Where Have All The Babies Gone?

In the past 10 days three different reports were released which strike me as having a profound effect on the future of our country and, to a certain degree, marketing and media issues going forward. The first was from mainland China. Years ago, Chinese leader, Mao Zedong, instituted a one child policy. The fear was that the country could not feed itself so the population needed to decline over time. As, in recent years, the country experimented with a unique form of the free market, things improved for hundreds of millions and the leaders realized that, with a rapidly aging population, they needed more young people. So, approximately two years ago, they lifted the ban in many provinces that had only allowed a couple to have a single child. Surprise! Since the ban has been lifted there has been no statistically significant move upward in the Chinese birth rate.

In the U.S. the government released figures that stated that U.S birthrates are at a thirty year low. Let us set the stage for a moment. In order to keep a population level, the average women needs to have 2.1 children. This is known as Zero Population Growth (ZPG). The latest data from the U.S federal government puts the birthrate at 1.7545 which is well below ZPG. For years, we often felt that we could hover above ZPG as immigrants would provide the lift above the threshold as they tended to have more kids than citizens born in the states. For whatever reason, that no longer holds true in the last couple of years. While we are now below ZPG, we are nowhere near the low levels seen in countries such as Spain, Greece, Japan and Italy where the statistic can be as low as 1.1. Many forecasters said that once the Great Recession passed, our birthrates would climb back up. That has clearly not happened as we enter our ninth year of economic recovery.

Why should we care? Well, American is not close to being the provider state that many nations in Western Europe are. There is a somewhat frayed safety net here in the states but it is nothing like the cradle to grave security that many other countries provide which will be unsustainable going forward. Young people would pay into social security and medicare and take care of us baby boomers. If there are fewer young people in the workforce, safety net promises will be harder to keep.

The third shoe dropped on May 20, 2018 in the Sunday New York Times. An excellent opinion piece by professors Christina Gibson-Davis and Christine Percheski covered the issue and was entitled, “The Wealth Gap Hits Families Hardest”.

We have all read countless articles about income inequality and, after a while, we have become numb to them, or given their super left wing slant, find them tiresome. This one hit me hard right in the gut. For the first time, I looked at some data regarding families with children. The academics took a  long term look at U.S. Households from 1989-2013 with children under 18 and examined their net worth. Results, to me, were both eye opening and depressing. Here are the highlights:
 
                     Median Net Worth

Top 1%         $5.2 million

Next 9%         $584, 850

Next 40%         $68, 974

Bottom 50%       -$233


These data are totally in line with several reports that some 40+% of Americans cannot afford a minor medical emergency or a big car repair. Also, the authors raise the scary scenario that when some youngsters start college, their parents may still be paying off college loans.

So, what is happening? To me, it is very simple. Sadly, people are not having children or more children as they cannot afford them. It is not due to selfishness on the part of these young adults. Many are literally up against the wall financially.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com