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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Today’s Policy Agenda: Birth Rates Are Down Because Couples Can’t Afford Parenthood



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Paul Ryan is about to release a comprehensive, deficit-neutral anti-poverty proposal.

Paul Ryan is set to unveil a new plan for fighting poverty at the American Enterprise Institute on Thursday, and Zachary Goldfarb of the Washington Post has a sneak peak:

Ryan will announce the new proposal Thursday amid a battery of ideas aimed at reshaping the GOP as a party seeking to boost the fortunes of the poor and working class. He will endorse an expansion of a tax-credit for the working poor similar to one that President Obama has also proposed and other measures to overhaul education and criminal justice programs . . .

Ryan is not proposing any spending cuts, and he will pledge that the resources given to the state will equal what it would have received under the current law. “It is important to note that this is not a budget-cutting exercise—this is a reform proposal,” according to a Ryan document obtained by The Post. The new state grant will be called an “Opportunity Grant.” The document says state initiatives would be subject to accountability standards.

It will be exciting to see what Ryan puts forward after over a year of fleshing out the issue, and expanding the EITC seems like a great idea. But the most important part of the story is the quote from his aide that Ryan’s approach to the issue doesn’t emphasize finding net budgetary savings. Especially when the drivers of our long-term fiscal imbalance are health and old-age entitlement programs, conservatives don’t need to fight for cuts to our safety net. But by applying conservative principles to the problems facing the poor, policymakers could certainly use the same amount of resources to achieve much better results.

Technological change is terminating some jobs.

For the Upshot, Claire Cain Miller reviews a new study of the effects of technological change on the labor market.

The American work force has been growing polarized for decades. On one end, there are highly skilled jobs like writing software or performing surgery, and on the other are service jobs like child care and cutting hair. The jobs in the middle, meanwhile, such as factory work, sales and bookkeeping, are shrinking – one of the reasons for the economy’s slow climb out of the recession.

Where did those jobs go? Part of the answer lies in Silicon Valley. It is no coincidence that many of those jobs entail the same repetitive tasks that computers, robots and other machines are uniquely suited to perform, from robots loading conveyor belts in factories to Kayak.com selling airline tickets.

A new working paper from the National Bureau of Economic Research shows how the recession accelerated the displacement of these midwage jobs. As technology now encroaches on jobs that people assumed would always belong- to humans, it is useful to consider those most affected by the job displacement so far: the young, the less educated and men.

This is a trend at the heart of the explicitly pro-work reform conservative agenda. In the long-run, technological change may create as many new jobs as it destroys and will certainly make us wealthier, but for now, it seems to be making it more difficult for young, unskilled men to find jobs and get access to the plethora of benefits work can bring to their lives. Reform conservatives argue that because work’s decline can wreck the economic lives of so many, society needs to push back against this trend, and they have a number of proposals intended to do so.

Inflation is not rising.

In the Wall Street Journal, Ben Leubsdorf sums up the latest Consumer Price Index numbers.

Consumer prices continued to rise in June but decelerated outside a spike in gasoline costs, a sign of firming—but not runaway—inflationary pressures that could ease pressure on Federal Reserve officials as they debate when to raise interest rates…

The CPI was up 2.1% in June from a year earlier, unchanged from May’s annual rise. The index excluding food and energy rose 1.9% in June from a year earlier, slipping from May’s 2% annual increase.

‘The June CPI report won’t be of much use to those pushing stories of rapidly accelerating inflation,’ Regions FinancialCorp. economist Richard Moody said in a note to clients. He said inflation ‘seems more likely to settle in at around’ the 2% mark ‘than it does to break out to the upside.’…

The Fed has set an annual inflation goal of 2%. But it prefers to look at a different gauge, the Commerce Department’s personal consumption expenditures price index, which typically runs below the CPI’s level. In May, the PCE price index was up 1.8% from a year earlier and rose 1.5% excluding food and energy.

As the economist quoted in the WSJ piece says, this is hardly the trend line of an economy headed towards rampant inflation. And like we’ve discussed before, this economy and labor market might well benefit from some inflation above the 2 percent target to encourage more investment and hiring. While the latest jobs numbers are encouraging, a labor market with such a large drop-off in labor-force participation (that appears to be half caused by factors other than demographics) and such weak GDP numbers can likely still benefit from relatively loose monetary policy.

Birth rates are down because couples can’t afford parenthood.

For the Washington Post’s new venture linking policy and storytelling, Storyline, Todd Frankel tells the story of a couple wanting to start a family but being unable to afford it.

The decision to have a child is not coolly rational, yet clinical calculations often play a role. Kids are expensive. Diapers. Doctor’s visits. Childcare. Food. Clothes. Maybe college down the road. Assuming that kind of responsibility is an act of optimism, the belief that tomorrow will be better than today.

So when the economy plunged into recession in 2008, shedding jobs and expectations, the U.S. birth rate followed, reversing the upward trend seen when times were good. And the birth rate has continued to fall, a sign of just how many Americans continue to struggle in this recovery, five years after the recession ended officially.

Last year, the nation’s fertility rate hit a historic low — 62.9 births per 1,000 women ages 15 to 44, according to the Centers for Disease Control and Prevention. Some of that decline comes from a long-term shift toward smaller families. But finances also play a pivotal role. A Gallup poll last year found the main reason Americans were delaying parenthood was worries about money and the economy.

For so many potential parents, the massive cost of having a child is enough to deter them from having children they’d otherwise like to have — and that our future economy will want them to have had. Efforts to increase the child tax credit or other family-friendly policies aren’t “social engineering,” they’re a way to correct for the compensate parents for the investment they make in society by raising children — and it’s an increasingly expensive investment.



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