During the two months I recently spent away from work to fulfill my demographic duty, I found that most of my conversations with visitors followed the same pattern. The talk quickly turned from the standard cooing over my baby girl to an intensive debate over parental leave: how much time and flexibility to grant new parents in the workforce, how to reconcile career ambitions with the responsibilities of human procreation, how to compensate for the crazy cost of child care and how to boost birthrates. As a white-collar, taxpaying working mother in the United States, I had become one of the statistics I used to pore over as an analyst pondering the implications of aging and shrinking populations.
But you don't have to be a parent — or an analyst, for that matter — to care about this stuff. In fact, a lot of the global angst today over stagnant economic growth, gender inequality and immigration policy has its roots in the demographic dilemma.
Babies in the Big Picture
For the first time in history, humankind has moved from experiencing high mortality rates and high birthrates to low mortality rates and low birthrates. Medical science has both reduced the rate of infant mortality and enabled humans to live longer. Women are no longer compelled to birth an average of four to seven children to ensure that at least some survive to sustain the family.
As economic opportunities shifted from the fields to the factories, the strains of city life made it simply too costly to raise large numbers of children. Urbanization also brought educational opportunities for women to discover life outside of an exclusively childbearing and homemaking role. The spread of oral contraceptives in the 1960s and 1970s gave women more control over if and when they started a family. And as more women have put off motherhood to attend university and enter the workforce, they not only have narrowed their fertility window, but they also increasingly have had to weigh the opportunity cost of leaving their jobs and devoting a big chunk of their savings to having children. There are no exceptions to this demographic model. Developed economies are already far along the path, while developing countries trail just a couple generations behind.
The Millennial Factor
The attitudes of younger generations toward childbearing, though less quantifiable, are also likely to contribute to the demographic decline. In the United States, a millennial couple saddled with student debt and living in a one-bedroom apartment in the city with few clear prospects for income growth may not see childbearing as logical or even responsible. A young European couple may not have the same debt burden that their American counterparts do, but the difficulty of finding well-paying jobs and affordable housing may likewise discourage them from having children.
From my vantage point in Austin, Texas — a millennial mecca — I've observed up close the polarizing effect of childbearing on society. Here, the social hierarchy of babies and dogs can flip 180 degrees from one ZIP code to the next, from babies in expensive European strollers on safe suburban sidewalks to bulldogs in sweaters lovingly schlepped around downtown boutiques. A friend recounted how a fellow mom's attempt to make a quick stop at a small gourmet market in the city with her two children and a bulky stroller in tow provoked a group of sneering, kombucha-armed patrons to yell out "BREEDER!" repeatedly until the frazzled woman stumbled back outside with her kids. The incident may be an extreme, albeit amusing, example of pedophobia. Nevertheless, I know plenty of young people who aren't overly concerned with marriage and babies; they pride themselves on living a more sustainable, modest life, and they believe that their disposable income is better spent on fancy foods and foreign travel than on diapers and day care.
The Global Cost of Falling Birthrates
Some argue that declining birthrates are a blessing for the globe, because fewer babies will free up more wealth and resources to be distributed among smaller populations. Then there are the demographic doomsdayers who argue that global catastrophe will ensue when falling birthrates diminish labor and capital, making life especially miserable for underdeveloped countries without the resources and infrastructure to cope with the transition. The reality is probably somewhere in between.
A population is considered stable when it has a total fertility rate (TFR) of just over 2, meaning couples are reproducing enough to replace themselves on Earth. When a country's TFR remains below 2 for an extended period of time, senior citizens start to outnumber babies. Over time, a low TFR means an ever-shrinking pool of taxpayers will carry an outsize tax burden on behalf of a state that needs to pay for pensions, health care and other entitlements for an ever-growing number of retirees. It means a smaller number of consumers to fuel the economy, since younger people and families spend more while older people tend to save more. It can also mean a smaller number of soldiers to sustain a country's national defense. Japan, with a TFR of 1.41, is learning these lessons firsthand; as the island nation has demonstrated, shaking off economic doldrums can be profoundly difficult when your population is rapidly aging and dwindling.
A Patriotic Duty to Get It On
Demographic decline is not a problem without solutions, though. Technological advancements in areas such as robotics, artificial intelligence and additive manufacturing offer one way to deal with the problem, compensating for smaller labor pools by vastly increasing productivity. As people live longer, moreover, governments can ease their own burdens by raising the retirement age and reducing pensions — that is, if they can withstand the political backlash that this kind of revision to the social contract invites. Countries in need of workers can open their borders to more immigrants, too. The United States, with a TFR of 1.8, France, whose TFR is 2.0, and Sweden, at 1.9, have all helped buoy their birthrates through more open immigration policies. But open borders often come with heavy political baggage, as the United States and countries throughout Europe can attest. Tolerance toward outsiders can quickly wane when the native population declines and begins to fear the dilution of its national character.
Governments have also tried to get to the source of the problem with a variety of wacky state schemes to convince couples of their patriotic duty to make whoopee. Russian President Vladimir Putin, for example, has arranged for the state to dole out prizes — including refrigerators, SUVs and direct cash deposits — if moms can manage to give birth on Russia Day, June 12. (An unofficial holiday, "Day of Conception," exactly nine months earlier encourages couples in Russia, where the TFR is 1.8, to procreate with the goal of a timely — and patriotic — delivery.) Other countries have unveiled similar initiatives with bizarre ad campaigns geared toward millennials. Young Danish couples are told to heed their civic duty and take romantic getaways to "Do It For Denmark," which has a TFR of 1.7; the campaign draws on the statistic that Danes reportedly have 46 percent more sex on vacation. If they end up having a baby nine months from the promotional period, they win a child-friendly vacation and baby supplies. In Singapore (TFR: 1.2), meanwhile, a promotional video encourages viewers to pop Mentos breath mints and "get a bao in the oven" on the state's National Night. South Korea, which also has a TFR of 1.2, doesn't have a full holiday, but it does let workers clock out early every third Wednesday of the month on "Family Day" with the hope that they will use that time to procreate.
The problem with these blunt baby-making schemes, however, is that they alone don't really do the trick to raise birthrates. If a couple is going to make a decision to have a baby, they need more than a romantic vacation or a day off work. The economics of childbearing need to make more sense.
The Politics of Parental Leave
The more potent and enduring solution lies in untangling the basic conundrum of how to get more women into the workforce without sacrificing birthrates in the process. Over the 20th century, female labor participation rose dramatically across the world thanks to medical advancements that helped to ease maternal health burdens; the introduction of infant formula, which helped mothers manage their schedules; and more advanced household appliances that gave women more time to step outside their traditional homemaking roles. Many developed countries have continued that trend this century by investing in parental leave policies to make it easier for women to have children and maintain a career.
But the United States has lagged behind. According to a 2010 study by Francine Blau and Lawrence Kahn of Cornell University, the United States dropped from having the sixth-highest female labor participation rate among 22 members of the Organization for Economic Cooperation and Development in 1990 to 17th place by 2010. A big part of the reason appears to lie in the fact that the United States is the only industrialized country in the world (and one of just three states overall, along with Papua New Guinea and Suriname) that does not mandate paid parental leave. Women in the United States working for companies with 50 or more employees are instead entitled to job protection and 12 weeks of unpaid leave under the Family and Medical Leave Act of 1993. Most women try to cobble together enough paid time off to enable them to recover from childbirth and to care for their newborns, and some may qualify to apply for short-term disability benefits to get them through. Still, unpaid or even partially paid leave can quickly become onerous. Muddling through maternity leave is especially arduous for the 42 percent of American mothers who are now their households' primary breadwinners, according to 2015 data from the Center for American Progress, and for the additional 22.4 percent who are co-breadwinners with their spouses.
And when the leave is over, the exorbitant cost of child care ends up driving many women out of the workforce. Plenty of working mothers decide they may be better off caring for their children at home than sacrificing the time with their kids only to see child care costs — which consume anywhere from 10 percent to one-quarter of household income in the United States — swallow their paychecks. Getting back into the workforce doesn't get any easier after several years of child-rearing. Re-sharpening skills and getting mind and body back into a productive work rhythm can take time, making it harder to compete for positions, let alone better pay.
Leaving Something to Be Desired
American mothers may eye with envy their European counterparts, who on average receive about one year of state-funded, paid maternity leave. Yet the picture on the other side of the Atlantic isn't as bright as it looks at first glance. The 2010 Cornell study found that countries with more extensive paid leave options tended to drive women into less demanding part-time work, while working American women were more likely to end up in higher-level and full-time positions. (The study's findings may also imply that many U.S. women geared toward leadership positions are deferring or opting out of having children in the interest of career.)
Furthermore, despite anti-discrimination laws protecting pregnant workers, lengthy paid leave policies often end up creating more obstacles for women in the workplace. When an expecting mother is off work for an extended period and her employer is still providing her partial or full pay, she is more likely to get sidelined from promotions or salary raises. At the same time, many private businesses struggle to absorb the cost of subsidizing workers on extended leave and may feel that they have little choice but to favor employees who are less likely to leave their managers in the lurch. Many women end up seeking part-time work and public sector jobs to guarantee more flexibility and ample benefits for family planning. But that solution, too, can be a cost to the country's economic health, diverting talent from more dynamic professions in the private sector while heavily indebted states struggle to shrink their bloated public sectors. Rigid and prolonged paid leave policies focused only on the mother may end up doing more harm than good.
The Two-Parent Solution
For the economics of childbearing to make sense in an age when working women are critical to economic growth, more rational and flexible policies designed to share responsibilities between parents are needed. If mothers and fathers share parental leave, female workers are less likely to be seen as liabilities. Along with more affordable child care options, tax incentives and sensible city planning for affordable housing, shared leave policies can help create a positive correlation between female labor participation and birthrates.
Sweden, for example, figured out through trial and error that it could significantly increase female participation in the workforce and incentivize fathers to participate in child care by providing a total of 480 days of paid leave to both parents, who can then decide how to divvy it up. For postnatal recovery and duties such as breastfeeding, the mother can logically stack her leave toward the beginning of the leave period, but she then can hand off the baton to her partner so she can return to work after a reasonable amount of time. Both parents get to be actively involved in their child's life without sacrificing their careers, the child gets the benefit of care from both parents during the most formative months, and businesses can avoid the costly process of replacing lost talent. Scandinavian countries also tend to spend more of their gross domestic product overall on public child care. Germany, Italy, Japan and South Korea, on the other hand, tend to spend more on extended paid leave, despite its drawbacks.
If countries can strike the right balance between parental leave and affordable child care, the economic reward for bringing more women into the workforce could be immense. A 2013 study from Goldman Sachs Group Inc. calculated that Japan, for example, could increase its GDP by 14 percent if it could boost the female employment rate, about 60 percent, to match the male employment rate, about 80 percent. The same study asserted that women accounted for 65 percent of consumer purchases worldwide, a figure that doubtless would grow as more women earn their own paychecks. Japanese Prime Minister Shinzo Abe has made "Womenomics" a priority for his government, but he will have to overcome significant cultural barriers to implement policies that encourage working women to have babies. Males still dominate Japanese business and political culture, and they often work late into the night to maintain the respect of their peers and senior management. It comes as little surprise, then, that only 2.63 percent of men in Japan actually use the paternity leave they receive under the law, according to the country's Health, Labor and Welfare Ministry.
A Bottom-Up Approach to Parental Leave in the U.S.
While other countries have been busy launching national campaigns to try to address the demographic problem, the United States has been largely absent from the debate. Its demographic outlook isn't dire relative to that of many of its high-income peers, but even so, the United States doesn't have much room for complacency. Politics aside, immigration flows from Mexico to the United States have dropped precipitously since the global financial crisis. A poll from the Pew Research Center, moreover, showed that birthrates have declined rapidly among immigrant mothers as they assimilate into urban American life. A less politically tolerant approach to immigration will only drive birthrates further down.
Let's be real, though. The United States is unlikely to develop the political cohesion and will to adopt a social democratic model like Sweden's to bring more women into the workforce and increase birthrates through federal policy. Instead, more progressive measures are likely to emerge at the corporate and state levels. California, New Jersey, Rhode Island and Massachusetts are the only U.S. states so far to provide paid parental leave. (Already, studies conducted in California and New Jersey have shown that the policies encourage more women to return to work instead of dropping out of the labor market.) Washington, D.C., will offer paid parental leave beginning in 2020, and legislation on the matter will take effect this year in New York. At the corporate level, U.S. tech companies such as Netflix, Etsy, Google, Amazon, Apple Inc., Adobe Systems Inc., Facebook and Twitter have set the trend for flexible leave policies. The companies, which tend to have younger people in management positions, see the need to retain valuable talent and have capitalized on tech's relative freedom from so-called industry standards on how to handle parental leave.
From my perspective as a female executive who is thrilled to have a baby girl and fortunate to have a supportive husband in her life, the right to build a fulfilling career without forsaking family life is sacrosanct. The years of academic and professional work that came before this world of Bumbos, Woombies and Boppies — yes, these are all real things — are as much a part of my identity as the years of motherhood ahead are. I refuse to give up that identity. But this story doesn't have to be personal to be relevant. Regardless of one's gender, sexual orientation or attitude toward kids, the economic implications of an aging and declining population are profound enough to give anyone pause.