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In 2017 the birth rate in United States hit a new record low. This has raised questions about why people in their 30s are having fewer children. In particular it looks like Millennials are on track to have fewer children compared with previous generations. Millennials came of age during a deep recession and births typically decline during a recession because fewer people feel prepared to handle the financial burden of having a child. Yet, we’re now eight years into an expansion with unemployment below 4 percent. Such a strong economy is typically associated with higher birth rates.
To be sure, one has to be careful interpreting the decline in births. Some of the decline is part of a long-run trend in fewer teen pregnancies. Indeed, the birth rate for teenagers is down by more than half since 2007. Birth rates of near-teens has also substantially declined over the past decade. The explanation for the decline in these births to young mothers come from efforts to make it easier for younger women to avoid an accidental pregnancy and by a growing desire for young women to pursue higher education.
The puzzle is that births for women in their 30s fell last year, as did births to women in their late 20s. Births to women in their 40s rose, but not enough to make up for the births not had by those in their 30s.
Many other countries have wrestled with declining fertility and have created policies to support working families in response. In 2011, Australia adopted paid maternity and paternity leave and subsequent research shows that the adoption of the paid leave policy increased fertility.
Would paid parental leave increase fertility in the United States? Certainly, it would get rid of one hurdle that currently stands in the way of women having children. While it is difficult to know the role of the lack of paid leave, rising student loans held by potential parents, and the rising cost of child care, two things are clear: raising children is expensive and women pay a career penalty when they have children.
Millennials have been staring down headlines telling them that a middle class family needs a quarter of a million dollars to raise a kid to age 18. These costs are not an exaggeration. Parents can easily spend more on the cost of childcare in the first five years of a child’s life than they will spend on college tuition. And yet Millennials are still paying off their own college tuition. Research shows that mothers face discrimination and that having a child leads to a large and persistent wage penalty. Delaying childbirth leads to a substantial increase in earnings — a lesson that Millennial women appear to have internalized. Many millennials clearly face a choice between financial security and having children.
The costs of having children are real. But should these costs actually be a concern to a country with a GDP per capital of $61,000? Many people argue that the United States cannot afford paid parental leave and affordable childcare. Yet countries with lower GDPs per capita successfully provide both. Clearly, the answer of affordability is about choice. What are we willing to spend to support the next generation? The reality is that the answer in the United States so far has been not much. In 2015, the federal government spent only $5,000 per child.
Fertility in the United States is likely to continue to drop unless the United States joins the rest of the world in supporting children and working families through policies like paid family leave and affordable childcare. The United States is alone in the developed world in refusing to provide paid leave upon the birth of a child. Twenty-five years ago the United States took a step forward by passing the Family and Medical Leave Act, which provides minimum rights to take an unpaid 12 weeks of leave. Since then, a growing body of research has shown the importance of mothers having time to bond with children following the birth of a child. But too few women take enough leave because it is unpaid, and other women wait to have children until they can afford to take leave and pay for childcare. These delays for many women will mean that they ultimately have fewer children than they would have chosen had they had access to paid leave, affordable childcare, and a more supportive work environment.
The real question is why the United States has failed to pass a federal paid leave policy. The public overwhelmingly supports such a policy. More than four out of five people believe that mothers should receive paid leave following a birth or adoption, and two out of three support paid leave for fathers. Moreover, as I and others have documented in previous posts, paid leave is good for kids, good for mothers, and good for economic growth.
I believe that there are three reasons that we are stuck without a policy that most people want.
1) We have abandoned fiscal responsibility and made commitments to the elderly without a plan to pay for them.
The United States has a run a deficit every year since 2002. In the past, the United States typically managed to shrink the deficit in good times. Not this time. The United States is on track to have the highest deficit ever recorded in a time of peace and economic growth. The problem with this constant deficit situation is that it is ever-present in every debate about how to reform our social safety net. When we cannot agree to pay for the policies we have already passed into law, it is difficult to enact new policies.
2) Acrimony across parties has made it hard to accept tough compromises.
The United States cannot adopt a paid parental leave policy without both political parties agreeing to work together to adopt a policy that will work for the most people possible. That means a policy in which everyone’s concerns are aired and compromises are reached over disagreements. This is why AEI and Brookings have joined forces to create a bipartisan recommendation for policy makers.
One solution may be to elect younger politicians and more women from both political parties. Parenting in the 21st century is different from parenting in the 20th century, yet most of our elected officials had their children in the last century. The 115th Congress is also 80 percent male. Yet female politicians govern differently. They are more bipartisan and more likely to support policies designed to help women and children.
3) An increase in paid leave from large companies has helped solve the problem for more upper-income families.
While the increase in paid leave offered by a few notable companies like Google and Goldman Sachs has been a welcome set of policy changes for some Americans, these policies have primarily benefited the top end of the income distribution. Few companies offer paid leave and those that do often have unequal policies, with benefits targeted toward their top earners. With the tech sector and other big corporations pushing to make sure that their most highly compensated employees have paid leave, the need for a federal paid leave policy may seem weaker. In reality, most low-income and middle-income women are unlikely to ever get access to paid maternity leave without a federal policy.
These are problems that we can and must solve if we are to support families in the 21st century. If we fail to do so, we may just find that our declining fertility rates create even greater fiscal policies, with too few young people left to support a rapidly aging society.
Betsey Stevenson is an associate professor of public policy at the University of Michigan’s Ford School of Public Policy.
Fertility in the United States is likely to continue to drop unless the United States joins the rest of the world in supporting children and working families through policies like paid family leave and affordable childcare.
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