD report warned that, “... Japan’s elderly population is projected to reach nearly three-quarters of the working-age population by 2050 ... .”

Nikkei Asia: "Over the past few years, the government has tried to make changes to Japan's social insurance system to lighten the burden on younger people. But reforms may not be able to keep up with a faster-than-expected drop in the working-age population, and a heavier economic load on young people may further discourage marriage and child-rearing, sparking a vicious cycle."

Japan's leaders have been slow to respond, rejecting efforts to welcome talented young immigrants into the workforce. They seem to be more concerned with "racial and cultural purity," a concern that some Americans can relate to.

America is facing a similar future if we don't respond wisely, and fairly quickly. And, as I often tell students, we know why this is happening and how to address the challenge of falling birth rates. It's not rocket science.

First, There is now a pile of research that tells us that economics is driving the baby bust. Raising kids is expensive, and America has not devised a comprehensive "family friendly" policy agenda. Our family leave policies are archaic and the cost of childcare is ridiculous. It has risen about 2,000 percent in the last 40 years, faster than college tuition, health care or pretty much anything else parents spend money on. The lack of affordable housing, mountains of student debt, and rising health care and maternity costs exacerbate the problem.

Second, there are two ways to address the baby bust and greying workforce; adopt policies to reduce the burdens of raising children or welcome more immigrants. Doing both would be optimum. The problem, of course, is that opposition to immigration is one of the few issues that unites the GOP's Trumpist base and Republicans have rushed to slam President Joe Biden's "American Families" and "infrastructure" plans which address many of the most pressing issues like early childhood education, universal childcare, and paid family leave.

To be fair, some Republicans like Mitt Romney understand the problem and the potential solutions but they are stuck with the current Republican coalition of voters, half of which fear "white replacement," and the other half which is dead-set against any policy that might result in higher taxes on wealthy Americans or corporations. So, conservatives block efforts to expand immigration and float plans for a "child allowance" to pay one parent to stay at home to raise children but propose cuts to other poverty programs to pay for it. Moreover, many "red" states haven't even got around to expanding Medicaid to provide working poor families with health care insurance and came very close to gutting Obamacare entirely during the first two years of the Trump administration. These are not folks focused on helping working class Americans.

As a result, the most likely outcome is that we do nothing and hope things improve before the problem becomes a crisis. That strategy almost never works.

#culture #news #economics #research

By: Don Lam & Curated Content