Steven Malanga joins Brian C. Anderson to discuss states’ varying birth rates.
Audio Transcript
Brian Anderson: Welcome back to the 10 Blocks podcast. This is Brian Anderson, the editor of City Journal. Joining me on the show today is Steven Malanga. Steve’s been on the show a number of times. He’s a senior fellow at the Manhattan Institute, and City Journal’s senior editor. He writes about state and local governance, economic policy, and many other matters ranging from pension funding to pot legalization. His work has been featured in many outlets along with City Journal, including the Wall Street Journal, where he appears regularly, the New York Times and the Los Angeles Times. Today we’re going to be discussing some of his recent writing, including his piece, “Baby Blues,” which appears in our spring issue, and looks at American states’ varying birth rates and their relationship to politics. So Steve, thanks very much as always for joining us.
Steve Malanga: Well, thank you for having me.
Brian Anderson: So as you note, American fertility, which has been not particularly robust, plummeted during Covid, and it’s continued to decline as we’ve come out of the pandemic, or at least continued to be pretty bad. Last year, the U.S. birth rate reached, in fact, an all-time low of 1.62 children per women, and that’s well below what demographers call a replacement rate, which is 2.1, which means you have 2.1 children. You note in your essay that individual states’ fertility rates follow a pattern, and this is what is kind of eye-opening. Those currently with the highest birth rates are overwhelmingly Republican, and those with the lowest are disproportionately Democrat. So I wonder, what does that mean? Can you describe the correspondence between states’ birth rates and their political affiliations, and is that something new or has that been something that has persisted across a period of time?
Steve Malanga: Yeah, I think the first thing we need to say is that the reason we are interested and concerned about this is that around the world, we have seen other nations for years, every place ranging from Japan and South Korea to Italy and Spain, go below what’s known as replacement level. What that means is that when you’re below replacement level in terms of fertility, that one generation is smaller than the previous one. And these successive rounds of generations being smaller and smaller leads to an aging population, leads to fewer workers, more older people who need to be supported, less productivity within a society.
And the United States for a very long time managed to maintain birth rates that were at or above replacement level, even while other industrialized prosperous nations were declining. But in the last 10 years or so, we too have dipped below this level, and that is going to lead to a lot of different societal challenges, including things like supporting Social Security and Medicare. When you hear about these kinds of crises, one of the reasons is because we’re going to have fewer workers contributing to a system, and more retired people. So this is the challenge.
Now around the world, countries have tried to reverse this with government policies, and no one seems to quite know what it is that drives this decline in fertility rates. One thing that struck me that I almost never see discussed, which might illuminate something about how this situation has developed, is that fertility rates among the states vary greatly. Varies from about replacement level in some places, like in South Dakota, which is near two children per woman in average, all the way down to 1.27 in a place like Vermont. So, there are wide divergences. It’s not like it’s the same number around the country. And the thing that struck me as I looked over the list of rates by states is that the top states are overwhelmingly Republican and the bottom states are overwhelmingly Democratic.
Only one Republican-leaning state, Nevada, is in the bottom 10. And essentially all of the top 10 are Republican-leaning. And on average, Republican states have above average or above the U.S. average rates, much closer to replacement, and Democratic states have much lower rates. And so, I began asking questions about what other characteristics these states have based on just who lives there, and maybe their political philosophy, which might kind of illuminate these particular differences. And among the many things that demographers look at to try to understand why rates are declining in some places is one obvious thing is marriage rates. Marriage rates in general in industrialized countries are declining. And even though people do today have children outside of marriage, married people do tend to have more children, they stay together longer. They also tend to be more stable in raising children. And so, when you have a decline in marriage rates, that’s one thing that seems to influence rates too.
And here again, if you look at a map, if you look at a color-coded map of marriage rates in the United States, it would look very much like a color-coded map of fertility rates in the United States. The Republican states overwhelmingly have the highest rates of marriage. Democratic states overwhelmingly have the lowest rates of marriage and the lowest rates of people who’ve never been married. So there’s one kind of insight. In other words, that’s not shocking. It shouldn’t be shocking to people. But we do live in a modern world where fewer people are getting married, and that seems to be influencing fertility rates. There are other things we can talk about, like the price of housing, which some economists say is influencing how many children people tend to have. And that too, as we’ve written many times in City Journal, is overwhelmingly higher in Democratic states, which tend to regulate land and land use and environmental use much more than it is in Republican states. So there are a number of factors that I talked about here.
Brian Anderson: I guess that that really does make sense that if it costs more to put a roof over your head and you have constraints in terms of size in terms of where you’re living, that that’s going to affect how you think about having children.
Steve Malanga: Unfortunately, yeah. Unfortunately.
Brian Anderson: And yeah, so the housing, what many people have described as a housing crisis across the country with just not enough supply is probably contributing here to another crisis, which is this collapse in our replacement rate or fertility rate. What about you also note that the way states responded to Covid may have played a role in driving down the fertility rate?
Steve Malanga: Sure. See, the thing is, another thing if you look at fertility rates throughout the 20th century, it’s a fascinating chart worldwide or countrywide, another thing that influences fertility rate is what I would call world crises. Not surprisingly, fertility rates go down during world wars. They went down during the Depression, they went down in the ‘70s in the United States and worldwide when we had a lot of economic turmoil revolving around not only war, but also the—
Brian Anderson: Inflation.
Steve Malanga: Yeah, the inflation and the rising price of oil. So Covid certainly qualifies as a worldwide crisis. And in the United States, again, because of our kind of decentralized federalist government where the states make individual decisions even though we have national policies, the decisions on Covid and everything from masking to economic shutdowns to opening or closing schools, all of those decisions varied greatly by states. And this is something else that City Journal has written a lot about. Anyone listening who wants to read about that can read some of the pieces we’ve done just about the differences in the way states performed in terms of keeping schools open and not keeping schools open.
And any number of studies have shown, not surprisingly, that the Republican states overwhelmingly opened their economies sooner, and as a result, they recovered economically sooner. They also opened their schools sooner, and as we’ve also written, some of the Democratic states that kept their schools closed, parents were extremely angry and there was a lot of learning loss and also even just kids facing mental health problems. So again, there’s another correlation is that we saw fertility rates go way down during Covid, and then we saw responses to Covid vary dramatically and be much more positive in Republican states. So it perhaps isn’t shocking, then, that that was another response driven in part by ideology or just government management, which may have influenced this tremendous drop in fertility rates that we’ve seen and also how it’s different. And that’s the other thing.
The other thing that I found that is really fascinating is that over time, some states’ fertility rates have changed much more than others, and you wonder, too, if this is about the politics of the states. Let me give you a really good example. In the early 1990s, California had the third-highest fertility rate in the country at basically 2.5. In that time, from the early 1990s to today, California’s fertility rate has dropped the most of any state. It’s now down to way below average, 1.47. So it’s dropped literally like a whole child per woman. And so California went from having the third-highest fertility rate in the country 30 years ago to now having one of the 10 lowest. And that’s a really dramatic change for a state that itself has changed a lot politically, has changed a lot economically in that time. So now you can ask yourself the question, well, what is it about what’s changed in California that among all the things that it’s driven, it’s also driven fertility rates down so much? So it’s another kind of fascinating observation when you look at the data.
Brian Anderson: Well, it does open up a lot of policy questions, and if you look at fertility rates globally, many low-birth-rate countries have tried to improve the situation to boost births with policies like mandating maternity leave, offering tax breaks to families that have more children, subsidizing child care. But these don’t seem to have had a huge effect on fertility rates. So I wonder, these are all sort of affirmative steps. How might American states generally, or America as a country, affect its fertility rate overall? One thing certainly would help, I think, and is implied by what we were talking about a moment ago, is a reduction in the cost of housing. But what other things might be done?
Steve Malanga: One of the most interesting thing is that other countries, European countries, particularly the northern European countries and also Asian countries like Japan and South Korea, have a lot of experience because they’ve been experiencing extreme birth declines for decades. There’s actually an interesting story that I just read about in Foreign Policy magazine about the implications in East Asia in China and Japan, but in terms of just their global influence because their birth rate is now in those countries down below one child per women. So it’s really collapsing and it’s creating a lot of social havoc, which is going to slowly materialize.
Very few policies seem to have mattered, and I would suggest that the reason most of these policies are kind of like economic in nature, and while the economy matters, what happens is underlying this change is also a cultural change that comes about in many of these societies as people become wealthier. And so these so-called pro-natal policies aren’t strong enough to reverse that. What I would say, and what I say in this piece, is that the first thing you have to do as government is do no harm. Well, what do we mean by that? Well, there’s a lot of work and some of this I’ve written about recently, including for instance in a piece I did on home ownership rates a couple of issues ago, there’s a lot of research that says that American tax policy and American social welfare policy has actually discouraged marriage. So the first thing we want to do is not have social policy or tax policy that discourages marriage. That’s got to be like the starting point.
Secondly, as you say, we have written and we’re writing a lot on housing. Part of what has happened in America, which people don’t seem to understand, is that after the great housing collapse of 2008, 2009, housing production in America just fell off a table. It declined annually by more than half. And so we’re short millions of units of housing, and that’s the primary reason why housing costs are so high. Along with that is that many, many states and many localities have enacted a lot of restrictions to building housing, which makes it harder and harder to do that, and more expensive to do that, including environmental restrictions and restrictions to keep out certain kinds of housing because people don’t like those kinds of housing. And I actually have a piece in this current issue about efforts to have government step in and build this housing that’s missing, and it’s so expensive that it’s just counterproductive.
But the other point is we can’t discourage people from having bigger families because we keep putting in place more and more regulations. So the second thing is, again, do no harm on things like housing. Those have to be the starting point. There’s very little evidence that some of these more proactive policies work, and part of the reason may be that in a lot of industrialized countries while they put those policies in place, those are the countries that also have the same kind of growing numbers of restrictions, more government, more regulations, which drive up the cost just of sending kids to college, of schooling. Property taxes are a huge problem in many states. When you add that to the mortgage, that’s another reason that people downsize, if you will, have smaller living quarters that discourages an extra child which you might or might not have had. So the first thing before we get to talking about what kind of natalist policies works is do no harm.
Brian Anderson: It’s disincentivizing.
Steve Malanga: Exactly. And the closer you look, the more ways you see that that’s what we’re doing.
Brian Anderson: I wonder if we could just shift to another demographic that you’ve covered, which is the baby boomers. And for decades, the press, the media has warned that the boomers have not been saving enough to enjoy a comfortable retirement, and policymakers in turn have advocated expanding public welfare programs to make up for the supposed retirement shortfall. Yet, as you’ve written in other pieces, this is the beat you cover, the baby boomers are in fact one of the richest generations in history. They own, I think, upward of $80 trillion in assets. So is there really a retirement crisis, or is that kind of a myth? And this really immense wealth of the baby boomer generation, what does it tell us about preparing for retirement?
Steve Malanga: Well, I have to say one of the reasons I was, I guess, inspired to write this is that I can remember as a journalist, as a financial journalist, going all the way back to the late 1980s and the 1990s, it was the staple of journalism to write about the retirement crisis of Americans aren’t saving enough. In particular, there was a lot during the era when we made this transition in the private sector from defined-benefit pension plans, which went out of fashion because they became so expensive, again, based on well-intentioned government regulations, which attempted to protect these kinds of pensions made them so expensive that everyone shifted to 401(k)s. And then there was just all this stuff about how unfair these things were, and they weren’t going to answer the needs of the generation.
And literally in this piece that I wrote, I literally identified thousands of stories about the retirement crisis that baby boomers faced and how it was going to drag America down. Well, lo and behold, in the last two years or three years, really during Covid and during the run-up of stocks during Covid, we’re now reading about how this is the wealthiest generation in history, and they’re estimated to have almost $80 trillion in assets. Now, it’s actually not a mystery because as we’ve written over the years about the problems with defined-benefit pension plans as they still exist in the public sector, they’re underfunded, they’re costing the taxpayers hundreds of billions of dollars. As we’ve written about those, the response was always, “No, no, no,” the public sector’s response was, “We’re leading the way. We have to shift everybody back to these defined pension plans.”
Well, it turns out that the 401(k)s of the baby boomers are just overflowing with cash, and now the stories are all hilariously, “What are baby boomers going to do with their money? And they’re not going to be able to spend it all and they’re going to give it all to their kids. It’s going to be the greatest wealth transfer in history.” Now, what I find so funny reading those stories is they’re completely without context. None of them mentions that for decades, all we talked about was how the baby boomers weren’t saving enough. So in a way, if you read my story on this, it’s almost a media story, and it was meant to be a media story because the media, of course, loves they love crying crisis because I think they get people to read those kinds of things.
But the lack of context here where we went from using what was supposed to be a retirement crisis for the baby boomers to deride the 401(k) plan, which I can tell you personally, because I started off working for a company that had an old-fashioned defined-benefit plan, and when I left that company after a number of years, the amount of money I got to take with me was very small, because a defined benefit plan only pays off if you stay until the end at one company. Then you get the riches, and you get the guaranteed income. But the portability of 401(k)s is part of what has made this generation of baby boomers so wealthy.
So what’s happening now is essentially we’re writing one set of stories and forgetting what we said beforehand. And that’s important because if you really want to understand what happened, you have to talk about what people were expecting to happen and why it didn’t happen, and that’s crucial to understanding the riches that the baby boomers now have. Now, some people, like a story like this, they point out that a certain percentage of people don’t have enough money, and there’s 20 something percent they’re just going to be existing on Social Security. Of course, that’s going to be the case.
There’s no retirement program, there’s no savings program that can guarantee the same income for everybody and can guarantee that everybody’s going to be safe. And that’s part of one’s personal responsibility. And some people, through no fault of their own, maybe through illness or whatever, will fall through the cracks. We do have a social safety net for them, but in general, $80 trillion of money that nobody anticipated that baby boomers would have is something that was completely unexpected. And now we’re writing about it as if we knew all along it was going to happen and we’re even now proposing, “Let’s take some of this money away from them, let’s keep that money to make government even bigger.”
Brian Anderson: This is a pattern that shows up sometimes, this kind of amnesia in the way we cover certain controversies and certain public policy issues. By the way, that piece, which appeared in January, that we’re talking about right now is called “The Retirement Crisis That Wasn’t,” and I think you’ve captured the essence of it in your comments here, Steve.
Thanks very much as always to Steve Malanga. We’ve been talking about two of his recent pieces, “Baby Blues,” which is in our spring issue, and then this earlier piece, which you can find on our website, “The Retirement Crisis That Wasn’t.” Don’t forget to check out Steve Malanga’s work on the City Journal website, www.city-journal.org. We’ll link to his author page in the description. You can find those pieces we’ve discussed today and a lot more there. You can also find City Journal on X. It’s @CityJournal and on Instagram @CityJournal_MI. As usual, if you like what you’ve heard on the podcast, please give us a five-star rating on iTunes. Steve Malanga, always great to talk with you.
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