Birth Rates Are Down

Birth Rates Are Down

Can ‘Baby Bonuses’ Turn Them Around?

BY VANESSA NIRODE

In response to low birth rates, the U.S. and other countries began implementing “baby bonuses” in the form of annual tax credits or monthly payouts to qualifying children’s legal guardians (i.e., biological or adoptive parents). An October 2020 CDC report, though, noted that the American fertility rate continued to drop and hit a 35-year low of 1.7 in 2019.

The overall decline—which stretches beyond U.S. borders— could lead to what some population researchers like those at University of Washington’s Institute for Health Metrics & Evaluation have labeled a “demographic time bomb.” As Anna Medaris Miller explained for Insider,

1.7

2019 U.S. fertility rate; its lowest in 35 years

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Inc., there may one day not be enough young people to support the economy or aging populations.

Why the Dip in Birth Rates?

“In order to maintain the population in the U.S.,” wrote Adam Bulger for Fatherly.com, “the fertility rate needs to be 2.1. America hasn’t done that since the 1970s.”

That 2.1 represents the average number of children each American

woman of child-bearing age would need to have to maintain the country’s current population balance. Bulger had at least one concern: An older population may strain federally-funded programs like Social Security or Medicaid, since not enough young workers would be paying into them via tax witholdings.

But why the dip in birth rates? In writing for “Money” magazine in October 2019, Chloe Wilt found that a

country’s birth rate is directly related to its perceived stability. People are more likely to have children when job markets and economies seem secure—or, when they feel supported to begin or grow their families.

“Dwindling population growth, on the other hand, can spell economic doom,” wrote Wilt. Both Bulger and Wilt said economic factors which contribute to a decline in pregnancies include:

• Student debt

• Job uncertainty

• Gaps in health coverage

In “Everyone’s Missing the Obvious About the Declining U.S. Birth Rate,” blogger Amando O. at Medium. com argued that three other factors have contributed to low birth rates in the U.S.: the high cost of having a baby (an average of $32,000 USD for the uninsured), the high cost of child care and a lack of any “national mandate for parental leave.”

Factors which boost birth rates, according to various demographic researchers and findings from the U.N.’s 2019 “World Population Prospects” report, include:

• Access to childcare

• Shifts in gender dynamics

• Maternity and paternity leave

• Other supports for workers

• Subsidized baby bonuses

“

Dwindling population growth … can spell economic doom.

”

– Chloe Wilt for “Money” (October 2019)

Do Baby Bonuses Work?

Baby bonus programs have been implemented by roughly 30 percent of the world’s governments with varying success. Past and current baby bonus programs stretch from Australia to Singapore. Canada, for example, has issued a tax-free monthly payment for children younger than 18 which is based on a family’s adjusted net income from the prior tax year.

The Parliament of Australia launched one such program in 2004, paying qualifying parents of newborns

(or adopted children younger than 16) installments totaling $5,000 per eligible child. Due to a low success rate, the program was dissolved in 2014. In its place was offered a Family Tax Benefit of $2,000 for a “firstborn” child (or multiples) and $1,000 for subsequent children.

In Estonia, along with a year’s maternity leave, families had been rewarded a one-time childbirth allowance for each newborn. A subsequent child allowance is paid monthly based on the number of children a family has—plus, the government has maintained a generous leave program. Across the Gulf of Finland, as was reported by the BBC in 2019, a Finnish program in Lesijarvi municipality paid families $10,000 EUR over the course of 10 years for each child born.

At BusinessInsider.com, Elena Holodny said Japan’s 2015 “fertility rate … hit its highest level in 21 years” at 1.46. The spike correlated with cash incentives for new parents, with u

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By 2015,

55 of 195 world governments had set birth rate policies

Christopher Wood for brokerage and investment firm CLSA saying Ama made the biggest jump due to tiered bonuses: 100,000 Yen for a first born, 1 Million Yen for a fourth (roughly $940 and $9,400 USD). The Nakanoshima island town’s fertility rate was 1.66 in 2014. By 2015? It was 1.8.

Singapore’s baby bonus program has potentially been the most generous. Its 2019 offerings included more than half the country’s average annual income (or $8,000) for both first- and second-born children and $10,000 for third- and fourth-born children. Still, a high cost of living seemed to deter families from taking advantage.

While government-subsidized baby bonuses may offer a cushion at the start of a child’s life, some say they do little to assist with ongoing expenses. Tomas Sobotka, PhD, is a head of research at Wittgenstein Centre for Demography and Global Human Capital in Vienna. He said recurring cash transfers could become more important “during the emerging economic crisis in the post-COVID era,” stressing that investments in child care and parental leave are crucial to solving low fertility rates.

Sobotka studied numerous countries’ policies and their effectiveness in a report for UNFPA—a United Nations sexual and reproductive health agency—and found that low fertility rates had spread across the globe over the past 30 years and that, by 2015, they had resulted in 55 of 195 governments investing in policies to increase their nations’ respective birth rates.

He concluded that “policies are most effective in supporting women’s and men’s fertility choices if they respond to various needs of individuals in diverse life situations.” And, he added: “They should foster reconciliation between paid work and childrearing but they also need to provide financial

support to families with limited income(s).”

The Cost of Raising Children

A 2015 U.S. Dept. of Agriculture report noted that the cost of raising a child through age 17 had reached $233,610 USD, on average, across America. Given the age range cited, the figure did not include the cost of supporting a “dependent” child (18 to 26) during their college years. Major expenses it did account for, which represent 63 percent of the total, were:

• Food (18%)

• Housing (29%)

• Child Care/Early Education (16%)

In September 2020, senior correspondent for Vox.com Dylan Matthews reported that then President-Elect Joe Biden had quietly but publicly “made official the most significant anti-poverty proposal of his candidacy” by

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“… policies are most effective in supporting women’s and men’s fertility choices if they respond to various needs of individuals in diverse life situations.

”

– Tomas Sobotka, PhD, head of research at Wittgenstein Centre

endorsing a policy to expand child tax credits so that—for the duration of the COVID-19 pandemic at least—parents would receive monthly checks.

Per Urban Institute calculations, Matthews said, that move “would cut child poverty in the U.S. by (one-third or more) and would give an average of $2,260” in annual, per-child financial support to American families with qualifying children. Similar child allowances have been common in E.U. countries, Canada and Australia.

Yet, in an effort to encourage multiple births, France began paying benefits to only families with two or more children—and it worked. Matthews noted other differences: “In many countries, the payments are truly universal; you get the money no matter how much you earn.” By contrast, Biden’s plan is said to favor a system whereby payments are phased out for top earners.

Higher child tax credits have proven to reduce child poverty and encourage population growth domestically and abroad. Matthews also speculated that they could reduce abortion rates by offsetting the costs of raising children. Finally, while employers have not historically offered baby bonuses in the form of cash payments, some corporations have enhanced employee child care benefits packages.

Credit Suisse Bank has paid nannies to accompany its employee parents on work trips, while American Express and USAA have offered their employees on-site child care and lactation rooms. Startups have stepped up to serve parents, as well. (See “High-Tech Incentives.”) •

High-Tech Incentives

It could be no one has ever called raising a child “an easy task.” Imagine the need to juggle child care, a household and career. The good news is that high-tech resources which simplify organizing and managing life as a parent have become easier to find. A few examples:

• HiCleo.com – A “family benefits” platform, Cleo is aimed at helping employers explain benefits packages and promote next-level care, health and wellness among employees.

• HuckleberryCare.com – This app tracks and improves little ones’ sleep patterns by pairing pediatric advice with A.I. to create custom sleep plans based on individual family needs.

• LearnPlayTime.com – In addition to helping parents monitor and schedule children’s digital activity, LearnPlay offers customized features to promote learning and skill building.

• Lovevery.com – A range of science-themed play kits are available for infants and toddlers by subscription. Loverery has long emphasized organic and sustainable materials.

• Poio.com – Phonics-based reading instruction is delivered by game play that adapts to 3- to 8-year olds’ skill levels. This Kahoot! app won a 2019 Learning Technologies Award for “Best Learning Game.”

• Talli.me – The device and its app were designed for easy interface, allowing parents to log care routines (i.e., nap time, medicines) and milestones (i.e., the transition to solid food) for ease of sharing with pediatricians and other caregivers.

• TinyBeans.com – The Tiny Beans platform has allowed parents to capture and share photos or videos with select family and friends. It also offers tailored advice, parenting hacks, etc.

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