Birth Rate Plummets: Are Young Americans Too Poor to Have Children?

Having to move back in with mom and dad could be the most effective birth control method ever devised.

US population growth is at its lowest level since the Great Depression. The average wage for college-educated men and women has plunged 11 and 8 percent respectively. Unmarried households outnumber married households for the first time in history. The longer term implications for the US economy are potentially severe as there will not be enough young workers to offset those who are growing older and retiring. The US had an advantage over other nations for many years because, being a nation of immigrants, it encouraged immigration. However, a socio-cultural reaction driven by economics (slightly) and ideology (mostly) has driven state governments to introduce harsh anti-immigration statutes that have discouraged what was once a primary source of labor growth.

Whether these trends will revert to previous trajectories if and when the economy revives is a matter of speculation. Analysis of cyclical trends suggests that household formation will rise again, but the delay in getting back to that point will affect both population and economic growth. JL

Bonnie Kavoussi reports in the Huffington Post:

The number of children born in the U.S. has plunged 8 percent since its all-time high in 2007, according to the National Center for Health Statistics. More alarming: population growth is at its slowest growth rate since the Great Depression, according to the U.S. Census.

Raising kids is expensive. The Department of Agriculture estimates that it costs about $13,000 per year to raise a child in a middle-income family.
Young Americans have borne the brunt of lower wages as 12.8 million Americans remain out of work. The average wage of college-educated men between the ages of 23 and 29 plunged 11 percent over the past decade, and the average wage of college-educated women of the same age fell 7.6 percent, according to data compiled by the Economic Policy Institute, a think tank.

As a result, many are moving back home with their parents rather than becoming parents themselves. Three in 10 young adults have moved back in with their parents in recent years, according to the Pew Research Center. In 2010, for the first time in U.S. history, unmarried households outnumbered married couples, according to the Census.

There's no doubt that birth rate is an indicator of a nation's economic well-being. Typically birth rates are lower in countries with fewer jobs, according to the OECD.

The birth rate has been falling since the housing bubble burst in 2007. 3.98 million children were born in the 12 months ending in June 2011: 8 percent fewer than the peak of 4.32 million in 2007. Nearly half of that decline has occurred since the end of 2009.

The shrinking number of people being born into the future U.S. labor force is likely to damp economic growth. James Stock and Mark Watson, economists at Harvard and Princeton, respectively, wrote in a recent paper that economic growth will continue to be sluggish because the labor force is growing at a slower rate.

"These trends are worrisome since population growth is a strong driver for consumer spending, housing demand, and household formation -- especially among younger age cohorts who are looking to buy their first home, form their first family, have their first child, or buy big ticket items," Chris Christopher, senior principal economist at IHS Global Insight, wrote in a research note on Monday.