WEBVTT - The Coming Baby Deficit 0:00:00.040 --> 0:00:03.280 I'm Jason Kelly. It's time for this week's cover story. Well, 0:00:03.320 --> 0:00:06.360 in the early days the pandemic, with lockdowns forcing couples 0:00:06.400 --> 0:00:09.160 to spend so much quality time together, you might have 0:00:09.240 --> 0:00:12.680 expected America to have a baby boom. But a few 0:00:12.680 --> 0:00:16.480 months later, the opposite is proving true. America is looking 0:00:16.600 --> 0:00:20.440 at a big baby bust. While some one fifty thousand 0:00:20.520 --> 0:00:24.079 Americans have died because of COVID, Brookings estimates that the 0:00:24.120 --> 0:00:26.960 US will have as many as five hundred thousand fewer 0:00:27.080 --> 0:00:30.760 babies next year. The economic implications of that deficit will 0:00:30.800 --> 0:00:34.360 linger long after the pandemic ends, as fewer babies means 0:00:34.360 --> 0:00:37.960 fewer consumers, fewer workers, and fewer taxpayers. In a time 0:00:38.000 --> 0:00:41.159 of transformation, u L knows that trust is necessary for 0:00:41.200 --> 0:00:44.440 innovation and business success. We use science and data driven 0:00:44.440 --> 0:00:47.479 insights to help you build the trust. Stakeholders demand. The 0:00:47.520 --> 0:00:50.320 future relies on trust, and you L empowers it. Learn 0:00:50.320 --> 0:00:53.360 more and access free research at UL dot com. Slash trust. 0:00:53.880 --> 0:00:58.120 The coming baby deficit, the COVID nineteen crisis may leave 0:00:58.160 --> 0:01:01.400 a lasting imprint on us or till the trends taking 0:01:01.400 --> 0:01:06.120 a toll on growth. By Peter Coy Pandas and white 0:01:06.200 --> 0:01:09.800 rhinos aren't the only creatures that are unsuccessful at mating 0:01:09.840 --> 0:01:13.800 in captivity. The folk wisdom that humans will copulate when 0:01:13.880 --> 0:01:18.080 left with nothing else to do, dubbed the blackout babies theory, 0:01:18.280 --> 0:01:22.120 surfaces regularly in the immediate aftermath of disasters, but the 0:01:22.160 --> 0:01:28.000 baby boom never materializes. The COVID nineteen pandemics spawned predictions 0:01:28.040 --> 0:01:31.040 that stay at home orders would eventually deliver a baby bump, 0:01:31.560 --> 0:01:34.840 Yet far from having more children than usual, Americans are 0:01:34.880 --> 0:01:39.520 expecting fewer in bedrooms across the US, Couples are making 0:01:39.560 --> 0:01:42.920 decisions that in the aggregate, could prove as consequential for 0:01:42.959 --> 0:01:45.760 the long term health of our economy as those taken 0:01:45.800 --> 0:01:51.840 by policymakers in Washington. Fewer children now means fewer consumers, workers, 0:01:51.920 --> 0:01:55.560 and taxpayers in the future, in other words, a smaller 0:01:55.600 --> 0:01:59.960 economy than otherwise, though also a smaller environmental footprint, which 0:02:00.120 --> 0:02:05.680 brings its own rewards. Wolfgang Lutz, an Austrian demographer, warned 0:02:05.720 --> 0:02:08.280 in two thousand and six that European nations were at 0:02:08.360 --> 0:02:11.280 risk of falling into a fertility trap, in which there 0:02:11.320 --> 0:02:15.000 are fewer women alive to have babies, Smaller families become 0:02:15.000 --> 0:02:18.959 the social norm, and low population growth reduces economic growth, 0:02:19.280 --> 0:02:22.880 fostering a pessimism that further suppresses the birth rate. It 0:02:22.919 --> 0:02:26.920 appears that Denmark, among others, has taken Lutz's message to heart. 0:02:27.360 --> 0:02:31.000 A public service announcement urges older Danes send your child 0:02:31.080 --> 0:02:34.680 on an active holiday and get a grandchild within nine months. 0:02:35.600 --> 0:02:38.480 At the time Lootz raised the alarm, the U s 0:02:38.480 --> 0:02:41.200 seemed well clear of such a trap, with a total 0:02:41.200 --> 0:02:44.480 fertility rate of two point one children per woman, what 0:02:44.560 --> 0:02:48.600 demographers call the replacement rate versus one point five for 0:02:48.680 --> 0:02:52.120 the European Union. Now that the US rate is below 0:02:52.160 --> 0:02:57.240 one point seven, that's no longer assured. Unromantic as it sounds, 0:02:57.360 --> 0:03:00.440 planning a family is a numbers exercise that factors in 0:03:00.480 --> 0:03:03.920 the age of the would be mother, access to affordable childcare, 0:03:04.320 --> 0:03:09.120 college costs, income and job security. Toss in a national 0:03:09.120 --> 0:03:12.639 health emergency and an economic crisis that invites comparisons to 0:03:12.680 --> 0:03:15.800 the Great Depression, and the benefits of parenthood no longer 0:03:15.840 --> 0:03:20.119 pencil out for many. The Guttmacher Institute surveyed about two 0:03:20.120 --> 0:03:23.440 thousand American women in late April and early May and 0:03:23.480 --> 0:03:27.440 found that wanted to delay pregnancy or have fewer children 0:03:27.480 --> 0:03:30.720 as a result of the pandemic that outweighed the seventeen 0:03:30.760 --> 0:03:34.640 percent who said they wanted children sooner or more of them. 0:03:34.720 --> 0:03:37.880 In June, the Brookings Institution released a study predicting the 0:03:37.960 --> 0:03:41.920 US is headed for a large, lasting baby bust. Its 0:03:41.960 --> 0:03:45.040 researchers forecast there will be three hundred thousand to five 0:03:45.120 --> 0:03:49.160 hundred thousand fewer children born in the US than there 0:03:49.160 --> 0:03:52.040 would have been absent the crisis, which amounts to a 0:03:52.080 --> 0:03:56.480 decrease of roughly ten from That means the number of 0:03:56.480 --> 0:03:59.520 babies never born is likely to greatly exceed the number 0:03:59.560 --> 0:04:02.840 of America kins who have died from coronavirus, which is 0:04:02.880 --> 0:04:07.040 now about one fifty thousand. The effect on population will 0:04:07.080 --> 0:04:10.040 be longer lasting as well. Many of the babies who 0:04:10.040 --> 0:04:13.680 aren't being born would have lived into the twenty second century. 0:04:14.040 --> 0:04:16.240 A lot of people I know at work and friends 0:04:16.279 --> 0:04:18.480 are saying they don't want to have children until this 0:04:18.560 --> 0:04:22.120 is over, says Tory Marsh, director of research at good 0:04:22.200 --> 0:04:25.640 r X, a price comparison and coupon site for prescription 0:04:25.720 --> 0:04:31.320 drugs based in Santa Monica, California. Marsh postponed her wedding, 0:04:31.680 --> 0:04:34.640 which had been scheduled for November. Because of the pandemic, 0:04:35.200 --> 0:04:38.560 it is definitely pushing back the timeline for babies. She says. 0:04:39.440 --> 0:04:42.200 If couples fully make up for lost time by having 0:04:42.240 --> 0:04:44.960 more children later, this drop in the birth rate will 0:04:45.040 --> 0:04:48.799 end up being just a blip. But demographers predict that many, 0:04:48.920 --> 0:04:51.240 if not most, of the births that are delayed will 0:04:51.279 --> 0:04:54.960 never be made up. There is this Panglossian narrative that 0:04:55.279 --> 0:04:59.200 delayed births will tend to recover, but statistically it doesn't happen, 0:04:59.440 --> 0:05:03.920 says Lie in Stone, chief information officer of Demographic Intelligence, 0:05:04.240 --> 0:05:07.160 a consulting firm whose clients have included Procter and Gamble 0:05:07.440 --> 0:05:11.160 and JP Morgan Chase. Lack of time is the most 0:05:11.200 --> 0:05:14.000 important reason the birth rate is unlikely to revert back 0:05:14.040 --> 0:05:17.440 to trend once the pandemic is over. While young women 0:05:17.440 --> 0:05:19.360 will still have plenty of years to give birth to 0:05:19.400 --> 0:05:22.480 their desired number of children, older ones will need to 0:05:22.560 --> 0:05:25.599 space births more tightly to reach their targets. In their 0:05:25.640 --> 0:05:29.480 remaining fertile years, some will run out their biological clock 0:05:29.720 --> 0:05:33.839 waiting for baby making conditions to improve. Every time that 0:05:33.880 --> 0:05:36.159 people decide to push back when they're going to have 0:05:36.240 --> 0:05:39.520 their first kid or their next kid. Some proportion will 0:05:39.600 --> 0:05:42.760 end up not having the child at all, says Karen Guzzo, 0:05:42.880 --> 0:05:46.719 a sociology professor at Bowling Green State University and acting 0:05:46.760 --> 0:05:50.400 director of the Center for Family and Demographic Research. For 0:05:50.480 --> 0:05:53.680 couples who are already parents, says Guzzo, the longer you 0:05:53.720 --> 0:05:56.400 wait to have your second or third child, the harder 0:05:56.440 --> 0:05:58.960 it is to say, oh, I'm ready to have babies again. 0:05:59.600 --> 0:06:02.680 They say, you know what, my family is complete. I'm 0:06:02.720 --> 0:06:05.760 happy with what I have. In the second half of 0:06:05.800 --> 0:06:08.960 the twentieth century, the pattern in the US and elsewhere 0:06:09.080 --> 0:06:12.360 was that fertility tended to fall during recessions and then 0:06:12.400 --> 0:06:16.640 bounced back when the economy recovered. Demographers expected that to 0:06:16.720 --> 0:06:19.200 happen after the two thousand and seven to two thousand 0:06:19.200 --> 0:06:21.640 and nine recession, which at the time had been the 0:06:21.680 --> 0:06:25.480 deepest since the Depression. People put off having children during 0:06:25.480 --> 0:06:28.800 the economic downturn and then catch up on fertility once 0:06:28.839 --> 0:06:33.880 economic conditions improve, Pew Research Center wrote in October report. 0:06:34.760 --> 0:06:38.440 But the pattern broke. The post recession rebound never came, 0:06:38.880 --> 0:06:41.799 even as the U s economy staged the longest expansion 0:06:41.800 --> 0:06:45.240 on record. Birth rates for women in their twenties, which 0:06:45.240 --> 0:06:48.520 had dropped twenty five or more during and shortly after 0:06:48.520 --> 0:06:52.320 the recession, kept falling and they stayed flat for women 0:06:52.360 --> 0:06:57.200 in their thirties. Had pre recessionary fertility patterns been sustained through, 0:06:58.600 --> 0:07:01.440 there would have been six point six million more births 0:07:01.480 --> 0:07:03.800 and nearly three million more women would have had their 0:07:03.800 --> 0:07:07.240 first child over the last eleven years, says Kenneth Johnson, 0:07:07.640 --> 0:07:10.920 a sociologist and demographer at the University of New Hampshire's 0:07:11.040 --> 0:07:15.200 Carci School of Public Policy. Early indicators point to the 0:07:15.200 --> 0:07:18.840 birth rate moving down another notch in this recession. The 0:07:18.880 --> 0:07:22.320 Wedding Report says its surveys show that slightly over sixty 0:07:22.720 --> 0:07:26.600 of weddings scheduled for have been postponed until later this 0:07:26.720 --> 0:07:30.600 year or one that's bound to delay some couples from 0:07:30.640 --> 0:07:35.000 starting a family. Also, when the pandemic broke out, birth 0:07:35.000 --> 0:07:38.440 control providers reported an increase in sales from people stocking 0:07:38.520 --> 0:07:41.840 up in case of shortages. Some sources have also seen 0:07:41.880 --> 0:07:44.840 a bump in demand for long lasting forms of birth control. 0:07:45.360 --> 0:07:49.400 The Pill Club Holdings logged a sixty increase in June 0:07:49.800 --> 0:07:53.080 in new patient requests for an overa a vaginal ring 0:07:53.200 --> 0:07:56.400 that prevents pregnancy for up to a year. In the US, 0:07:56.800 --> 0:07:59.920 contraception has generally been available to those who need it, 0:08:00.280 --> 0:08:03.520 in contrast to the situation in poor and middle income countries, 0:08:03.800 --> 0:08:07.000 where disruptions and access to birth control may result in 0:08:07.040 --> 0:08:10.400 as many as seven million unintended pregnancies in just half 0:08:10.440 --> 0:08:13.320 a year, according to an April estimate by the United 0:08:13.360 --> 0:08:18.000 Nations Population Fund. Planned Parenthood Federation of America has seen 0:08:18.040 --> 0:08:20.920 an increase in demand for abortion pills, according to doctor 0:08:21.000 --> 0:08:25.320 Gillian Dean, senior director of medical Services. She says several 0:08:25.320 --> 0:08:27.960 women have come to her for help to end pregnancies 0:08:27.960 --> 0:08:30.360 that they would have wanted to continue were it not 0:08:30.480 --> 0:08:33.960 for the economic fall out of the pandemic. With almost 0:08:34.080 --> 0:08:37.480 eighteen million Americans out of work as of June, it's 0:08:37.480 --> 0:08:39.720 no wonder many couples might not be in the mood 0:08:39.760 --> 0:08:44.800 for procreating. Demographer Sergio Della Pergola has documented a tight 0:08:44.840 --> 0:08:49.880 statistical correlation between optimism and fertility in Israeli society. The 0:08:49.920 --> 0:08:54.880 Bloomberg u S National Economy Expectations Diffusion Index, which gauges 0:08:54.920 --> 0:08:58.680 consumers economic outlook, crashed below thirty in April and May 0:08:59.040 --> 0:09:02.600 from fifty seven in February, recovering to thirty eight point 0:09:02.640 --> 0:09:06.560 five in July. Not everyone will wring their hands at 0:09:06.559 --> 0:09:10.280 the thought of all those missing children. Some environmentalists may 0:09:10.400 --> 0:09:12.880 view the US birth dearth as good for the planet. 0:09:13.280 --> 0:09:16.800 Each American consumer is responsible for about three times the 0:09:16.840 --> 0:09:20.400 amount of greenhouse gas emissions as a Chinese consumer, according 0:09:20.480 --> 0:09:24.400 to a nineteen report by the United Nations Environment Program. 0:09:24.440 --> 0:09:28.000 A twenty seventeen study from Sweden's Lund University published in 0:09:28.120 --> 0:09:31.760 Environmental Research Letters found that having fewer children is the 0:09:31.800 --> 0:09:34.160 best thing that people in rich countries could do for 0:09:34.200 --> 0:09:37.559 the planet, far more effective than buying an electric car 0:09:37.920 --> 0:09:41.760 or refraining from air travel. On the other hand, each 0:09:41.840 --> 0:09:46.640 child who's wanted but not born is some Famili's quiet tragedy. 0:09:47.000 --> 0:09:50.160 Surveys such as the National Survey of Family Growth show 0:09:50.200 --> 0:09:53.800 that the average American woman wants two children, or possibly three, 0:09:54.160 --> 0:09:57.520 depending on how long it lasts. The COVID nineteen crisis 0:09:57.520 --> 0:10:00.200 may compel many women not to fulfill that design. Fire 0:10:01.200 --> 0:10:04.720 For the economy, fewer future workers will entail a bigger 0:10:04.760 --> 0:10:08.760 burden on each one to support future retirees. Every two 0:10:08.800 --> 0:10:12.240 tenths decline in the total fertility rate. That is too 0:10:12.280 --> 0:10:15.720 fewer children per ten women necessitates an increase in the 0:10:15.760 --> 0:10:19.360 social security payroll tax of about point four percentage points. 0:10:19.880 --> 0:10:22.840 According to a table in the annual Report of the 0:10:22.880 --> 0:10:27.440 Trustees of the Social Security Trust Funds, slow or negative 0:10:27.440 --> 0:10:31.920 population growth tends to depress economic dynamism, some economists argue. 0:10:32.440 --> 0:10:35.680 In a research paper published in January, Charles Jones, a 0:10:35.720 --> 0:10:39.800 professor at Stanford University's Graduate School of Business, posits that 0:10:39.880 --> 0:10:44.640 so called natalist policies, such as offering couple's financial incentives 0:10:44.679 --> 0:10:47.560 to have more children, could spell the difference between an 0:10:47.600 --> 0:10:51.720 expanding cosmos of exponential growth in both population and living 0:10:51.760 --> 0:10:55.800 standards and an empty planet in which incomes stagnate and 0:10:55.840 --> 0:11:00.840 the population vanishes. It's worth noting that countries, including hungry 0:11:00.880 --> 0:11:04.080 Poland and more recently Russia, have had little success in 0:11:04.160 --> 0:11:08.800 reversing declining fertility rates with subsidies. Even when the pandemic 0:11:08.920 --> 0:11:11.400 is over, many of the factors that have pushed down 0:11:11.440 --> 0:11:14.920 fertility rates in the US will remain in place. Those 0:11:14.920 --> 0:11:18.080 include the penalty to women's careers for having children and 0:11:18.120 --> 0:11:22.800 the high cost of childcare, education, and health insurance. Childcare 0:11:22.960 --> 0:11:26.200 is particularly salient for couples who already have one child 0:11:26.679 --> 0:11:29.680 because they're more aware of how problematic it is, says 0:11:29.720 --> 0:11:33.680 Bowling Green's Guzzoh. In some states, childcare is more expensive 0:11:33.720 --> 0:11:38.360 than college. As important as child care is pandemic related, 0:11:38.400 --> 0:11:40.839 federal aid given to the sector has been less than 0:11:40.840 --> 0:11:44.800 the sum given to Delta Airlines. University of Michigan economist 0:11:44.840 --> 0:11:49.560 Betsy Stevenson told Politico Magazine any attempt to divine the 0:11:49.600 --> 0:11:52.520 future of fertility is complicated by the fact that there 0:11:52.559 --> 0:11:55.840 are different ways to measure it, and sometimes they contradict 0:11:55.920 --> 0:11:59.480 each other. One indicator that's pointing strongly negative is the 0:11:59.559 --> 0:12:02.200 number of earths, which hit a thirty five year low 0:12:02.320 --> 0:12:05.240 last year and is likely to be even lower this year. 0:12:05.880 --> 0:12:09.119 Another is the total fertility rate, which is a snapshot 0:12:09.120 --> 0:12:11.080 of the birth rates for women of all ages in 0:12:11.080 --> 0:12:15.280 a given year. It has fluctuated wildly over the past century. 0:12:15.880 --> 0:12:17.800 It was three point thirty one at the end of 0:12:17.800 --> 0:12:21.640 World War One, fell to two point fifteen during the Depression, 0:12:22.320 --> 0:12:25.080 rose to three point sixty eight in nineteen fifty seven, 0:12:25.559 --> 0:12:28.600 fell to one point seventy four in nineteen seventy six, 0:12:29.120 --> 0:12:32.240 then rose to two point one two in two thousand seven. 0:12:32.960 --> 0:12:36.080 At that time just before the financial crisis, the U 0:12:36.240 --> 0:12:38.720 S rate was among the highest of the wealthy nations. 0:12:38.960 --> 0:12:41.800 A total fertility rate of about two point one the 0:12:41.880 --> 0:12:45.640 replacement rate is what's required to stabilize the population over 0:12:45.640 --> 0:12:48.559 the long term, but the two thousand seven peak in 0:12:48.600 --> 0:12:51.800 fertility was short lived. The rate fell in the last 0:12:51.800 --> 0:12:55.040 recession and kept going down after it, falling to one 0:12:55.080 --> 0:12:58.040 point eighty nine and twenty eleven and hitting one point 0:12:58.080 --> 0:13:01.720 sixty eight last year. The fact that the total fertility 0:13:01.800 --> 0:13:05.040 rate has fluctuated widely suggests that there's at least a 0:13:05.080 --> 0:13:08.520 possibility its next move is up. That's what the Social 0:13:08.520 --> 0:13:12.480 Security Trustees are banking on. Their twenty twenty annual report, 0:13:12.679 --> 0:13:16.480 which was prepared before the pandemic, makes an intermediate projection 0:13:16.559 --> 0:13:18.960 that the total fertility rate will rise to one point 0:13:19.040 --> 0:13:22.200 ninety five by twenty twenty nine and then stay there 0:13:22.200 --> 0:13:25.680 through twenty ninety five, the end of the forecast period. 0:13:26.320 --> 0:13:30.640 In an emailed statement, Social Security Chief Actuary Stephen Goss 0:13:30.679 --> 0:13:33.520 cited the surveys that women want two or more children 0:13:34.160 --> 0:13:37.160 that suggests that the current reduction in the total fertility 0:13:37.240 --> 0:13:40.880 rate will not be permanent. He wrote, setting aside the 0:13:40.880 --> 0:13:44.880 current crisis, it's possible that today's twenty something women intend 0:13:44.920 --> 0:13:47.400 to have babies at later ages than their mothers or 0:13:47.440 --> 0:13:50.800 older sisters did. If so, that wouldn't be reflected in 0:13:50.800 --> 0:13:54.480 today's low total fertility rate. The total fertility rate is 0:13:54.520 --> 0:13:57.720 a tricky concept. It's the number of children an imaginary 0:13:57.760 --> 0:14:00.960 woman would have over her lifetime if likelihood of having 0:14:00.960 --> 0:14:03.320 a baby in each year of life matched what the 0:14:03.360 --> 0:14:06.960 birth rate is now for women of that age. For example, 0:14:07.000 --> 0:14:10.800 at sixteen, she experiences the birthrate of today's sixteen year olds. 0:14:10.960 --> 0:14:13.960 At thirty eight, she experiences the birth rate of today's 0:14:13.960 --> 0:14:18.199 thirty eight year olds. In contrast, the easier to understand 0:14:18.480 --> 0:14:22.400 completed fertility rate measures how many babies women actually have 0:14:22.680 --> 0:14:27.080 over their reproductive lives. That number has stayed high. Today's 0:14:27.120 --> 0:14:29.960 women who are forty nine years old have had two 0:14:30.000 --> 0:14:33.000 point one children on average, which is a bit higher 0:14:33.000 --> 0:14:36.560 than the forty nine year olds of a few years ago. Certainly, 0:14:36.640 --> 0:14:39.960 women who are undergoing fertility treatments are as determined as 0:14:39.960 --> 0:14:43.880 ever to have children. Eva Pensi Moog, thirty one, a 0:14:44.000 --> 0:14:47.520 user experience designer from Chicago, says some of the older 0:14:47.520 --> 0:14:50.680 women in her infertility support groups are literally in a 0:14:50.800 --> 0:14:53.360 race against the clock to collect as many eggs as 0:14:53.400 --> 0:14:57.400 they can before they're gone. Julie christ thirty nine and 0:14:57.480 --> 0:15:00.680 Rachel Anderson thirty one, of Bristol, Connecticut, it who have 0:15:00.760 --> 0:15:03.880 a nineteen month old son, are trying for another child 0:15:04.040 --> 0:15:08.320 via in vitro fertilization. Sometimes we ask ourselves, what the 0:15:08.360 --> 0:15:11.920 heck are we doing. The world is so weird, says Anderson. 0:15:12.560 --> 0:15:17.520 You can call it naive. We want kids with Alexander 0:15:17.560 --> 0:15:21.440 Tensi and Mayieve She. And that's this week's cover story 0:15:21.520 --> 0:15:24.360 by Peter Koy. Find that story and all of the 0:15:24.440 --> 0:15:27.920 latest issue at Bloomberg dot com and business week dot com. 0:15:28.040 --> 0:15:31.560 I'm Jason Kelly. Check us out. Every day are Bloomberg 0:15:31.600 --> 0:15:34.320 Business Week Radio Show from two to six pm Wall 0:15:34.360 --> 0:15:35.920 Street Time. This is Bloomberg.