No Easy Fix for Low U.S. Birth Rate, Economics Professor Says
June 9, 2025
- Author
- Jay Pfeifer
The United States needs more babies. Recent data shows the birth rate in the U.S. sits at 1.6 babies per woman over their lifetime, significantly less than the 2.1 births needed to maintain a country鈥檚 population.
Economics Professor Siobhan O鈥橩eefe says a low birth rate will eventually starve the economy of labor and wages. An aging population strains programs like Social Security, which depend on younger workers鈥 wages to pay into the system in order for it to work.
鈥淭oday's babies are tomorrow's labor force,鈥 she said. 鈥淚f people aren't choosing to have children and those children aren't then growing up to be healthy, economically self-sufficient individuals, then the whole economy kind of crumbles.鈥
A low birth rate can also be seen as a sign that young parents don鈥檛 see better times ahead.
鈥淚f people don't feel like they can provide a good life for their children and therefore are not having children,鈥 O鈥橩eefe said, 鈥渢hat tells us something about consumer confidence.鈥
But turning declining birth rates around is harder than it sounds. Attempts to incentivize increased births have fallen flat in countries around the world.
O鈥橩eefe shares her thoughts below.
Why is the U.S. birth rate so low?
It鈥檚 hard 鈥 if not impossible 鈥 to say conclusively why we are having so few babies in the United States.
But there are a couple of ways to look at it.
One possible contributing factor is the cost of having and raising kids in the United States.
Even birth itself isn't cheap, right? The average out-of-pocket cost of a birth for someone with insurance is approximately $3,000. When you combine that with the cost of child care and education, babies can be prohibitively expensive.
The low birth rate also is a consequence of the plummeting teen birth rate in the United States. In 1960, the teen birth rate was almost one in 100. In 1990, it was approximately 60 out of 1,000. In 2022, it was 13.5 per 1,000. That鈥檚 an extraordinary drop that has definitely brought down the birth rate.
Some countries have tried providing financial incentives to families when they have children. Has that increased the birth rate?
Things like 鈥渂aby bonuses鈥 don鈥檛 seem to change the number of babies. It does, however, seem to shift the timing of when people have babies.
That is, people aren鈥檛 having new babies because of a payout. But they do seem to have them faster. They might have a second kid six months earlier because they don鈥檛 need to save as much for the cost of the kid. But they aren鈥檛 necessarily having a third.
Are there other policies that have shown promise?
The Nordic countries have been leaders in quality-of-life policies like extensive parental leave and easy access to health care. These are all good things to do but they don鈥檛 necessarily solve the birth rate.
Is solving this problem particularly urgent?
When Social Security was started in the late 1930s, there were about 40 workers per retiree.
Now, there are approximately two-and-a-half to three workers per retiree.
In our lifetimes, we're going to reach the point where we do not have enough people to support our current funding obligations. Without program or demographic changes, this could occur in the next 10-20 years.
So, what should we do?
There are three things we should think about in particular.
The first: We could structure our tax and pay systems differently for old age support. Social Security made a huge difference in people's lives when it was introduced in 1937. The economy looks really different than it did then. Maybe it鈥檚 time to update the whole system.
The other thing we can do is not necessarily an option in all developed countries.
Broadly speaking, we could rethink our attitudes toward immigration. There are a lot of prime, working-age adults who would love to come and work and pay taxes in the United States. And adding adults is a lot quicker than trying to get people to have a baby now and waiting for 25 years for that baby to contribute to our tax base.
Last, we should think broadly about why fewer people want to have children in the United States. Policies that make life easier and better for children and families often have long-run benefits.
