How children are raised, educated and cared for has become a subject of sharpened focus in the 21st century than before. But there is a shortage of children, which will lead to a shrinking supply of workers and taxpayers in the not too distant future. With fewer children, the U.S. needs to cultivate the future abilities of kids already living in the country so society can accomplish more with less.
Those are the conclusions of a report from the Children’s Hospital Association and Lucile Packard Foundation for Children’s Health. The report’s author, Dowell Myers, PhD, recently visited the AMA’s Chicago headquarters to discuss the issue, and in his talk he identified a greater need for investing in children to maximize their capabilities and future earning power.
Myers is a demographer and professor in the Sol Price School of Public Policy at the University of Southern California. This new analysis found that declining birth rates and retiring Baby Boomers make the U.S. dependent on an increasingly smaller population of workers and consumers to drive the economy and generate tax revenue.
The report found that in 1970 the U.S. had 21 million children aged 10 to 14 and only 7 million people between the ages of 65 and 69. By 2030, however, there will still be 21 million children between the ages of 10 and 14, but also 21 million older adults between 65 and 69, eliminating the previous ratio of three children to one senior.
“Every kid who comes of age now is 1.8 times more valuable to society as they were before. They were precious all along, but now they are critically important,” Myers said. “2030 is the turning point. It is the first time in history that all baby boomers will be over 65 and the first time they will outnumber children.”
This limited growth in the proportion of children in the population leads to fewer growing into adult roles of workers, taxpayers and consumers who drive the economy. Here is how to improve the future outlook for children.
Invest in children for future growth
Early poverty and a lack of health care and educational investment cause worse outcomes, leading to long-term lowered productivity of this vital, future tax base.
“We must invest more in the children—not less—so that with their fewer numbers they can help more with the growing needs of the economy and the seniors,” Myers said.
Looking at IRS tax records and how access to Medicaid during childhood affected individuals in early adulthood, another study found that kids grew to be better earners and taxpayers. About 56 cents of every dollar spent on Medicaid was recouped by the federal government through tax payments by the time children turned 60 years old.
All kids are expensive in the beginning, said Myers, but in middle age, depending on their level of education, you can see how much their tax contributions are. There is a big return if the children are better educated.
Other benefits include lower reliance on government support programs and stronger contributions to the economy overall. And for every one dollar initially invested, early learning initiatives yield up to $8.60 in societal benefits over a child’s lifetime, according to another study.
Include children from immigrant parents
Immigration is largely driven by labor demand and also yields children. These children are U.S. born and contribute to the ranks of children growing up in America from birth, which helps fill part of the country’s shortage.
In 2015 there were almost 4 million children. However, without immigrant parents that number would have been three million—a loss of one million children. This reduction would result in a severe economic blow in the next two decades when labor force growth is driven to historic lows from large amounts of retirements by the Baby Boomer generation.
“When we take care of children well, it isn’t just charity for the kids. It actually will reward us all,” Myers said. “We get back well over what we put in. But again, we live in the present and people don’t think about the payout in the future. One thing is certain: the children are going to grow up!”
