Black and White Program

U.S. birth rates fall from economic recession

December 5th, 2012 by Steven Barnes

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The Pew Research Center recently published a report indicating that the U.S. birth rate fell 8 percent from 2007 to 2010. The decline, a record low, was attributed to immigrant women having fewer children. That same group has led the U.S. population growth for the past 20 years. The rate dropped 6 percent for woman born in the U.S. and a significant 14 percent for foreign-born females since 2007, continuing to decline in 2011. It may be no coincidence that the sharp downturn has occurred during the nation’s worst economic recession in years.

Declining birth rates spark fears and concerns about the vulnerability of social programs, as Medicare and Social Security are both funded by payroll taxes on working adults. Essentially, alarm is due to a declining birth rate means fewer contributions to these programs, and because the current elderly rely on them (the contributions of younger workers). Looking at the demand of the Social Security Program alone indicates how alarming the situation could be if a decline of birth rates continues. Baby boomers (individuals born between 1946 and 1964) are continuing to retire and exit the work environment, adding to the program’s dependents and financial demands. Approximately 28 percent of U.S. households reported drawing some form of social security in 2011. Based on the current payroll tax contribution rates, the Social Security fund (over $700 billion at present) used for paying retirees will expire in 2033 without any further intervention.

Data for the Pew study was obtained from the National Center for Health Statistics and the U.S. Census. The 2007-2010 14 percent decline in the birthrate for foreign-born women was greater than in the entire period between 1990 and 2007. The birthrate among Mexican women in the U.S., the nation’s largest immigrant group, fell 23 percent. The birth rate is defined as the number of births per 1,000 women ages 15-44.

The report indicates that the U.S. birth rate in 2011 was 63.2 per 1,000 women of childbearing age (based on initial pre-data). That number represents nearly a 50% drop from a peak of 122.7 in 1957 during the postwar baby boom. The rate steadily fell before stabilizing at 65-70 births per 1,000 since the 1970s. Further analysis indicates that White, non-Hispanic women made up two-thirds of U.S. births in 2010, a drop from 72 percent in 1990. Eleven percent of births among U.S.-born women were to teen mothers; about 5 percent of foreign-born mothers were teens. Immigrants accounted for 33 percent of all births to women over 35, the study found.

A declining birth rate simply equals fewer individuals on one side of the contribution-payment ratio needed in order for the system to work as designed. In 1965, 81 million workers paid for benefits to 20 million people. That was a 4-1 ratio. The ratio has fallen to 2.8-1 at present.

Addressing the Medicare segment of the problem, approximately 50 million elderly and disabled people obtain benefits. Its trust fund is expected to be depleted completely by 2024 unless some action is undertaken.

Discussions of raising the retirement age (to lessen the amount of social security benefits needed to be paid) has surfaced multiple times over the past 10 years, but is so politically charged, that no action has been taken to that effect. Medicare program reform has also been on the radar. Both were presented as realistic options in a 2010 National Commission on Fiscal Responsibility and Reform report, led by former U.S. Senator Alan Simpson, a Wyoming Republican, and former Clinton White House Chief of Staff Erskine Bowles.

While the current birth rates may raise alarm, some analysts also have written that the downward trend may not be a sustainable one, as it is no surprise that birth rates have fallen during recessional times.

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