America's Demographic Destiny Can't Be Ignored

The birth rate is at an all-time low. That’s going to have a major impact on public services.
July 2019
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Peter Harkness
By Peter Harkness  |  Founder, Publisher Emeritus

The first four months of this year brought a surprising amount of good economic news. Financial markets were booming, even with a trade war dominating the headlines. Wages were on the rise, unemployment was falling and economic output seemed to be humming along at a pace not seen in at least two decades.

Does that mean it’s time to party? Probably not. More recent news hasn’t looked quite so rosy, with what seems to be a softening economy and a dismal jobs report last month. But there’s an even more foundational reason that should be cause for concern, an important indicator that the financial markets, economic forecasters and certainly the press don’t pay much attention to: population trends. Recent Census data shows that population growth has slowed to the lowest levels the nation has seen in more than 80 years. Birth rates have now declined to the point where the under-18 population is now lower than it was in the last Census in 2010. And as the entire population ages, the number of deaths is increasing.

The birth rate began falling around 2007, when many people lost their jobs and homes during the Great Recession. But even as the economy began to bounce back, the births kept dwindling. Last year, the national birth rate hit its lowest point in more than three decades; the fertility rate, a related but different measure, fell to its lowest point on record. There’s reason to think it may continue to fall. According to a recent large national survey on family growth, almost half of American women with one child do not intend to have another.

One reason for the drop is that women are waiting longer to have their first child, at least two years longer than a decade ago. The average age for a first-time mother in the United States was 27 at last count, up from 21 in 1972. 

This means the American population is aging -- fast. The latest projections from Census data covering 2010 through 2018 reveal that the population under the age of 18 fell by 780,000, or 1 percent, while the number of Americans over 55 grew by a whopping 19.2 million, or 8 percent. The decline in the number of young people came in 29 states, particularly in New England and some other Northeast states, the industrial Midwest and in Mississippi, New Mexico and West Virginia.

Contributing to this trend was a falloff in people moving around, or geographic mobility, to a historic low. In the past two years, one-fifth of all states experienced population losses, even accounting for immigration from abroad. The trend was particularly apparent in the Northeast. Other states, including Florida, Texas, Utah and Washington, gained young people either from other states or abroad. But the national projection is clear: Our younger population will continue to experience a long-term decline.

These demographic trends will have a significant impact on governments at all levels for decades to come. Retirement and health-care systems, already under significant stress, will continue to face enormous strains. The same will be true of affordable housing for older Americans.

A fast-growing and increasingly dependent aging population will require more public resources, at a time when the workforce to provide them may be stagnant or even shrinking. Social Security will continue to be a major issue, with fewer contributors paying in and more retirees qualifying to receive it. Tax revenues may be affected by labor shortages, particularly in such vital areas as trucking, home construction, infrastructure improvement and, perversely, home health care for the elderly.

Which brings us to the inevitable subject of immigration from abroad. Around the turn of this century, the natural increase in population exceeded immigration by 50 percent. But the plummeting domestic birth rate means that immigration today accounts for almost as much overall growth as domestic births do. (That’s true even despite the fact that immigration rates have also fallen considerably since 2000.) What that means is that our immigrant population has the potential to stabilize our workforce numbers -- if we can agree on a reformed policy.

That, of course, is a gargantuan “if,” given the discord and gridlock in Washington over immigration reform. The policy of President Trump’s administration seems to change by the day. A short time ago, the president told a workforce advisory panel co-chaired by his daughter Ivanka and Commerce Secretary Wilbur Ross that “we’re going to let a lot of people come in because we need workers.” Only one month later, he declared that the “country is full” and can’t take in anyone else. The very next day, the Department of Homeland Security revealed that it had almost doubled the number of guest worker visas issued for this summer to 63,000. So who knows?

What’s clear is that our country is facing decades of demographic shifts that will present a sizable challenge for state and federal policy. Ignoring that reality is something we cannot afford to do.

Peter Harkness
Peter Harkness | Founder, Publisher Emeritus | pharkness@governing.com