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As birth rates around the world continue to shrink, world governments are spending billions of dollars to combat this. Yet, there has been little progress in slowing down the continued shrinking birthrates through Europe, Asia, and the United States. This has caused worry in governments around the world about the increased burdens on their economies and the lack of workers needed.
The worldwide birth rate has fallen from 5.1 births per woman to 2.4 in the last 50 years. Some countries, such as Italy, South Korea, and Japan, are projected to see their populations drop by half in the next 75 years. In 2020, partly due to the impacts of COVID-19, South Korea had the lowest birth rate in a major economy ever, .84 births per woman. Also, in 2020, the United States recorded its lowest population growth of .35%, and removing the impact of immigration, the population was below the replacement rate.
Even Hungary and Norway, the two countries in Europe spending the most on supporting families, have seen birth rates below the replacement rate at 1.5 and 1.4 children per woman, respectively. Both Hungary and Norway spend over 3% of their GDP on supporting families and increasing birth rates, which is more than they spend on their militaries; in comparison, the U.S. only spends 1% of its GDP on supporting families. There are several different strategies countries have implemented to try and increase their birth rates, including subsidized loans, paid parental leave, government-supported child care, tax credits for having children, and exemptions from income tax.
One of the reasons people are delaying having kids or foregoing altogether is the opportunity cost of having kids. As more women enter the workforce, couples are delaying having children. While the costs of having children have also gone up, the cost of child care has increased by 30% in the last 10 years and 200% in the last 30 years. It has been estimated that 50% of the population lives in a childcare desert, where there is insufficient supply to meet the area's demand.
As the birth rate in a country decreases, the average age of the population increases, especially as people live longer. As the population gets older, a smaller percentage of the population is working, which is the main reason for concern for global governments. The dependency ratio, which is the ratio of people who are 65+ to people between the ages 25-65, has risen to a new high of almost 70% in the United States. This represents a rise of 97% from 1950, which means there are now twice as many 65+ people relative to the working population as there were 70 years ago. This puts more stress on the social security system, as there are more people receiving social security but fewer people paying into it. According to the Social Security Association, by 2080, the working-class population will shrink to 54% while the population receiving benefits will double.
With limited options for fixing and alleviating the stress on the social security system, such as decreasing benefits, increasing benefit age, or increasing taxes, the decreasing birth rate is having an adverse effect on social security benefits in the United States.
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