Immigrants are the only hope for America’s shrinking workforce

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Published: May 22, 2019 12:06:14 AM

For three decades, Asia’s most successful economies have experimented with a range of policies to reverse far more serious declines in fertility.

Immigrants, American women, Social Security, healthcare, immigration laws, opinion newsNotably, more than half of these immigrants are in their 20s and 30s—prime working years. (Reuters)

By Adam Minter

In 2018, American women gave birth to the fewest number of children since 1986, according to US government data released last week. The decline since 2007, when a record 4.2 million children were born, has been precipitous. Births have declined every year since then but one, falling to 3.8 million. That amounts to a fertility rate of 1.7 children per American woman in her lifetime—well below the rate of 2.1 necessary to maintain a stable population.

The decline poses a long-term problem for an aging country in which more and more citizens are dependent upon Social Security, government healthcare and a shrinking number of workers to fund both. But the US is hardly unique. For three decades, Asia’s most successful economies have experimented with a range of policies to reverse far more serious declines in fertility. What they’ve learned is that the only sure way to reverse the trend is to do what the US has historically done better than virtually any other nation on earth: accept immigrants.

For decades, demographers and economists have known that rising incomes are closely related to declining birth rates. The reasons are several, and generally worth celebrating. In developing countries, the rates of female education and access to contraceptives tend to be lower. As incomes rise, women acquire options outside of the home and greater control of their reproductive rights. Affluent singles put off marriage and children during prime childbearing years.

Meanwhile, in large cities, growing families face the burden of high housing prices and shrinking home sizes. Those who have families must find the resources to pay for childcare or sacrifice career options. Longer-term, they face the burden of expensive school and university fees.

As a result, fertility declines are common across the developed world. Nowhere has the shift been more dramatic than in Asia. For example, Japan’s fertility rate has declined from a post-World War II high of 4.4 to around 1.4 now. In Singapore, the fertility rate dipped below replacement level in the mid-1970s and now stands at around 1.2. And in South Korea, the fertility rate has fallen from over 6 in 1960 to 0.95 (likely the world’s lowest) during the third quarter of 2018.

In each of these countries, the declines have for decades been a matter of intense concern and policy experimentation. Governments in Asia first focused on pro-marriage and pro-natalist policies designed to counter what were thought to be the factors inhibiting couples from marrying and having children.

Singapore’s efforts on this front date back to 1984, when the government established a matchmaking agency for university graduates. Over the years, official initiatives have expanded to include paying cash bonuses to families for having children (the more kids, the more lucrative), generous maternity and paternity leave policies, childcare subsidies and other benefits. In Japan, pro-natalist policies were first introduced in 1991 and many go further than Singapore’s; for instance, men can qualify for a year of partially paid paternity leave. And in South Korea, spending on pro-natalist policies adds up to around half of the defense budget.

There is much to recommend such policies. Among other benefits, they boost gender equity at home and in the workplace. For those reasons alone, they’re worth considering in the US, too. But the fact is that they have failed to meaningfully increase fertility rates.

As a result, Asia’s wealthiest economies are increasingly turning to immigration as a short and long-term means of addressing worker shortages. It’s not easy. Singapore’s government suffered a backlash after the foreign-born population on the tiny island rose too quickly. Japan and South Korea are much more homogenous, and home to large constituencies that would prefer they remain that way. But the long-term demographic outlook for both countries is so dire that leaders are finally getting traction on reforms to allow more outsiders.

In Japan, where the population is shrinking, immigration increased for the sixth straight year in 2018; foreigners now account for 1.76% of the population. Notably, more than half of these immigrants are in their 20s and 30s—prime working years. Meanwhile, in historically xenophobic South Korea, the government has spent handsomely on programs to promote multiculturalism since the mid-2000s, while opening the doors to immigrants. The results have been impressive: Between 2006 and 2016, the foreign-born population grew from 536,000 to more than 2 million, and by 2020 it’s estimated that one-third of all children born in South Korea will have a foreign-born parent.

The fertility decline in the US isn’t as steep as in Asia and concern—especially in the current administration—isn’t nearly as high. But, over the long-term, the US will need to address its shrinking workforce. Rather than counting on getting a different result from the same policies Asian countries have already tried, America should simply do what it’s always done to rejuvenate its population and economy: Open the doors to young and skilled newcomers. Until some country shows otherwise, immigration remains the most effective means of reversing a baby bust.

(This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners)

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