• Nick

How we are eating our young.

When it comes to the atomic family model, being a father, a mother and two kids, Japan is hell. It just doesn’t happen there. The reasons underpinning this are large and complex and range from the slavish work ethic (which appears to be just under 50 hours per week for the average male), the economic slumber since the late 1980’s downturn and younger generations disinterest in rearing a family, amongst many others.

Fertility rate means the number of children that an average female will have in her lifetime. In Japan at the moment, this number is approximately 1.3. The replacement rate (the average fertility rate required to sustain a population) is 2.1; a couple must produce 2 offspring plus a little extra to cover for premature deaths. Based on current statistics, Japan’s overall population appears likely to decline many millions over the next thirty-or-so years. At the moment, Japan’s population is declining by over 500,000 people per year.

What does Japan have to do with us?

Japan is an allegory. Consider the following graph which is taken straight from the Australian Bureau of Statistics (ABS):

The fertility rate of 2 is highlighted for reference. Tracing from the start of the graph, one can see the baby boom after World War two, and then the subsequent correction from around 1960-1980 after this point, a slight dip after 1980 and a gradual rise up until about the 2008 Global Financial Crisis (GFC). None of this is particularly outlandish and it correlates quite well with the events occasioning ups and downs in the population.

Consider the demographics of Japan again, where there are currently (depending at which statistics you see) there are around 2.5 times the number of over 65 year old citizens than the number of those under the age of 14. The increase in the prevalence of the elderly and the decrease to the prevalence of youth have been steadily moving in their respective directions for decades. The issues associated with this disparity are axiomatic, as an ageing population work less, require more publicly funded assistance and all up at a certain point create a net drag on the economy. No, I am not suggesting a soilent green type of solution. But any economist should be worried about these trends, politicians should be fearful, and mums and dads should be actively trying to oppose it.

Why is this happening in Australia?

There are many factors causing the decline in the fertility rate. Consider the following graphs taken from the ABS and from The Fertile Years by Professor Joyce Harper:

Let us explore and extrapolate these details a bit. In light of the above graphs, the following statistics are evident:

  1. In Australia since approximately 1980, the median age for parents has increased by around 5 years;

  2. Professor Harper’s fertility and miscarriage statistics show a marked increase in miscarriage and decrease in fertility with increasing age;

  3. In Australia, the median age for marriage has increased by around 2 years for both men and women.

Add in the following taken from the ABS:

We can see from the above graph that in the 1966 statistics, there was a marked decrease in female employment at around the age of 20 years (likely coinciding with first child), a slightly less pronounced but similar trend in the 1980s, a less pronounced trend (and slightly higher age) in 2000’s and then a reversal of this trend in 2020. On the 2020 line, there is a ~5% drop in employment at around the age of 29 (which happens to be the median age of birth at current).

Now compare this to the ABS statistics on housing prices in Australia’s capital cities as well as the age of average buyers from 2019 and 2020. Note that the prices are weighted using the ABS indexing analysis, which for our purposes basically means that the houses are given an approximate value taking into account macro-economic factors like inflation.

What does this all mean?

Too many graphs, I know, but the gist of it is this; we are teaching our children (and in particular our daughters) that it is the most important thing in their life to have a career. In teaching them this, they necessarily lower the importance of getting married and having a family. Accordingly, our children are getting married later and are having children later in their life in order to further their careers, which in turn lowers their fertility rate and increases their risk of miscarriage. They are taking on mortgages for properties which have almost doubled in their cost over the previous decade and will need to work more in order to pay them off.

I am not saying that women shouldn’t work, nor is the increase in their ability to choose to work a bad thing. I am saying that there is a significant cost in all this. I think it is no coincidence with the increased female employment rate over the past sixty years that the cost of dwellings has gone up so considerably while the fertility rate dwindles.

Without significant immigration numbers, our population would be steadily and significantly declining. It is a wonder that Australia is still such a popular destination for residence considering that ones children will find it so hard to raise a family.

Eating our young

Over the past two decades, the price of housing along with the stock market has increased well beyond that of inflation, while at the same time wage growth has been stagnant-to-middling at best. This has benefited people who have owned real estate and shares for a long time. These increases haven’t come from nowhere, and correlate very nicely with a significant increase to the workforce from female participation (and from skilled immigration, which is another article in its self). The cost of a massive increase to female workplace participation has been having more children, and having them at a younger age.

It is nice to have a million-dollar three-bedroom abode. Perhaps you can sell your investment property and retire a decade early. The cost of this, however, is your flesh and blood.

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