Entitlements for seniors could face significant shortfalls in the near future if millennials don’t start having children. Since they’re still living at home working at low-paying jobs, it’s quite unlikely the trend will be reversed.
The lack of births among millennial women in the United States is turning heads. The Urban Institute released a report last month that found American millennial women in their 20s are the slowest to have children than any other generation in the nation’s history.
Ostensibly, birth rates for female millennials in their 20s dipped by 15 percent between 2007 and 2012. Career choices and fertility development aren’t the blame, but rather the U.S. economy and a paucity of marriages. Study authors do note, however, that women in their 20s could delay childbirth until their 30s.
The report warned that this could create both an economic and societal shift: “If these low birth rates to women in their twenties continue, the U.S. might eventually face the type of generational imbalance that currently characterizes Japan and some European countries, but it is too early to predict or worry about that eventuality.”
What many analysts and economists are ignoring is the effect it could have on entitlement programs. As it is widely known, entitlement programs for seniors, like Social Security and Medicare, is paid for by today’s generation of workers akin to a Ponzi scheme. Moreover, there are going to be more retirees than workers – back in the day the ratio was 32 workers for every retiree, but now it’s about three or two to one.
The paucity of births is equal to fewer than 500,000 kids each year. Compounded over the next several years then this could very well spell trouble for the financial stability of current and future entitlement programs, though they’re not very sound to begin with.
“For economic reasons – including cultivating the next generation of Americans to work and pay for the benefits of their many, many elders – we still need more babies,” the Washington Post‘s Catherine Rampell wrote in an op-ed. “Preferably, these will be babies born with wedlock, if for no other reason than the greater financial stability usually associated with having two married parents.”
Social Security is on the road to bankruptcy within the next two decades, while Medicare is scheduled to be insolvent in the coming decade (SEE: David Walker warns of Social Security, state pensions insolvency). Unless significant reforms are made in the same timespan then a great boom of births may not be enough to solve the problem.
In the end, we need more babies to pay for this Ponzi scheme. Get ready for the tumbling of this house of cards.
Eugene Patrick Devany says
This is another good reason to follow Bill Gates suggestion to replace the job killing payroll taxes with a better tax base such as a VAT.
irony says
funny you mention bill gate; he has an agenda to depopulate the world. The world will not :)
But america will (depopulate) and as a consequence sink the economy.
Becarefull what u wish for..your children & my children will pay the price.
Eugene Patrick Devany says
People with good jobs are more likely to make babies and raise them well.