Guest Post by Simon Black
Last month the US government’s National Vital Statistics System released data showing that the birth rate in the Land of the Free has dropped to -yet another- ALL TIME LOW.
It’s the FOURTH year in a row that the fertility rate has reached a record low in the US, meaning that the issue just keeps getting worse.
And it’s one that has enormous, long-term economic consequences.
If people are having fewer babies today, it means that, in the future, there will be fewer workers in the system paying taxes.
And the biggest loser in that scenario, by far, is Social Security.
The entire long-term viability of Social Security depends on having enough workers paying taxes to support the retirees who are currently receiving benefits.
They call this the worker-to-retiree ratio, and Social Security monitors this very closely.
Social Security’s administrators project that they need a worker-to-retiree ratio of at least 2.8 in order to keep the system functioning. If the ratio drops below 2.8, there simply won’t be enough workers paying taxes to support the monthly benefits for current retirees.
Clearly this system requires steadily rising population.
If you have 1 retiree today, that means there should be at least 2.8 people paying in to the system.
A generation from now, those 2.8 people will be retired, requiring at least 7.84 (2.8 * 2.8) workers paying in to the system. A generation later, those 7.84 people will be retired, requiring 21.95 (7.84 * 2.8) workers paying into the system.
It’s easy to see how this can get totally out of control within just a few generations.
This brings us back to the central problem: birth rate.
Back in the 1960s, the average woman would have nearly 4.0 children in her lifetime.
But this rate has been steadily declining for decades. By 2007 it had fallen to 2.12. And it has fallen every year since then, now down to 1.73.
A fertility rate of 1.73 is below what demographers consider the ‘population replacement level,’ meaning that there are more deaths than births.
More importantly, this long-term decline in the fertility rate has had a slow, damaging effect on the worker-to-retiree ratio.
Back in 1960 there were 5.1 workers for every retiree according to Social Security’s own data. Baby boomers were just starting to join the work force and there weren’t too many people collecting Social Security benefits yet.
By 1990 the ratio had fallen to 3.4 workers for every retiree. That was a lot lower than in 1960, but still sufficient to keep Social Security running.
By 2012, the ratio had already fallen to the minimum 2.8. And given that the US fertility rate continues to decline, the worker-to-retiree ratio is also going to keep falling.
Baby boomers are retiring by the tens of thousands. People are living longer than ever. And there are fewer people being born to pay taxes into the system in the future.
Social Security knows that the fertility rate is critical to its program, and the statistic factors heavily into their long-term projections.
According to its most recent annual report, Social Security’s ‘intermediate’ scenario (i.e. its conservative, base-case projection) assumes a fertility rate of 2.0.
Again, the actual fertility rate in the US is now just 1.73… FAR below Social Security’s assumption. Moreover, the 30 year average fertility rate in the US is around 1.9, which is still below Social Security’s assumption.
Now, you might be thinking that immigration should pick up the slack. As foreigners move to the US, they’ll join the work force and pay taxes into the system, improving the worker-to-retiree ratio.That’s true in theory. But you may be surprised to learn that the US “net migration rate” has also been falling for decades.
After peaking around 2000, net migration rate in the US has fallen by more than half.
And the Census Bureau announced in late December that just 595,000 net migrants moved to the US in 2019; that’s the fewest net migrants of the entire decade, and a continuation of this trend of declining migrants.
This is another huge problem for Social Security; the program’s base-case scenario assumes that net migration in the US will be nearly 1.3 million people each year.
Yet the average net migration over the past decade was just 840,000… and the rate continues to decline.
You can see the problem here: many of Social Security’s most critical assumptions are totally off-base.
Their assumption about the nation’s fertility rate is far rosier than reality. Their assumption about the net migration rate is far more optimistic than reality.
And with some of the most critical assumptions so off-base, it’s difficult to see how they’re going to meet their projections.
Oh, remember that Social Security’s base-case projection is that its primary trust funds will run out of money in 2035… and that the program will be underfunded by trillions of dollars.
Yet even this dismal forecast is based on highly flawed assumptions… so the reality may be even worse.
This is a global problem, by the way.
Japan and Europe are in the same boat with their fertility rates, and populations in many developed nations are declining. The median age in Japan is nearly 50, and the country sells more adult diapers than baby diapers.
In Italy, deaths exceeded births in 2019 by a whopping 212,000… the biggest figure since World War I ravaged the continent. Even the global average fertility rate has fallen by half since 1960.
These are all critical challenges for pension and social security funds.
I’ve said it before: there is no magic wand to fix this. No politician can sprinkle pixie dust on their pension programs and miraculously make them solvent again. It’s simple arithmetic.
But if you rely on yourself, you can solve this problem with a bit of discipline and planning.
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Social Security is a Ponzi Scheme. Anyone looking at it seriously has to admit as much.
The gov’t created it to cheat the population and therefore it’s been very successful. It’s time is nearing an end however, and it should be left to die off instead of enslaving future generations to pay for a failed policy.
That was the plan from the get go.
Its not the fertility rate. it’s that people think or know that they can’t afford to have children. also, we have a large number of people who don’t want the responsibility or that kids will get in the way of having a good time.
Consider that…. the fact that there is soy in everything you buy food wise is causing a fertility problem. Soy feminizes males.
SS is a Ponzi Scheme that is rapidly reaching its apex. It was designed as a wealth transfer vehicle and worked quite well for many, many years. As populations lived longer and longer, Congress refused to advance the retirement age, until it was almost too late. Of course, when they raised the age for full retirement benefits, they left the early retirement age the same, only reducing the benefits.
I suspect the 1.73 birth rate is even worse, as far as SS goes. The young people with educations and good earning potential are the ones not having children or having just 1. It is the very poor and the uneducated migrants who are making up the majority of the births. These people, if they are even paying into SS, are contributing at a much lower rate than most boomers did while working.
You reap what you sow.
And the biggest winners are labor and the environment. Supply and demand drives wages upward and fewer people means less sprawl. All would be fine but the ponzi scheme backers want the debt and death paradigm to continue.
Government must start by respecting the intent of the 16th Amendment, which was to be a relatively small tax on ONLY the wealthiest incomes. Ordinary workers were never intended to have to pay any sort of income or payroll tax.
If the force and effect of our laws is not what the writers of the Constitution intended, we no longer have true representative government.
People are having too few children in part because their financial security level is being ripped away from them by the wrongful government resort to income taxation authority.
The power to tax was NOT ever intended to be the power to destroy. Certainly not the power to destroy the country by crippling the family.
Just as the Second Amendment is not absolute (for instance, it does not allow individuals to own nuclear weapons), so also the 16th Amendment is not absolute– it does not allow the government to financially cripple families or even to prevent families from having a sufficient financial comfort level.
Looks like we need a good plague to wipe out most of the over 60’s, and a nice war to produce another baby boom. That will take care of it…Right?
The math described in this article is often called a Ponzi Scheme. It is illegal for anybody to organize a Ponzi Scheme except for the government.
Were it not for the Government’s Ponzi Scheme, there would be no need to worry about birthrates. There are plenty of people on earth so there is little need to worry that we will be going extinct anytime soon. It is probably good for the environment if the population is reduced in the future. Just about every social and environmental problem gets easier to solve with less rather than more people. They are starting to talk about the need for a reservation system to visit the National Parks. America was a nicer place when we had 200 million people and it has become a nasty place with 330 million people and we are headed for 500 million. We will be at each other’s throats! Dense populations are not compatible with freedom. It is why the liberal policies which probably make sense in highly urbanized areas look like fascism to rural people.
The answer is to fix the Ponzi Scheme! One good idea would be to largely privatize retirement savings. They could still be mandatory but the government would not be in charge of managing the funds and could not borrow from them either (unless the private individual decided to invest in Treasury Bills or Savings Bonds). If all of the money that people had paid into Social Security had been instead invested in the private economy, retirees would be overflowing with money when they reached retirement age.
Fuck that, I am 60, have been paying in, and want my fucking money. If it runs out before I die, then fuck you, I want mine.
Men are tired of females using men to impregnate themselves and then living off their incomes for many years. I’d never impregnate a female, it’s all downside no upside for me and that IS the bottom line for men.
Do not, by any circumstance. marry an American woman. You’ll regret it. Find yourself someone who appreciates your maleness.
I’ve been married to an American white woman for 30 years and who is awesome and has had two sons of mine. Your post seems faggoty.
And things are the same today, compared to 30 years ago?
This article left out the part about brown folks breeding like rabbits and white folks not breeding at all.
So, white folks are about to be the minority. And brown folks keep streaming in by the millions. That is an outcome both undesirable and inevitable.
At least Oz is too far away for them to swim to.
sad but true.