Sunday, May 9, 2021

The U.S. needs more workers - increase birth rate or increase immigration

Here’s the thing. We need more workers. “The U.S. economy needs more kids. Parents say they want more kids. Yet the baby bust has gotten worse.”

According to Catherine Rampell: The baby bust won’t end without government action. Following are her conclusions.

… the birthrate is now below the “replacement rate” — the level at which the current generation can at least replace itself — of 2.1 births per woman. This matters for a variety of economic reasons.

We need another generation of children to eventually grow up to become workers, keep the economy productive and contribute the taxes that fund Social Security, Medicare and other services for our aging, nonworking population. Other countries whose demographic time bombs have already detonated, such as Japan, have demonstrated how challenging it is to have a swelling number of retirees dependent on a shrinking number of workers. If the size of the U.S. workforce stagnates or declines, economic growth and living standards are likely to languish.

Possible policy responses fall into two buckets.

First would be a suite of changes that make it easier for Americans to have more kids. They include providing greater income security, so parents can afford to have the number of children they want. Also, adapting workplaces and other parts of the safety net so parents or would-be parents who want to stay in the labor force can do so more easily.

President Biden’s families-related proposal would make progress on these fronts, by extending the temporary “child allowance” he recently signed into law, guaranteeing free or low-cost child care, and implementing paid family leave, among other programs. Changing the culture around work and making “greedy” workplaces friendlier to parents will be greater challenges, though the normalization of remote work arrangements over the past year may help.

But while these changes would make some parents’ lives less stressful, and perhaps induce some people on the margin to pop out more babies, they may not have much impact on overall fertility trends. Many countries with low birthrates have implemented explicitly pro-natal policies, such as greater access to child care or cash bonuses for having babies. They’ve generally been unsuccessful at lifting birthrates.

The other policy in the toolkit is immigration.

If the United States wants more working-age people to contribute to our economy, there are millions of strivers around the world ready and eager to pitch in. Indeed, immigrants and their children have been a key driver of population, economic and productivity growth in the not-so-distant past, but dwindling immigration is another reason population growth slowed so much in the 2010s.

Ramping up immigration should be easy. Despite the nasty, xenophobic rhetoric that dominated U.S. politics in recent years, recent surveys suggest Americans are more pro-immigrant than at any previous time on record. Biden has urged Congress to undertake immigration reform, if lawmakers can get out of their own way.

Biden has pledged to recharge the economy. Without question, that will require ramping up its economic engine — its population — too.

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