Stop pretending financial incentives will save the birth rate!
Stop pretending financial incentives will save the birth rate!
Even the incredible benefits of elite tech companies fail to cause women to have children
Recently
hosted an excellent discussion with David Goodhart (Head of Demography, Immigration & Integration at the prestigious British think tank Policy Exchange) on the subject of his new book The Care Dilemma.Unfortunately, there was an extended section of the discussion on the need for the government to introduce major financial incentives in order to raise the birth rate. This is a widely held opinion, but it is wrong. Economic interventions have proven to be ineffective - and we can’t afford to keep deceiving ourselves on this issue.
Economic interventions - no matter how generous - cannot save us. This is not an issue that can be solved with tweaks to tax structures and budgets. Easy fixes and course corrections are not available. There’s no ‘business-as-usual’ progressive liberal technocratic solution to this challenge. As I’ve previously argued, collapsing fertility is a systemic social (status) issue that relates to the deepest belief structures of our civilization. Shying away from this spells destruction.
It’s straightforward to show that economic interventions don’t raise birth rates by looking at the many countries which have tried them. I’ll quickly revisit this data to make this clear. Despite this consistent finding, many believe that it is a question of scale: ‘if only we spent more’. I’ll answer this misconception later in this essay.
From my piece It’s embarrassing to be a stay-at-home-mom:
Economic interventions fail. Hungary spends an incredible 5% of its GDP on its fertility drive through the provision of financial incentives: significant loans, tax breaks, subsidized fertility treatments. Its dire situation has moderately improved, but overall fertility remains far below replacement levels, with a rate of 1.59 births per woman (fewer than the US at 1.66). A society needs a birthrate of 2.1 to sustain itself.
The Nordic nations offer further economic and lifestyle benefits to parents through exceptional state-backed parental leave and childcare policies, with the World Economic Forum describing them as “the best places to have children” in the world. In some, women can take more than a year’s parental leave, challenging the argument that the need to work is blocking women from having children. These countries also have some of the lowest fertility rates in the world, and they continue to fall.
…Failing to accept this leads to disaster, like South Korea spending hundreds of billions on economic incentives to have children, only for their birthrate to drop yet faster.
By the way - as an update - Hungary’s birth rate has fallen substantially over the last two years and is now the fastest falling in the EU. It’s back to a catastrophic 1.32. Even during the 2012-2016 period when it seemed like their spending 5% of GDP on the issue might have some success, they peaked at less than 1.6, up from about 1.25. Maybe if they’d spent 15% or more of GDP and bankrupted the country they could have achieved a replacement level birth rate! (I doubt it.)
Look: trust me, I’m not blind to the impetus for these claims. As the sole provider for a single-income household with children I’m acutely aware of the financial pressures this entails - but this isn’t the reason that people aren’t having kids.
Perhaps to illustrate this further I’ll recount what I saw when I worked for FAANG-tier tech company which went all-in on attracting female talent by adding as many family formation benefits as possible. Tech companies are - per capita - massively more wealthy and agile than any nation state, and compete heavily for elite female talent and will do almost anything to attract them.
This company offered everything that even the richest countries could only ever dream of. They gave parents benefits to a degree that it caused a mini-revolt among the non-parents, who felt that this arrangement was unfair. Bear in mind that this is all on top of world leading salaries - median income was well over $200k.
The benefits included:
5-figure cash bonus, no questions asked, upon childbirth;
Extended, flexible, and shared parental leave;
Full range of fertility treatments covered (IVF, egg freezing, hormone therapy, even surrogacy);
Excellent private healthcare insurance;
Greater latitude to work from home as a parent;
Flexible working hours;
‘Take as much holiday as you want’;
Childcare credits with large providers.
Now, ask yourself: do you think great numbers of tech workers were starting large families? No, of course not. Here’s what I actually saw:
Senior management (top ~2% of the company) were predominantly male, very wealthy, married, over 40, and did have children.
Below them, among the general engineering workforce, the minority of men had children, although many still did.
Of the female workforce, a radical minority had children. Those who did had two or fewer.
I’d estimate about 20% of the workforce were parents, with (at least) a 5:1 ratio of men to women. This estimate is based on what I saw in the parent groups and channels within the company, and I would guess it’s fairly reliable. This is in the context of a ~40% female workforce. The company was large, with thousands of employees, so should be quite representative.
Further observations:
Once women had spent years in the trenches and had the financial latitude to do whatever they wanted and quit tech, none that I worked closely with chose to start families. One burned out and quit work entirely, wealthy but unmarried in her late thirties. Others took prestigious positions in academia, government administrations, or NGOs. Many seemed to struggle to find a man they were interested in.
My female co-workers who did have children typically had one or two while still working at the company, in a back-to-back spurt late in their thirties. This allowed them to take almost two continuous years off and get the ‘having children’ milestone out of the way. I don’t remember any having three or more children.
Another observation (based on a small sample size, so don’t treat too seriously) was that the women who did have children tended to have ultra-successful husbands, over-and-above the average well-payed software engineer. These husbands either worked in finance or were tech senior management at other companies.
Most women would permanently drop out of full-time tech work in their forties, and I’ll confess to not tracking closely what these ones did, but I didn’t get the impression that they were about to become stay-at-home-moms.
Conversely, most men started having children around their fortieth birthday. The ‘dad’ cohort at the company was significantly older than the average employee. I don’t think the benefits mattered a huge amount to them - by this point they were mostly independently wealthy anyway.
My impression was that many of the men who did not have children were still waiting for their partners to ‘be ready’, and didn’t want to fight them about it. Their partners were mostly professional women subject to the same dynamics described above.
Overall I’d estimate that the company fertility rate was still decently below replacement levels. What I can conclusively say, however, is that these world-leading economic interventions did not result in a baby boom. Parents remained in the significant minority, and large families were rare indeed.
On the one hand, naysayers might protest that elite tech workers are a psychologically and socially unrepresentative population. Fair enough. But on the other side of the scale, I’d note that since the workforce skewed young (mostly under 38), almost all the women there were in their childbearing years, so you would expect a relative hypersensitivity to any effective interventions.
Having children will never be economically advantageous, and economic advantage (or even comfort) is not why people have children. It was status and social standing that held these women back from starting families: they didn’t want to be left behind as their colleagues gained in seniority and prestige, and they had been conditioned to believe that the career they had worked so hard to achieve should not be compromised for low-status pursuits like motherhood. They had been taught to understand and value themselves as employees, not parents.
Economic interventions do not raise birth rates!
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Sic transit imperium,
Johann
I am expecting our eighth. Today I took our toddler out shopping while her siblings were at school. I'm treated so much more nicely when I seem to have only one child that it's scandalous. There is no amount of money that would compensate for that.
Very good article that draws all the right conclusions.
If you want more mothers, your society must give them the corresponding high status. Or have such strict social rules that encourage numerous births.
That was the case in the Roman Empire, where Christians had a much higher fertility rate than everyone else - because their faith forbade them from committing infanticide.
There is also a fairly recent study, the name of which I unfortunately can't remember, according to which conservatives in the USA are said to have a 40-something% higher fertility rate than liberals. Because they have different values when it comes to having children.