Low fertility is a very big question – There is a simple answer – Retirement Research Center

Donating money to new parents won't solve this problem.

In recent weeks, the administration released temporary data for 2024, which shows that the birth rate in the U.S. remains low in the U.S., and the report shows that the Trump administration wants to encourage Americans to get married and have more babies.

First of all, facts. Fertility has generally been declining since the infant boom in the mid-1960s and has accelerated after the Great Recession. Many observers believe that once the economy recovers, fertility rates will rebound. It does not (see Figure 1). Today, a woman has an assumption of life-long delivery in her childbirth year at 1.63, which is much lower than the level needed to stabilize the population.

The current fertility rate in the United States is not abnormal. It is roughly consistent with prices in other high-income countries (see Figure 2). Part of the belated fusion reflects a sharp decline in births of Hispanic women, some of which can be attributed to an increase in Hispanic locally born Hispanic share, and some may reflect a decline in birth rates in primitive countries such as Mexico. It is important that we should not expect U.S. interest rates to rebound in the foreseeable future. (For a big summary of fertility status, see a recent paper by Melissa Kearney and Phil Levine on the Aspen Institute.)

Is low fertility a problem? Some people think this is a positive reflection of women's ability to control their own destiny. Indeed, women have achieved a huge foundation in educational achievement and workplace opportunities.

However, low fertility does have real economic consequences. It may lead to a decrease in innovation and a decrease in economic growth. It can also cause financial problems. For those interested in retirement, the main focus is on the impact of low childbearing on social security and health insurance, both of which are benefits to retirees through taxes on workers. Although Social Security Trustees somehow lowered the long-term fertility hypothesis, it was still significantly higher than the current rate (see Figure 3).

What can be done? Rumors say that fertility issues will become a “important part” in the government's agenda. President Trump calls for “baby prosperity”, while JD Vance and Elon Musk are obvious pro-hosts. Some ideas for increasing fertility include a $5,000 cash “baby bonus” per (married) American mother; retaining a Fulbright scholarship for applicants who are married and have children; or educating women on their menstrual cycles so they understand when ovulation and can get pregnant.

The challenge is that over the past 30 years, many countries have developed pro-family policies – based on child welfare, providing newborn allowances or providing child tax credits. Evidence suggests that these efforts have not worked yet. Sweden is a great example because even soup to soup fertility is 1.67, almost the same as the United States

So, what is the answer? Tell JD Vance and Elon Musk that $5,000 won't do anything. But, also tell them that having your own baby is not the only option. Increasing immigration is a direct way to increase the worker-to-retirement ratio and improve the financial status of social security and health insurance. Sensitivity analysis of Social Security actuaries shows that an increase in net immigration by 200,000 per year will reduce the actuarial deficit of 75 years, currently accounting for 3.5% of taxable wages, or about 0.2% of wages. That is, the increase in immigration can offset many of the cost pressures caused by low fertility rates.