The Enormous Value Of Subsidized Child Care Give women the opportunity to have a career and children

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WASHINGTON – Most advanced countries are experiencing low or very low fertility rates. Anything below 2.1 children per woman signals population decline. In some cases the fertility collapse has reached truly alarming proportions.

Elderly Asia

The absolute worst is Singapore. With a fertility rate below 1 child per woman, this rich, well-managed city-state will soon be a country of very few old, or very old people. Within Asia, Japan and South Korea are also doing poorly, with around 1.4 children per woman. (In China, with a mandated “one child policy”, the state created the declining population problem).

Declining birth rates in Europe 

In most of Europe, same story. Fertility rates are well below population replacement level. The steepest decline is in the East and in the South. Fertility rates in Italy and Greece are very close to Japan’s.

France is the only bright exception. And, according to The Economist, (Baby Love, July 25, 2015), this has mostly to do with public policy. The French state subsidizes child care services.

Either children or a career

Here is the story. The main reason why women in developed countries marry much later and have far fewer children is that many women who have entered the labor market are unable to successfully mix a job or career and motherhood. Not surprisingly, it is really difficult, in many cases impossible, to have both: a demanding job and children.

Therefore, as many women nowadays choose to have a career, this means fewer children. Of course, there may other reasons as well. But demanding work and children in many if not most cases tend to be mutually exclusive.

The result of women opting for work is fewer babies and declining populations. And declining populations create all sorts of problems. Among them: shrinking labor markets, and less economic dynamism.

Social security systems will have to be redesigned 

In developed countries we have to add another major public policy problem. Most Western nations adopted retirement systems in which the active working population pays into the national fund that delivers financial assistance to the retirees. This system was conceived a long time ago. It was based on the assumption that there would always be a large active population that pays into the fund, while the number of retirees would always be relatively small. Therefore, the fund would always be solvent. Well, not so anymore.

Due to declining fertility rates, now there are fewer workers paying into the system; and tomorrow there will be an even smaller number. At the same time, there are more elderly people who live much longer lives on account of health care improvements. So you have very few active workers who are supposed to provide the funds necessary for the retirement and health care needs of more older people who live much longer, and therefore cost more. This system cannot work anymore as originally designed.

Let’s follow the French example

Anyway, if we agree that falling birth rates create major problems, then let’s do what France has done. Subsidize nurseries and other child care services. When women realize that society will pay for their child care, they will no longer be forced to choose between a career or motherhood. Knowing that there will be good and reliable child care facilities available to them at no cost, or at a nominal cost, they will be able to have both a career and children.

A worthy investment 

Of course, taxpayers will have to absorb this significant new financial burden. But it will be worth it. There will be a great gain for society. Millions of women will be free to pursue job opportunities. Women who already work will not have to drop out in order to take care of their newborns. The economy will gain because of the added contributions coming from 50% of the population. And societies will be rejuvenated and enriched.

The alternative is to let this trend continue. Think of the consequences. Countries  composed mostly of old people are not appealing markets; and they are unlikely to be or become great laboratories of innovation and forward-looking ideas.

Let’s help women live productive and fulfilled lives; and they will help us all.

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