America isn’t making enough babies, and we haven’t for years.
Since 2007, the number of babies born in the U.S. has fallen almost every year, and in 2023, the birthrate hit its lowest level ever. The total fertility rate fell 2% last year, down to 1.62 babies per woman, 20% lower than 15 years ago.
The baby bust is bad news for many reasons. It shrinks the workforce. Paired with a record number of retirees, a smaller working-age population means inflation and shortages.
People still want bigger families. The ideal family size, according to Gallup, is closer to three children than to two — and it’s climbing. So people are falling farther and farther short of the families that most want.
Low birthrates are also bad for those who do have families, as our society becomes less family-oriented and the world becomes less family-friendly.
Immigration can’t compensate for these problems, as some people suggest. Importing workers, say through guest-worker programs, tends to be exploitative and undermine social cohesion. The countries from which most immigrants come — Mexico, India, and China — have birthrates below the replacement level of 2.1. Low-skill immigrants, whom our system favors, lower wages for native workers. This makes it harder for young workers to get married and start families, thus driving fertility rates even lower.
America needs to become more family-friendly. This will mostly have to be done by civil society and local governments — revitalized community institutions, more sidewalks and playgrounds, changing norms governing children in public, etc.
But state governments and even the federal government can help.
The tax code should acknowledge the benefits children provide to everyone, not just the families they are born into. The child tax credit should be increased — not massively, but significantly. Inflation caused by President Joe Biden’s excessive spending has cut 15% of the value of the tax credit. It should be increased and indexed to inflation. It should also be available through a child’s 18th birthday (it currently expires Jan. 1 when children are 16). Parents should be able to move some of the credit up to earlier years in exchange for a smaller credit in later years.
These increased costs can be funded by repealing less effective federal child subsidies such as the family portion of the earned income tax credit, as well as the child and dependent care credit.
The Biden administration, as seems inevitable under his mismanagement, is moving in the opposite direction. Biden wants to expand federal subsidies for day care. This is a horrible idea for a dozen reasons, many of which we’ve laid out before. Most importantly, if you’re going to give parents a tax break, just give them a tax break, and let them decide whether to use this money to reduce their paid work, build a granny flat, or hire child care.
You cannot address the baby bust without addressing our retreat from marriage. Later marriage and less marriage means fewer babies. Uncle Sam probably can’t effectively promote marriage, but it can stop discouraging marriage.
Most marriage penalties in the tax code have been repealed, but in means-tested federal aid programs there are still plenty of policies that penalize marriage. Congress should repeal them.
Owning a home has become much more expensive amid inadequate supply and much higher interest rates. This is the main way it has become more expensive to raise children. Higher housing costs are proven to drive down birthrates.
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Uncle Sam shouldn’t subsidize homeownership (that went poorly a couple of decades ago), but it should minimize its upward pressure on home prices. Federal regulations, including environmental regulations, make it more expensive to build homes, especially starter homes.
We need to restore America’s culture and values to turn around our demographic collapse. But the federal government can help a bit — mostly by not getting in the way of people who want to form families.
