The Danger of Shortchanging Parents

a dollar bill pinned up like a diaper
Getty / The Atlantic

In 1920, following the ratification of the Nineteenth Amendment, which granted women the right to vote, the lawyer and feminist Crystal Eastman turned her attention to the future. The new goal of the feminist movement, she argued, should be to ensure that women are free to pursue careers outside of child-rearing—but also to guarantee that if women chose to focus on parenting, their labors would be “recognized by the world as work, requiring a definite economic reward.” A century later, American women have made considerable progress toward being able to pursue the careers they want. But parents still aren’t compensated for their work—far from it.

Raising a child costs parents a quarter of a million dollars, excluding college tuition. On top of these direct costs, parents who reduce their hours or drop out of the workforce to care for children forgo income, retirement savings, Social Security benefits, and wage growth, because of lost job experience. A 26-year-old teacher who leaves her job for five years to care for children stands to lose more than $700,000 in the process.

Not having kids, though, is easier than ever. Today, many women can avoid pregnancy for up to 12 years with a single doctor appointment. Around the world, women have responded to these circumstances rationally—by working more and having fewer children. The total fertility rate is at an all-time low in the United States. It is below replacement level—the rate needed to replace the existing population as people die, or about 2.1 children per couple—in every postindustrial economy. It is declining pretty much everywhere else. And although the United Nations expects fertility in the developed world to recover slightly over the next 80 years, other forecasts suggest that birth rates will drop further in many advanced economies, including America, and faster globally.

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Sooner or later, this demographic decline will cause problems for the United States and the world. Countries depend on stable or growing populations to maintain their tax bases, workforces, and elder-support programs. How can governments ward off low fertility, and the problems that come with it? Politicians such as President Joe Biden and Senator Mitt Romney want to follow Eastman’s lead, and encourage child-rearing by providing financial support to parents. But other countries’ experiences suggest that as people get used to having two or fewer children, even significant financial support might not be enough to incentivize them to have more. If policy makers want to ensure a stable population in the future, they have to provide more support for parents now.

The importance of a stable or growing population to human economies is easy to overlook. Most measures of economic activity treat money that parents spend on children as a form of consumption, and ignore the unpaid time that parents devote to kids’ care. This is because many economists regard children as a commodity that parents “purchase.” Since the 1970s, though, feminist economists have criticized this framework for failing to properly account for the economic relevance of parenting. Although children do provide value to their parents, classifying them as commodities understates their economic and social importance, Nancy Folbre argued in her 1994 paper “Children as Public Goods.” Spending on children is a form of “investment in demographic infrastructure,” Folbre told me recently.

Taxes offer the most concrete example of this phenomenon. Children grow up to become adults and pay taxes that exceed the value of what’s been spent on them. Although parents pay slightly less than nonparents in taxes over their lifetime, the net taxes their offspring will pay more than offset the difference, by about $217,000 per parent, according to a 2011 estimate.  

A generation that doesn’t reproduce itself risks overburdening a dwindling workforce with the requirements of the elderly. Fewer children means fewer buyers for the houses and stocks that the elderly invested in to build a retirement nest egg, a smaller tax base to pay for their pensions and outsize hospital bills, and fewer people around to undertake their care. The demands of the elderly will account for an ever-larger share of economic activity and government spending. The cost of living may decline as housing prices fall, but the economy could stagnate, especially if the shrinking pool of young people dampens innovation. The higher tax rates needed to cover Social Security and Medicare as fewer young people pay into them may exacerbate this effect.

As a wealthy nation, the United States will likely have the option of relying on immigration to delay some of these problems—if it can sustain the political will to embrace it. Foreign-born people account for a much more substantial share of the population in Australia (29 percent), Canada (21 percent), Switzerland (30 percent), Austria (19 percent), and Sweden (18 percent) than they do in the United States (14 percent). But even immigration is not a permanent solution to the problems of low fertility. The forces prompting people have fewer children are not unique to the United States. Countries in Europe and East Asia have recorded low fertility for decades, and now the rest of the world is following suit. In 2019, about half of the global population lived in areas with below-replacement fertility. Fertility remains high in sub-Saharan Africa and parts of Asia and Oceania, but is falling and is expected to continue doing so, for all of the same reasons it has fallen elsewhere: urbanization, the importance of education in industrialized economies, and women’s increasing access to employment and birth control.

Declining fertility, especially in countries that provide little or no support to parents, doesn’t surprise feminist economists like Folbre. A country that does not publicly fund national defense won’t have much of it. A city that does not subsidize street lamps will have poorly lit streets.

The United States provides some help to parents and children through public education and tax credits, as well as a patchwork of other supports depending on where you live and how much money you make. But the U.S. could be doing a lot more to ease the financial strain of child-rearing, such as instituting publicly funded paid family leave, subsidizing child care, and giving direct cash assistance to families with children. Policy makers could also take steps to better ensure that child-rearing and employment are compatible by moving toward a shorter and more flexible workweek, or aligning the school day with the workday.

Lawmakers have attempted to advance a few of these policies. Some Republicans want to allow parents to use a portion of their future Social Security benefits for parental leave in exchange for delaying their retirement. Democrats have introduced legislation to institute a paid-family-leave program funded through a new payroll tax, expand federal subsidies for child care, and create a network of federally funded but locally run child-care centers. Most recently, as part of Biden’s coronavirus-relief bill, Democrats passed a temporary child allowance of up to $300 a month that phases out as family income rises. Romney introduced similar legislation that would consolidate existing support for children into a permanent, universal monthly cash benefit of up to $350 per child.

Whether any of these programs would be enough to stabilize the population isn’t clear. Demographers have had a tough time teasing out the role of specific policies in boosting fertility. Hallmarks of the Scandinavian approach to family policy, such as parental leave and subsidized child care, may have helped shield the region from severe declines in fertility experienced elsewhere in Europe toward the end of the 20th century, but they’ve produced lackluster results elsewhere. Over the past two decades, for example, successive Japanese governments have improved the terms of parental leave, invested in a day-care system with expanded hours, and directed employers to offer flexible and reduced hours to parents of young children. But Japan’s birth rate hasn’t changed much. Japan’s “programs do reduce the costs of raising children,” writes Leonard Schoppa, a politics professor at the University of Virginia, but “most career jobs in Japan ask employees to work until 08:00 or 09:00 pm every night and accept transfers at the risk of their continued employment.” Generous parental leave and subsidized child care won’t persuade someone to have a child when that person’s job is incompatible with parenting.

The experiences of developed countries, taken together, suggest that small cash transfers or short parental leaves are unlikely to significantly increase fertility rates, Leonard Lopoo, a public-policy professor at Syracuse University who studies the fertility effects of family policies, told me. Benefits that remove significant financial obstacles—the cost of child care, medical bills for prenatal care and giving birth, or college tuition—and prevent parents from having to leave their jobs are most likely to persuade someone to have a child, he said.

Still, the fertility-boosting effects of successful family policies are usually marginal, which has led to some head-scratching among demographers. Some point to the fact that having a child is a long-term financial commitment—you can’t back out of it just because you lose your job or a new administration slashes child allowances. The constant boom and bust of the global economy does little to inspire confidence in would-be parents. And even the most generous family benefits only partially offset the costs of raising a kid. Other demographers hypothesize that low fertility has self-reinforcing characteristics, and that countries that fail to preempt the forces driving it risk falling into a “low-fertility trap.” For example, as families shrink, people grow accustomed to the lifestyle that comes with a smaller family.

The difficulty of reversing low fertility has convinced some demographers that governments lack the power to achieve the kind of sustained increase in the birth rate that the U.S. would need to stabilize its population. “We can keep it where it is and maybe raise it a little bit, but not if we keep going on the course that we're going on now,” says Mary Brinton, a sociology professor at Harvard whose research focuses on gender equity and low fertility in postindustrial societies. Others think that increasing the birth rate significantly is possible, just expensive, and that financial support won’t work without other reforms that remove barriers to marriage and affordable housing, and shorten the protracted education timeline that delays young people’s entry into the job market.

If we could be certain that America’s fertility rate won’t continue to decline, and if we knew for sure how to raise it when we need to (and we were content to ignore our sky-high rates of child poverty), we could probably ignore falling fertility for a few more decades. But we have no such assurances. Policy makers need to prioritize the financial attainability of parenthood for as many people as possible, as soon as possible. Parenting is not a hobby—it’s an indispensable part of a properly functioning economy, and our present system works only if people continue to do it. As Crystal Eastman put it, child-rearing is “peculiarly and directly a service to society.” We no longer have the option of taking it for granted.