Do Fewer Babies in the U.S. Now Mean Fewer Workers in the Future?

Dana Wilkie By Dana Wilkie June 6, 2018
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Do Fewer Babies in the U.S. Now Mean Fewer Workers in the Future?

​U.S. birth rates declined in 2017 for women in their teens, 20s and 30s, leading to the fewest babies born in 30 years and raising the specter that fewer babies may translate into a shortage of workers in coming years.

The findings come from a May 2018 report from the U.S. Centers for Disease Control and Prevention (CDC). Based on a review of more than 99 percent of the birth certificates filed nationwide, the report counted 3.853 million births last year. That's the lowest since 1987.

"Workers will be scarce," predicted demographer Dowell Myers, director of the Population Dynamics Research Group at the University of Southern California. "There will be more competition and raiding [of workers by companies]. Recruitment will be more competitive in terms of pay and benefits. Thus, there will be a greater need to cement worker loyalty with a superior working environment."

Not encouraging news for employers who are currently facing the lowest unemployment rate since 2000—3.8 percent.

Births have been declining since 2014, but 2017 saw the greatest year-to-year drop—about 92,000 less than the previous year.

The slowdown is worrisome because of the growing gap between the working-age population that funds social programs and the elderly who rely on them, Myers said, predicting that the country will be increasingly dependent economically and socially on a smaller number of children.

In fact, the imbalance between children and retirees is growing such that the economic burden on a child born in 2015 will be nearly twice that of a child born in 1985, according to a 2013 study by the University of Southern California.

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Workforce Alternatives

Finding ways to keep older employees in the workforce, looking to immigrants, and providing benefits that appeal to those caring for children or other relatives could be among the ways to ensure that there enough employees in the future workforce, suggested Ethan Sharygin, a partner with Demographic Intelligence, which provides U.S. birth and marriage forecasts and is based in Charlottesville, Va.

"Great untapped potential remains for more people to be brought back into the labor force," he said. "Leaders should be watching trends in educational attainment and immigration. Companies that can identify potential for achievement in people who lack job skills will be at a competitive advantage, but then they will have to work hard to retain workers that they have developed."

And companies need to think now, Sharygin said, about the sort of workplace culture the nation's employees will demand when they start looking for their first jobs in a couple of decades. Employers may have to step up what they are already doing with flexible work and parental leave.

"Younger workers expect less in the way of pensions and long-term benefits and more in the way of companies making work compatible with their desired lifestyle. Telework will be a way to bolster retention, but that comes with its own challenges and costs. Companies that can accommodate growth by modular networks of small offices with varying specializations may be more able to navigate these changes than companies that use a single big building or single campus model as the norm for work."

Older Americans, Sharygin said, will want more flexibility in their work hours, while workers with families will expect robust parental-leave benefits.

"More women will wait until they are established in their career, have some economic security and have 'made their mark' before becoming parents," he said. "As parents who have more security and confidence, they will invest more heavily in their infant children during an intensive early parenting period, and they are very likely to return to their jobs [only] after [the] infant years. More men will also want paternity benefits, sharing the burden of intensive parenting during early childhood."

As for immigrants' influence on the future workforce, the recent decline in U.S. births is being fueled in part by a decline in immigrants coming to this country, experts said. And it's unclear if proposed changes to immigration laws—particularly those put forward by President Donald Trump—will prevent immigrants from filling enough future jobs to counter a worker shortage. The Society for Human Resource Management has asked leaders of Congress to pass legislation that would allow beneficiaries of the Deferred Action for Childhood Arrivals program to continue working and attending school in the U.S.

The U.S. Is Not Japan

Not all experts agreed, however, that the declining birth rate will translate into a future worker shortage.

Despite the dip in the U.S. fertility rate and slower population growth, the U.S. is still growing and is a long way from grappling with the demographic crisis other developed nations face, noted Hans-Peter Kohler, a University of Pennsylvania demographer who studies birth trends.

The Washington Post reported in 2016 that Japan's census showed that the country's population had shrunk considerably: The 2010 census showed a population of 128,057,352, but the 2015 figure showed just 127,110,000. In other words, Japan's population had shrunk by almost 1 million people in five years.

"Japan's birth rate has long been significantly below the 2.1 per woman that is needed to sustain growth—it currently stands at about 1.4 per woman—and the deficit isn't made up by significant levels of immigration like it is in some other nations," the Post reported.  "Japan is far from alone here. The U.N. has estimated that a total of 48 countries will see their population decline by 2050."

"Personally, I am skeptical that the U.S. is heading toward a Japanese or Southern European lowest-low fertility pattern," Kohler said. "At the moment, including based on the 2017 data, the U.S. fertility continues to be relatively high among high-income countries."

However, he said, if births in the U.S. continue to decline, changes in the labor force "will be accelerated."

More Automation?

Yet countries with significantly declining birth rates do offer lessons in how to cope with worker shortages, Myers said.

"Look at what Japan has done; they are leaders in automation due to their long-standing low birth rate and declining overall population," he said.

Wrote Bloomberg News in 2017: "Japan's aging and shrinking population has been partly blamed for the on-again, off-again nature of growth and deflation the past three decades. Lately, it's been driving a different and just as powerful idea: In the absence of large-scale immigration, the only viable solution for many domestic industries is to plow money into robots and information technology."

Sharygin, however, said he doesn't think that automation is among the more important ways to meet future staffing needs. Instead, he said, "great untapped potential remains for more people to be brought back into the labor force," including by luring older workers back to work or encouraging them to stay on the job longer.

"Investments in a work environment that is attractive to employees may pay off more than investments in automation," he said. "With the pool of qualified job candidates likely to decline, corporations will have to compete more to attract workers."

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