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Texas’ Declining Birth Rate Could Cause Future Labor Shortages

The state’s drop in birth rate has been happening faster than the national average, despite high rates of immigration. Soon, Texas will need to bring in workers from other states to meet labor demands.

(TNS) — Texans aren’t making babies fast enough to keep up with the number of jobs expected to be created in the state in coming years.

And that worries economists and demographic experts who see a declining birth rate as a threat to the state’s super-charged business growth.

The Lone Star State’s birth rate is falling off at a faster pace than the national average, which has been declining since its peak in 2007. From 2007 to 2019, the national birth rate fell from 69 to 58 babies per 1,000 women ages 15 to 44. That’s a nearly 16 percent decline.

In Texas, the dropoff was even more pronounced — falling over 21 percent from 79 births to 62 births.

The rate of births in Texas and the U.S. isn’t high enough to even sustain current population levels, a measure known as the replacement rate, said Texas state demographer Lloyd Potter. In Texas, women have an average of 1.8 children in their lifetime while the replacement rate is 2.1 children.

“In 10 to 20 years, we’re going to start seeing pretty significant demand for labor that’s not being fulfilled for Texas,” he said.

2021 is giving employers a taste of what future labor shortages might look like, with workers displaced by the pandemic returning slowly — if at all — to jobs being offered. Their reasons run the gamut — some retired early, couples learned to live on one paycheck, minimum wage workers found higher-paying jobs and others reassessed their careers while living off financial cushions they built by spending less over the last 19 months.

In August, the U.S. had 10.4 million job openings, according to the latest government data. In the same month, a record 4.3 million people quit their jobs.

Future labor shortages caused by a long-term birth rate decline would cause a similar impact, leaving businesses short of hands to help keep them open and growing.

Birth rates are declining nationally for the reasons most would expect, including women gaining higher levels of education and employment and delaying settling down, decreasing their window for having kids. The pandemic led to further birth declines, as is typical when unemployment rises and income falls.

But in Texas, the rate is falling faster because it has a larger Hispanic population and birth rates among Hispanic women are seeing the most dramatic declines, according to research from the Federal Reserve Bank of Dallas. Hispanic women make up 42 percent of women of childbearing age in Texas, compared with 21 percent nationally.

“It’s very interesting because for a long time in terms of population growth and birth rates we got used to a lot of immigrants and U.S. born-Hispanics having more children than other groups and that pushed up Texas’ birth rate,” said Pia Orrenius, vice president and senior economist at the Dallas Fed.

The reason Texas can still claim a spot of the nation’s fastest-growing states is because of the high rate of net migration into the state, according to data from the U.S. Census Bureau. But even if immigration doubled or tripled, it will never be enough to offset the declining birth rate, Orrenius said.

“Immigration is never going to be the answer,” she said. “It can be part of the answer.”

Texas is gaining the most domestic migrants from California, as well as from New York, Illinois, Florida, Louisiana and Puerto Rico, according to research from Potter’s state demography office. Outside of the U.S., it’s gaining the most migrants from Mexico, China and India, he said.

The state essentially needs to “import labor” if it wants to fill the jobs being created here, Potter said.

“Both immigration and domestic migration [are key factors] in terms of our ability to fill the jobs created here,” he said. “If we didn’t have that, we’d be in real trouble, I would say.”

But the problem in the future is that Texas won’t be able to rely as heavily on migrants because other states will also be experiencing shortages, he said.

“If we have a declining labor force without a declining economy, then we won’t be able to support the economy,” Potter said.

Texas is quickly adding jobs, a trend expected to continue even as the birth rate decline is also expected to continue. In 2017, Texas added 306,900 jobs. Two years later in 2019, Texas added nearly 343,000 new jobs statewide before the pandemic hit.

In the decade ending in 2028, 1.7 million new jobs are projected to be added in Texas, according to estimates from the Texas Workforce Commission. Of those new jobs, 40.7 percent will require some form of postsecondary education and training.

Besides creating a labor shortage, a declining population means the U.S. will need to revise programs created around the assumption that populations would continue to grow. That includes Social Security and Medicare, but also the whole education system, Potter said.

The birth rate decline is undeniable. But Texas and other states have to decide whether to ignore it and accept it or do something about it. To “fix” it, states can focus on pro-natalist policies such as increasing the child tax credit and providing paid parental leave. Natalism typically seeks to create financial and social incentives for people to reproduce.

“The problem is Texas’ taste for policies like paying someone not to work isn’t really a Texan way of thinking about things so it’s going to be a real challenge for Texas to come up with strategies to become pro-natalist,” Potter said.

Countries ahead of the U.S., such as those in Scandinavia, are already trying out pro-natalist policies because they’re further ahead in the birth decline dilemma, Potter said. In Lestijärvi, one of the smallest municipalities in Finland, parents are paid $11,612.05 over 10 years for each child.

“Those countries have a lot of money to throw at a problem because they do well financially and they’re still having a difficult time getting even close to replacement,” he said. “There are not any real easy answers to this.”

There also are population growth skeptics who question the impact it will have on the climate and the planet, Orrenius said.

“Now there are more people questioning that assumption, saying maybe we don’t want more people,” she said. “Maybe we want to slow down and grow smarter, not bigger.”

©2021 The Dallas Morning News. Distributed by Tribune Content Agency, LLC.

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