Home    News & Publications    The Impact Of Falling Birth Rates

The Impact Of Falling Birth Rates

June 20, 2024

One of the ways to bring home the impact of declining birth rates is to bring up the topic of Social Security. One of the reasons for the current difficulties is there aren’t enough workers paying into the system to support those now collecting benefits.

According to the Social Security Administration:
1950: 16 workers per person receiving benefits (beneficiary)
1960: 5 workers per beneficiary
Today: 3 workers per beneficiary
2025: 2.3 workers per beneficiary

This is the result of falling birth rates which reduces the number in the labor force.

In a New York Times article, “There Aren’t Enough Babies, Alarming the Whole World,” what we see in the U.S. is occurring worldwide. We are on the brink of not replacing the population that dies. As you can see by the numbers above, this decline happened quickly.

Even India, the most populous country in the world has a fertility rate below replacement. The impact on society is significant. Japanese Prime Minister Fumio Kishida said, the “collapse” of their birth rate “left it standing on the verge of whether we can continue to function as a society.”

Italian Prime Minister Giorgia Meloni has set a priority of raising the country’s “demographic GDP” though no details were provided.

With the falling birth rates, labor shortages will get worse because of the smaller workforce. A smaller workforce limits economic growth. At the same time, the older generation that still lives uses more of the healthcare and retirement system resources.

While we worry about AI, technology, robotics, etc. taking away jobs, if you add the shrinking workforce from low birth rates, you wonder if the two can live symbiotically. Of course, that also assumes, those of workforce age have the skills to fill the jobs available. Another plug for our previous article on reskilling.

SUBSCRIBE TO NEWSLETTER

Receive the Financial Connections quarterly newsletter

ABOUT FEE-ONLY SERVICES

No Hidden Costs. No Referral Fees. No Commissions.

As a fiduciary, we put our clients' interests first. Our compensation comes exclusively from you. If we don't directly provide a particular service, we can serve as a resource for referrals to other professionals.

Download the fee schedule Download Disclosure Form ADV Parts 2 & 3