By: Danielle Thillet
Since the great recession hit the world in 2008, many people have made the decision to put off having kids (or opting out altogether) for fear of not being able to financially support a growing family. In general, this is a pretty responsible thought process for a pretty personal decision. But in the greater scheme, it may ironically be paving the way for more economic troubles in the years to come and is actually starting to worry experts.
It's a problem that's been plaguing Japan for years, as its birth rate has been steadily declining since the mid-80’s. On April 1st, they reported an all-time low with 16.33 million children aged under 15, accounting for only 12.8% of the overall population. Whereas citizens over the age of 65 is estimated at 25.6% and projected to reach 40% by 2060. It’s gotten desperate enough that local government leaders have been organizing singles events for young people to try to encourage connections.
In the United States, the United Kingdom, Germany, and France, birth rates have dropped by nearly 5% since 2008. The reasons for each country’s decline isn’t clear, but the long term effects are pretty scary. An estimated 1/3 of economic growth is credited to a system where more people join the workforce each year than are leaving it. So, as we age and retire, two new eager young people are graduating school and filling in jobs, or creating need for new job opportunities. Creating more jobs creates more production. More production leads to more spending — and so on. Without at least replacement-level reproduction, there will be a shortage of workers in the future. The drop in the birth rate is part of the reason why the world has still not recovered from the recession. Think of it this way, the Great Depression eventually led to the Baby Boom — which is what made the 1950’s one of the greatest times of prosperity in the United States. We’ve had our slump, we’re just waiting for the boom. And it doesn’t show signs of coming.
As an investment strategist recently explained to the Associated Press: "For the first time since World War II, we're no longer getting a tailwind. You're going to create fewer jobs...All else equal, wage growth will be slower."
There’s also the concern of what will happen to older people if these trends continue. Social Security beneficiaries depend on pay outs from the existing workforce. You pay now, you gain later. (Well, unless we keep gutting the program, that is.) If there’s no one to pay in, many senior citizens will be forced to delay retirement, or perhaps might never be able to retire. Not to mention the increasingly vacant jobs that revolve around elder care. But even in the short term, we’re already started to see a decrease in overall pay, and fewer profits.
Even if birth rates start to rise, many negative ramifications are already occurring and are hard to fix. The hope is that over time the problem will start to naturally reverse itself. Otherwise, many more nation’s might resort to a “Do It for Denmark” style ad campaign. We’re sure it won’t be long until someone in the US pitches a competitive reality TV show for the same purposes.
[Pic via Wikimedia Commons]