Aug 15, 2025
American families are shrinking, and many cite the rising cost of housing as the primary reason why.
A new report by the Institute for Family Studies (IFS) points the finger squarely at the lack of affordable housing, with report co-author Lyman Stone telling Business Insider that, “It's the thing that everybody thinks about first, as soon as they're thinking about fertility.”
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And that thought process is not unprecedented.
The correlation between the availability of affordable housing and fluctuation in birth rates dates back to the 1930s, according to Business Insider, when “the advent of the modern, low-down-payment mortgage” allowed more young people to buy homes and reportedly helped fuel the baby boom.
The IFS report, meanwhile, is less surprising when you consider the average cost of a home in the United States is approximately $462,000 – a number that prices out many would-be parents.
The United States, however, is not alone in its birth rate decline. While CDC data show America bottomed out at an historic low of 1.6 children per woman last year – less than half of the all-time high of 3.77 children per woman set in 1957 – the overall global birth rate is also rapidly falling.
The Atlantic noted a recent UN study that showed that the global population will “officially begin its decline” around the year 2084, when “rich countries will all have become like Japan, stagnant and aging. And the rest of the world will have become old before it ever got the chance to become rich.”
Yet despite this, many experts don’t agree that declining birth rates warrant such a “doom and gloom” forecast.
Rising enthusiasm over falling birth rates
It’s not difficult to find experts who agree that falling birth rates could result in myriad problems, from tectonic societal shifts to retirees outnumbering workers to the collapse of national GDPs. Even President Trump promised to institute policies to help boost the birth rate, dubbing himself “the fertilization president.”
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Many others, however, argue that declining birth rates offer greater economic and societal opportunities, both now and in the future.
We already know that childfree folks, or those with fewer children, save more money than those with multiple kids. In fact, a 2024 survey found that American couples with no children saved twice as much as their child-rearing counterparts and “are four times more likely than parents to say they have no financial stress.”
The International Monetary Fund (IMF), meanwhile, acknowledges the risks of falling birth rates but also notes that “Fewer children and smaller populations mean less need for spending on housing and childcare.” It argues the resources “could be reallocated to research and development, adoption of advanced technologies and elevation of education quality.”
It also highlighted that falling birth rates can “stimulate economic growth by driving up rates of labor force participation, especially among women, as well as savings and capital accumulation,” adding that such a scenario played out following the baby boom.
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Population Connection, a national organization that advocates for stabilizing the population, says that a reduced population means “less competition for jobs, cheaper housing, and less strain on social services and public infrastructure.” And BlackRock’s Simona Paravani-Mellinghoff wrote in 2023 that labor shortages could “raise the bargaining power of employees and lift wages – all of which is ultimately inflationary.”
Even back in 2012, a Harvard School of Public Health study found that as the number of children in richer households declined, the poor and middle class began “to catch up as women in those groups gain[ed] access to education and family planning.”
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Looking ahead to a less crowded world
Beyond the practical, a declining birth rate could usher in more longterm and sustainable socioeconomic changes. And that begins with reframing how we think about population and its relation to economic growth.
Australian demographer Peter McDonald explained to the Guardian that economic growth is powered by “population, participation and productivity,” with the latter being the key.
“Nothing beats productivity. If you’re able to have high levels of productivity the other two are supplementary.”
It’s a sentiment shared by the IMF: “A population’s productive characteristics figure more prominently than its size in defining its capacity for knowledge creation and innovation.”
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A focus on productivity in a post-growth world, then, means that governments must embrace and implement new socioeconomic strategies, Population Connection says. That includes “greater investment in preventive healthcare, education, and child welfare,” while “rethink[ing] social security and pension programs, which in their current form, rely on an endlessly growing supply of young tax payers.”
The National Library of Medicine agrees, adding “These demographic changes can also spur a new wave of industrial revolution, creating novel development prospects.”
Such novel prospects might include advancements in generative AI to supplement productivity as populations decline. CNN pointed to a Federal Reserve Bank of Richmond study that claimed AI “could increase labor productivity between 1.5% and 18% over the next decade.” It also flagged a Goldman Sachs report claiming that “generative AI could raise global GDP by as much as 7% over a 10-year period.”
While it’s true that the jury is still divided on exactly how AI will shape the future of the workforce, it’s also clear that the possibilities for fruitful AI-powered productivity exist.
Plus, let's not forget the impact a shrinking population will have on the Earth and those inhabiting it. “Population decline,” the IMF noted, “may also enhance social welfare if it reduces environmental pressures such as land, air, and water pollution; climate change; deforestation; and the loss of biodiversity.”
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Mike Crisolago is a Staff Reporter at Moneywise with more than 15 years of experience in the journalism industry as a writer, editor, content strategist and podcast host. His work has appeared in various Canadian print and digital publications including Zoomer magazine, Quill & Quire and Canadian Family, among others. He’s also served as a mentor to students in Centennial College’s journalism program.
