Oregon Office of Economic Analysis

Part 1 looked at the natural increase in Oregon’s population, how it is expected to turn negative next decade and how half of Oregon counties already see deaths outnumber births. Today in Part 2 we will examine Oregon’s relatively stable, or stagnant, total number of births which is expected to continue in the decade ahead.

Birthrates increased nationwide from the 1970s through the 1990s. On the eve of the Great Recession, the U.S. had replacement rate fertility (2.1) and here in Oregon we nearly did as well (2.0). However, since then the birthrate has fallen considerably, particularly in Oregon and across the West. Initially, it was thought birthrates would rebound along with the economy. However, even as the economy has improved, not only have birthrates not picked up, they continue to fall further. Today, Oregon is a half a child below replacement rate (1.6 in 2017, data is not yet final for 2018), and the U.S. nearly so (1.7 or 1.8). While Oregon has one of the lowest birthrates nationwide, similar big picture trends are seen throughout the country.

Lyman Stone, an economist who writes about demographics and population, notes that such a decline is not yet at as pronounced as Russia’s decline in the post-Soviet era, but it is on par with birthrate declines seen in Canada, France, Japan, and Sweden. None of these countries have regained replacement rate fertility.

Now, the hard questions are why has this happened and why should we care?

Lets start with a couple reasons why this matters. Fewer children means fewer workers in the coming 20-60 years. This will result in slower economic growth. As discussed recently, demographics are already weighing on the economy quite a bit and will continue to do so in the decade ahead. Continued low birthrates will weigh on growth further into the middle of the century. Demographic imbalances may also make it more challenging to take care of older adults. From a labor perspective this includes staffing for long-term care, while from a fiscal perspective the increased challenges on Social Security.

As Lyman notes both on his blog and in the New York Times, there is another reason why we should care from a societal perspective. In comparing the ideal fertility rate from the General Social Survey with the total fertility rate that is actually observed, there is a widening gap. Women and men say they want 2.5-3 kids, but are only having 1.5-2 kids. This work shows there has always been a difference between ideal and achieved fertility, but that it is widening in the past decade. It is now reaching the differences seen back in the 1970s and 1980s, or when fertility rates began increasing again.

In separate research, the New York Times asked young adults why they are not having as many children and the answers were enlightening and also probably what you would expect. A lot of the top reasons given are financial in nature — childcare costs, student debt, housing affordability, etc. These issues are clearly in play here in Oregon where we have one of the highest childcare costs nationwide and among the worst housing affordability. However some reasons from the survey were clearly personal — wanting more leisure time or personal freedom, delaying marriage or not having a partner yet, etc. Overall, research points toward the rising age at which people marry being a key factor, as birthrates have not changed much after adjusting for marital status. As such, the delay in marriage is driving the delay in having children.

Another factor social scientists point to is gender equality. With rising educational attainment and employment opportunities, marriage and motherhood have become more of a choice. Complicating the picture further is the fact that women face an earnings penalty after having kids, and the U.S. has fewer policies supporting working families than many other developed countries. All of this may also contribute to the rise of stay-at-home moms in the past decade or so.

Finally, it must be noted that, at least initially, the decline in birthrates were in large part due to falling teen pregnancies. And yes, these declines began long before 16 and Pregnant and Teen Mom were on the airways. Overall, this is a great development from a social and human capital perspective. There is also some evidence that what we are seeing in annual birthrates is a bit misleading. Research from Pew shows that the by the time women are in their 40s, they have had the same number of children as the previous generation. This is sometimes called the tempo effect, that births are delayed and not foregone. That said, Lyman models a few scenarios including the tempo effect and birthrates by age or generational cohorts. He finds that the overall lower birthrate is here to stay for the foreseeable future, barring big changes in societal behavior and norms.

While we don’t have as good of data here in Oregon, we clearly see this shift in the age of the mother. The birthrate for first-time moms is rising substantially for 30- and 40-somethings, while it is declining for teens and 20-somethings.

What is striking to me when I look at the population forecast Kanhaiya in our office produces, is that Oregon will see fewer children in the future. This is not just a falling birthrate, but an outright decline in the total number of children in the state. In 2030, Oregon will have one million more residents than we did back in 2007, when we last had replacement rate fertility (almost), however the number of kids will be actually be lower. And this is in a state that sees strong net in-migration!

All told, fertility shapes many issues across the country from immigration to education, housing to labor supply. The U.S. and Oregon are expected to continue to see very low birthrates in the years to come. To the extent that these lower birthrates represent better economic opportunities for women and are more of a revealed preference, the declines are not worrisome at the personal level and should even be celebrated.

However, from a macro level, demographic imbalances can be problematic. As we work through the current demographic issues of Baby Boomer retirements, we are also sowing the seeds of the next imbalance in the coming decades.

Academic studies generally find that offering cash or tax incentives for parents produces modest and temporary boosts to birthrates, which tend to be more cultural in nature. As such, barring any substantial shifts in societal norms or larger flows of working-age international migrants, Oregon and the U.S. will likely need to adjust to shifting demographic trends in the decades ahead.

Stay tuned for Part 3 of the series when we will explore deaths a bit further.