Pandemic baby bust: Millennials’ bad luck leads to fewer kids

When the COVID-19 pandemic began in earnest in the United States in March of 2020, there was a winking suggestion that we might see a baby boom nine months later, as couples found themselves in lockdown together and in need of entertainment. Social scientists who study fertility, however, saw a perfect storm brewing of factors that could lead to a large baby bust:

• An economic downturn
• High levels of uncertainty or pessimism about the future
• Fewer social interactions

Early forecasts estimated that the U.S. would have 300,000 to 500,000 fewer births in 2021 as a result of the pandemic — so far, the evidence supports these predictions. One-third of women surveyed in the spring of 2020 said they planned to delay or reduce their fertility as a result of the pandemic, and Google searches for phrases related to pregnancy plummeted.

The CDC just released its preliminary births report for 2020, offering some of the earliest signs of a decline in actual fertility, as births fell 4 percent relative to 2019. However, a closer look reveals that while births were down 7.7 percent in December — the first month when most births conceived during the early days of the pandemic lockdowns would have occurred — births also fell in each of the first three quarters of 2020, well before we would expect any effects of the pandemic to be realized. These numbers are relative to 2019, which itself was already a record-low year for birth rates in the United States. In fact, birth rates are down 19 percent since the year 2007 — a remarkable decline in just 13 years, and a trend that has contributed to a historic slowdown in the growth rate of the population.

Some of this decline was expected, due to changing immigration patterns and a narrowing of the gap in birth rates between Hispanic and non-Hispanic women. And some of it is welcome, as unintended births have fallen even more rapidly since 2007, including an astounding 60 percent decline in the teen birth rate over this period.

However, the forces behind the pandemic baby bust — economic decline, uncertainty about the future — also play a role in the longer-term trend. The fact that the decline in fertility began in 2007 is not a coincidence: This year also marks the beginning of the Great Recession and economists and demographers expected a large decline in fertility in its wake. But unlike previous recessions, births continued to decline well after the economy regained its footing, resulting in a baby-less recovery.

Why did fertility continue to fall even after the economy bounced back? Part of the answer lies in “scarring” effects — the fact that many young people who complete their education or enter the labor market during recessions find that their wages and employment opportunities are suppressed long after the recession ends. Crucially, recessions have also been shown to have scarring effects on home ownership, marriage — and fertility.

Indeed, birth rates for millennial women, who were in their teens and 20s when the Great Recession hit, have been lower at every age than for the GenX women that preceded them. For many years, economists and demographers wondered whether millennials’ lower birth rates in their 20s would be offset by higher birth rates in their 30s, especially as survey data suggested that they wanted more children. We now know that hasn’t happened — birth rates for older women have been flat or have even declined, after steadily rising for decades. The occurrence of a global pandemic during their final fertile years will likely dash any remaining hopes of catch-up. Whether or not one thinks the falling national birth rate is a problem, the fact that so many in this generation will not have the children they wanted is a great loss.

If there is good news here, it is that this explanation leaves open the possibility that the fertility decline of the last 13 years is not a “new normal.” Rather, it reflects the unique experience of the generation that has been called the unluckiest in U.S. history, and who saw their fertile years bookended by extraordinary and devastating global events. But even if this is the case, recessions and disasters will surely happen again. How can we help future generations have the children they want even if they, too, are unlucky?

Policies like a permanent child tax credit could help. There are stronger arguments for the credit than the hope that it will increase birth rates — it has the potential to reduce child poverty dramatically, and subsidizes investments in children while allowing families to choose what is best for them. But it could also provide support and reassurance that would allow young people to feel comfortable having children even when the circumstances are not perfect or uncertainty is high. A strong safety net weakens the effects of recessions on poor health and suicide, giving us reason to hope that it would do the same for fertility.

Gen Z is now in a position similar to that of their millennial elders — they are finishing school and entering the labor market during a severe economic downturn, with a confidence-shaking global pandemic thrown in. The scars they will bear from these events will be deep and long-lasting. A permanent child tax credit could help ensure that they can have the families they want as they heal.

Kasey Buckles is an associate professor of Economics at the University of Notre Dame, a research associate at the National Bureau of Economic Research, and a research fellow at the IZA Institute for Labor Economics.  She is a co-editor of the Journal of Policy Analysis and Management and a board member for the American Economic Association’s Committee on the Status of Women in the Economics Profession. Her research interests include the economics of the family, economic demography, and child health and well-being. Follow her on Twitter: @Kasey_Buckles