3/5 - Why Rising Family Size Temporarily Hid America's Motherhood Decline (1980-2016)
In the aggregate, the poor aren't having more babies; the upper middle class and the rich are.
The data defies everything we thought we knew (yes I know this is a bit of a cliche): The highest-earning Dutch women had 60% higher birth rates than the poorest, according to a recent study using tens of millions of administrative records. In Sweden, the richest 20% of men born 1951-1967 had nearly double the fertility of the poorest 20%. For native-born non-Hispanic white American women, fertility rises with income across 90% of the income range.
In the aggregate, the poor aren't having more babies; the rich are. But here's the twist: in America, this creates a brutal bifurcation (I could say split but bifurcation is a bit more *brutal* of a word) where some women get everything while others get nothing. Again, this is in the *aggregate*, especially how varied and complex the US is economically and regionally. Meanwhile, Europe chose a different path that Mario Draghi now admits was catastrophic.
Just to point out how bad the American bifurcation is, we see a trend that Millennial and Gen Z who are married and own a house have higher net worths than previous generations. Problem is, Millennials and Gen Z are owning homes and getting married at lower rates in the US. Just 33% of millennials at age 30 were homeowners, compared to 42% of Gen X and 48% of baby boomers when they were the same age.
We are seeing rapidly rising income and wealth gaps in Millennial and Gen Z, where on paper, bad actors can argue that young people are doing better than they are, and mock the economic losers.
Considering higher incomes leads to higher fertility rates among women, it is starting to get clear on why America’s CPM is increasing, because if you win you *win* and if you lose, you lose *badly*.
The Dual-Income Trap
Just to point out how *costly* having a kid is and why that turns people off. Center-based childcare for one infant or toddler ranges from about $5,000 a year in Mississippi to over $22,000 a year in Washington, D.C. U.S. families spend between 8.9% and 16.0% of their median income on full-day care for just one child. The median individual with a child under 13 who pays for child care spends $1,700 per month on their rent or mortgage and $867 on child care, meaning child care costs are 51 percent of monthly housing costs on average.
Just to keep hamming on how insane this is: The U.S. Department of Health and Human Services concludes that affordable childcare should not exceed 7 percent of family income. There is only one state in the nation, Louisiana, in which the cost of center-based infant care for one child meets that definition for a married couple with the median income.
and his American Compass would point out that people want to spend time with kids, not dump them off at daycare to work more hours. Well, he is right, according to the American Time Use Survey, mothers in "both full time" households spend 2.30 hours per day caring for household children, compared to 3.49 hours for households where only the father works. Families sacrifice time with children not by choice but by economics. They need two incomes just to afford the childcare that enables two incomes. This doesn’t mean all women want to be homemakers or etc, and some homemakers needs toThe Education-Income Reversal
Something happened between 1940 and today. For women born in the 1940s, college women had at least 0.4 children fewer than non-college women. But for women born in the 1960s and 1970s, this negative effect of education has eroded. Today, there is almost no difference between college-graduates and non-college graduates among non-Hispanic white women.
Although highly educated women with more than 16 years of schooling had the lowest fertility rate in 1980, this no longer held true in 2019. The relationship flipped: educated women who achieve high incomes now have more children than their less-educated peers.
Why? A 10% increase in income results in an 8% increase in birth rates, according to research on coal boom regions. A $100,000 increase in home value results in a 16% increase in the probability of having a child. When families have resources, they use them for children—but only certain families have resources.
The European Suppression Strategy
Europe took a different path, and Mario Draghi's 2024 report admits it failed catastrophically. On a per capita basis since 2000, real disposable income has grown almost twice as much in the US as in the EU. European growth has been undermined by austerity economics following the 2008 financial crisis and the lack of a significant EU fiscal capacity.
In 1995, productivity growth in the euro area was on a par with the rest of the world at about 2%. But now, at below 0.5%, it lags behind the growth rates of the United States, other advanced economies and emerging markets. Domestic growth in Europe has been well below what could have been achieved in recent years, due to factors such as lack of progress in removing barriers within the single market and restrictive fiscal policy.
The strategy was deliberate: suppress wage growth to maintain competitiveness. This depressed growth rate has in turn lowered innovation, which then further lowered the growth rate. But suppressing income suppresses fertility. European women don't earn enough to afford children, even with subsidies.
Why American CPM Increases
The American bifurcation explains the CPM mystery. Mothers who clear the economic barriers—dual high incomes, stable marriages, family wealth—achieve their ideal family size and often exceed it. Cross-country fertility correlations showing negative fertility gradients are starting to fall apart. Today, Nepal and France have about the same fertility rates: 1.85, despite France having about 10-30 times higher GDP per capita.
Investment income, family support, husband's earnings—all enable larger families. But wage labor competes with motherhood unless income is high enough to purchase substitutes.
The pre 2023 winners in America's economy (tech workers, finance professionals, dual-professional couples) have the resources for multiple children. They can afford nannies, private schools, larger homes. They achieve the 2.6 children Americans say is ideal, some have three or four.
The Policy Revelation
In countries such as Sweden and Denmark, where public childcare is widely available for children of all ages, female employment and fertility rates today are higher than in countries where childcare is sparse. But America achieved something different: by allowing massive inequality, it created a class of mothers wealthy enough to afford achieve their marriage and fertility goals. For a time with Gen X, it compensated for falling material rates and possible CPM erosion, but the Great Recession collapsed TMR even further.
This isn't sustainable or moral, but it reveals a truth: income enables fertility when it's high enough. We keep seeing a common theme that’s popping up again and again: the compatibility of women's careers and families. America accidentally achieved this, but only for the economic winners with high enough incomes.
Europe's error was assuming you could have fertility without income growth. By lifting output and employment and lowering unemployment, reforms improve governments' structural balances. Moreover, higher levels of potential output reduce the current overhang of public sector debt. Instead, Europe chose austerity, suppressed wages, and wondered why fertility collapsed.
The Complete Picture
The American CPM increase isn't a success story, it's a symptom of extreme selection (another cliche). Only the economically strongest become mothers, and they have the resources for multiple children. Everyone else is excluded entirely. The bifurcation shows in every statistic:
High fertility requires high income in modern economies. You can't *just* directly subsidize (they do help, but it isn’t the end all be all!) your way around this reality. Europe tried suppressing incomes while offering benefits, it failed. America allows extreme inequality—creating high fertility for winners, exclusion for everyone else. Neither model is sustainable.
Edit: Accidentally published the wrong draft