The youngest baby boomers will begin turning 50 next year, a noteworthy milestone in the graying of America. But the more important data point may be this: Last year, the birth rate in America fell to the lowest level in recorded history.
These may be separate developments but they are part of the same ominous story. As our largest generation moves toward full-on retirement we are minting what promises to be our smallest generation, a group that from the very beginning of its working years will face the impossible task of supporting millions of entitled old fogeys. Something will have to give.
The U.S. birth rate slid by 8% in recent years, reaching 63.2 births per 1,000 women of childbearing age in 2011, according to a report from the Pew Research Center. That is half the peak birth rate recorded in 1957, which was smack in the middle of the baby boom. This is the lowest rate since at least 1920, the earliest year for which there are reliable numbers.
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The biggest declines were among foreign-born women, where the fertility rate plummeted by 14%. Mexican immigrant women showed the steepest drop: 23%.
These declines are troublesome on a number of fronts. First, a declining birth rate poses all sorts of problems for what’s left of our social safety net. In 20 years, every last one of 78 million boomers will have reached full retirement age just as today’s historically low number of newborns is entering the workforce. Without big changes Social Security, which is a pay-as-you-go system, will be overwhelmed. Public and private pension systems, which are severely underfunded, may find it difficult to keep their promises as well. This is not new news. But the recent steep drop-off in birth rates compounds the problem.
Second, for many years it was widely assumed that falling birth rates among American women would be largely offset by births to the immigrant population. This would add enough workers to the tax rolls in future years to mitigate our demographic issues. Yet the steepest declines have been precisely among these immigrant populations.
Declining births are yet another way the Great Recession is leaving a lasting mark. In an earlier report, Pew linked falling fertility rates to economic distress. Just after the top of the last economic cycle, American births hit 4.3 million in 2007. That number has been sliding ever since and hit 3.95 million in 2011, Pew says.
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This trend is also evident in previous recessions and was perhaps most pronounced during the Great Depression. So there is reason to believe that birth rates will rebound with the economy. From the Pew report:
“Experts suggest that much of the fertility decline that occurs during an economic decline is postponement of childbearing and does not represent a decision to have fewer children. In other words, people put off having children during the economic downturn, and then catch up on fertility once economic conditions improve.”
So maybe all the little future taxpayers we need to support a giant geezer population down the road will materialize yet. But I wouldn’t count on it. If you are one of those young boomers, it’s too late to do anything about the birth rate but you still have time to do something about your retirement.