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U.S. birth rate hits new low. This could be bad news for everyone

The number of older Americans is surpassing the number of very young Americans. Most experts don't think that's good news.

America's fertility rate has hit a new low, which has been the nation's birth rate story of late. One issue policymakers and planners ponder is the impact that will have on programs that serve the elderly, such as Social Security.
America's fertility rate has hit a new low, which has been the nation's birth rate story of late. One issue policymakers and planners ponder is the impact that will have on programs that serve the elderly, such as Social Security.
Raul Rodriguez, Adobe Stock

SALT LAKE CITY — The number of babies born in 2018 fell 2 percent compared to 2017, marking four straight years of decreases. The 3.8 million babies born last year mark the smallest number in 32 years, according to new provisional numbers from the Centers for Disease Control and Prevention released Tuesday night.

The U.S. birth rate is now below the replacement rate of 2.1 children per woman, and experts say that could kick off events that will negatively impact all U.S. generations, from stalling economic growth to shortchanging funding for Social Security and other safety net programs that benefit the elderly.

America is becoming an "aging society," said Matthew Mowell, a senior economist for Oxford Economics, a global economic forecaster that also released a report this week on declining births in the United States. "It does put a ceiling on the overall productive capacity of the economy — how much the United States is capable of producing. If we don't see productivity pick up, it definitely dampens potential economic growth."

According to the report, American cities and regions will "grow slower and older."

"We are starting to see a lot of migration flows based around people's stage in life," said Mowell, who analyzes U.S. economic trends. "It highlights that the country as a whole is aging."

Many of America's "fastest-growing cities in terms of total population are now retirement destinations," Oxford Economics reports. Half of the 20 fastest-growing cities overall have a median age above the national average, while a quarter have a median age over 50.

"The U.S. population is both growing more slowly and aging. While America's population growth in 2018 was half the pace of the early 1990s, the nation's median age today, 38, is eight years older than in the 1980s," the report said.

It notes that "even rapidly growing cities that skew younger," including St. George, Utah, and Las Vegas, Nevada, "have sizable retiree populations." The report adds that "interestingly, metros in Utah, which have a cultural preference for larger families, tend to have high birth rates and the median ages of Salt Lake City and Provo are a youthful 32.9 years and 24.7 years, respectively."

Mowell cites Utah as an example of how a population's age affects its economy. "I tell people that the quality of growth in Utah is interesting," Mowell said, citing high numbers of people moving into the state with above-average skill levels, paired with a high value placed on education within Utah. "There's a lot of positive momentum. Utah's in a very good place right now, on the right side of a very bad trend."

Key findings

The CDC report reveals opposite trend lines when it comes to age groups and birth rates.

Birth rates for women between the ages of 15 and 34 declined from 2017 to 2018, but increased for women 35 to 44.

The number of births to women 20-24 has fallen an average of 4 percent a year since 2007, and the birth rate for teens dropped between 8 and 9 percent from 2017 to 2018. Since 2007, births to females 15-19 has plummeted 60 percent.

Birth rates by race tell a more consistent story. Births to non-Hispanic white and black women fell 2 percent, while births to Hispanic women dropped 1 percent.

Demographers document the present and predict the future by looking at fertility. CDC found the general fertility rate in 2019 hit a new low of 59 births per 1,000 women ages 15-44, considered the childbearing years. The United States has experienced a 2 percent decline in that rate every year since 2014.

The total fertility rate was also a record low 1,728 births per 1,000 women. That rate is estimated based on how many births would occur across a hypothetical pool of women using age-specific birth rates. The report says "the rate has generally been below replacement since 1981 and consistently below replacement for the last decade."

The CDC numbers are provisional and based on nearly 100 percent of birth records for 2018 received by the National Center for Health Statistics by mid-February 2019.

Future forces

An aging population can pose economic challenges for an entire nation if the numbers of young people and old people skew too far out of balance, experts say.

Trustees for Medicare recently issued a report showing that without Congressional intervention, funding for its Part B program will reduce payments to providers in 2026. Social Security trustees issued a similar warning that it would need to reduce benefits in 2035 because of shortfall. Both programs depend on contributions from a healthy-sized workforce for funding. If the ratio of the older generation relying on the programs and the younger generation that funds them becomes too imbalanced, the programs falter or fail.

An aging population "becomes a very difficult challenge for community leaders, decision-makers and government entities because everyone wants to be kind and serve as many people as possible, but the tradeoff is as you move from a younger population to an older population, you shift the dependency ratio from young to old," said Samuel Sturgeon, president of Demographic Intelligence.

While it's not a popular notion, he said, putting money into the young is considered an investment. Providing an education and safeguarding their well-being builds on the future and provides economic benefit. There's less financial return on money spent on the elderly, so it's a tricky balance.

Politicians may be leery, however, of antagonizing the elderly, who have always been a strong voting demographic, he added.

Bloomberg Businessweek last fall considered declining birth rates and the aging of America, then pointed to countries like Japan that have been in the aging curve longer to predict how the challenges might play out.

"In Japan, employers often struggle to fill job vacancies. Spending on health care and pensions has swollen Japan’s public debt to more than twice the size of its economy. The International Monetary Fund has estimated that the country’s annual economic growth could be 1 percentage point lower for the next three decades because of Japan’s aging population. That means the country’s economy, forecast to expand 1 percent this year and next, may stagnate further."

Creating policy to address issues is easier with the elderly than with new births, even with trends. Trends can change. The size of the elderly population is predictable and allows more opportunity for advanced planning, said Sturgeon.

But there are gaps in how communities have planned for an aging demographic. Suburbs work for families, he said, but not for the elderly. And communities are not always great at figuring out how to care for or even engage older people in their communities.

Nor do communities consistently utilize the strengths that come with age, Sturgeon said. "Are we structured in a way to take advantage of their skills?"