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Texas birth-rate decline complicates economic growth prospects

James Lee, Pia Orrenius and Ana Pranger

Birth rates have steadily declined in the U.S. since peaking in 2007. Surprisingly, birth rates—births per 1,000 women of childbearing age—have fallen faster in Texas than nationally.

From 2007 to 2019, the Texas birth rate declined from 79 to 62 births per 1,000 women ages 15–44, while nationally the birth rate fell from 69 to 58 for that age group (Chart 1). Although only preliminary data are available for 2020, they suggest birth rates dropped further last year.

Chart 1: Birth Rate Declines Faster in Texas than U.S.

Downloadable chart | Chart data

To be sure, the birth rate in Texas remained higher than the rates in most states in 2019. Texas ranked 14th among states, while most other large states, including California and New York, were below the U.S. average (Chart 2).

Chart 2: Texas Birth Rate 14th Highest in the Nation

Downloadable chart | Chart data

Women in Texas had a total fertility rate—the number of children one woman will have in her lifetime—of 1.8 children compared with the U.S. average of 1.7 children. Both the state and national rates were below the replacement rate—the number of children needed to sustain the size of the population in absence of migration—of 2.1.

A large net inflow of migrants to Texas from other states and countries boosts otherwise slowing population growth. Declining fertility and an aging population are greater factors in states with low or negative migration rates.

Low birth rates can slow growth

Lower birth rates are associated with less growth and a more rapidly aging population and, hence, slower economic expansion. An economy can expand in two basic ways: by increasing labor (the number of workers/hours worked) or by boosting productivity. Productivity typically rises with enhanced worker skills and education, better technology, higher capital stock and more-efficient processes.

In a typical year, both labor and productivity grow. However, the U.S. is in a demographic squeeze because of the retirement of baby boomers—individuals born between 1946 and 1964, an outsized cohort. To make matters worse, the pandemic has likely accelerated baby boomer retirements.

In the meantime, productivity growth has been on a long downward trend, slowing from 3.3 percent in 2000 to 1.4 percent in 2018. Declining birth rates will not only result in smaller cohorts of young workers in a couple of decades but will simultaneously contribute to a more rapidly aging workforce.

With pay-as-you-go social programs such as Social Security and Medicare reliant upon population growth, this demographic squeeze could lead to a fiscal one. Because worker youthfulness is also correlated with innovation, scarcity of young workers with cutting-edge skills can slow productivity growth.

Hispanics, young women account for much of birth-rate decline

Much of Texas’ above-average birth-rate decline of 21 percent since 2007 is due to a sharp fall in the birth rate among Hispanic women—down 31 percent (Chart 3). Hispanic women make up 42 percent of women of childbearing age in Texas compared with only 21 percent across the country.

Chart 3: Birth Rate Falls Fastest Among Hispanic Women in Texas

Downloadable chart | Chart data

A decline in immigration, especially from Mexico, has contributed to falling birth rates overall and among Hispanics. Mexican immigrant women have more children on average than U.S-born women and typically account for the largest share of U.S. births to foreign-born mothers.

The Great Recession disproportionately affected Hispanic well-being. The housing market collapse accompanying that downturn and a relatively slow recovery of construction were particularly felt among Hispanic workers, who make up 30 percent of U.S. construction workers but less than 20 percent of the U.S. population.

Another factor is the changing behavior of young women. The birth rate for women under age 30 has declined 36 percent since 2007, and these under-30 individuals represent about half of women of childbearing age in Texas and the U.S. (Chart 4).

Chart 4: Birth Rate Falls Fastest Among Hispanic Women in Texas

Downloadable chart | Chart data

The decline is even more dramatic for teenagers. In Texas, the teen birth rate decreased 61 percent between 2007 and 2019, while the rate for women in their 20s fell 27 percent.

With increased access to contraception, young women and girls are having fewer unintended births, also contributing to the decline.

Reasons for having fewer children

Because raising children costs money and time, the decision to have a baby is not just a function of the factors that determine fertility, such as age and having a partner. Perhaps the best demonstration of this is the decline in fertility when unemployment rises and incomes fall, such as during economic recessions. The 2007–09 recession appears to have had a long-lasting negative effect on birth rates. Last year’s pandemic recession, although brief, also appears to have drastically depressed birth rates.

Paradoxically, both bad and good economic conditions can delay childbearing. To the extent that women have become more highly educated and hold higher-wage jobs, birth rates have declined. Putting off the first child due to more schooling and a career typically means fewer children over a lifetime.

An overall lower marriage rate since the 1990s has also contributed, although nonmarital births have risen, offsetting some of the impact; 40 percent of U.S. births in 2019 were to unmarried women. Meanwhile, contraception has given women the ability to better control fertility; at the same time, medical advancements have allowed conception at older ages and through nontraditional means.

Migration keeps Texas growing

Birth rates have been trending lower in Texas and the U.S. since the start of the Great Recession. Hispanic women and women under age 30 have experienced the most dramatic declines. Because Texas has a very large Hispanic population, birth rates have fallen faster in the state than in the nation.

When fewer children are born, the population and economy grow more slowly. For now, high net migration into the state has aided Texas population growth. But migration can easily stop or reverse itself. In the long run, if growth is a concern, policymakers can address some of the factors that have led women to have fewer children.

About the Authors

James Lee

Lee is a research analyst in the Research Department at the Federal Reserve Bank of Dallas.

Pia Orrenius

Orrenius is a vice president in the Research Department at the Federal Reserve Bank of Dallas.

Ana Pranger

Pranger was an intern in the Research Department at the Federal Reserve Bank of Dallas.

The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System.

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