How the Falling Birth Rate in the U.S. Affects Business

Falling baby pandas (yes, we know it’s a stretch)

The birth rate in the United States is at the lowest ever recorded, according to new data released in November by the Pew Research Center.  This has important and long-term implications – political, social, and economic.  It also affects how marketers will try to sell their products and services.

The yearly number of births per 1000 women between 15 and 44 years old dropped to 64 births per 1000.  For comparison, the birth rate in the United States peaked in 1957, at 122.7 births per 1000.  When the economy was strong, the United States experienced a baby boom.  Now, as the economy limps along in its recovery, twenty-somethings may still delay becoming a parent due to high student loans or a difficult job market.  The steepest decline in birth rate was among Hispanic women, who have been hit particularly hard by the recession.

The United States has been the envy of the developed world because its birth rate has generally been high enough to replace people, due in large part to immigrants and their children.  The reason you want to have a stable or growing population is so the younger workers can support the older members of the population as they age.  Countries dealing with falling birth rates, like Japan, are very worried about how to tackle this social issue.

If Americans are having less babies, this means businesses that sell products or offer services catering to young families will have to adapt or risk losing revenue due to decreased number of babies being born.  Schools, childcare centers, and children-related businesses will need to adjust their game plan if their core consumers are less than before.

By contrast, companies that specialize in products or services catering to the elderly population are likely to do quite well.  Services would include healthcare, meal delivery, transportation, and more.

The average age of a working American will increase, and this will affect workplace dynamics.  Some worry about whether this will mean decreased productivity or innovation, without lots of energetic, young counterparts putting pressure from below.

Birth rates generally bounce back after economic downturns and there is no reason to expect that people won’t begin having babies at a higher rate.  Nevertheless, even a temporarily depressed birth rate can have significant consequences long-term.

For entrepreneurs, the falling birth rate offers opportunities and risks. Knowledge of this trend could prove powerful.

John Bradley Jackson
Director, Center for Entrepreneurship

[image: daodao]


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