How to change Canada’s baby bust into a baby boom

One mark of a healthy society with a bright future is one with babies, says economist Ross McKitrick — “a lot of babies and children being born and raised here. And that’s not happening.”

McKitrick is the author of a new analysis on Canada’s free-falling birth rate, which has been steadily declining for 15 years and now sits well below 2.1 births, on average, per woman, the level needed to replace the population.

From a high of 3.7 during the mid-20th century baby boom, Canada’s birth rate plummeted to 1.4 by 2020.

In 2022, it dipped again, to 1.3, “the lowest recorded over more than a century of data,” Statistics Canada then reported. Except it tumbled further still, reaching a new record low in 2023 of 1.26. Canada is now part of the “lowest-low” fertility countries, joining South Korea, Spain, Italy and Japan, a “fertility crash” that McKitrick says demands federal attention.

How to boost birth rates in high-income countries is a subject academics have been late to the game to address, McKitrick said. It’s shaped as much by social changes as economic factors. However, some responses are doable, McKitrick and others say, including making housing more affordable, boosting the “duration and generosity” of parental leave benefits and increasing tax deductions for dependents, with deductibles increasing with each additional child.

There should be larger financial rewards for young couples that have children

“There should be larger financial rewards for young couples that have children,” McKitrick said, adding that it may be more effective to try to coax families that already have one child into having a second or third.

Conservative Leader Pierre Poilievre took heat for tying human “biological clocks” to housing affordability, but he wasn’t overstating the situation, said McKitrick, a professor of economics at the University of Guelph. A couple’s optimal reproductive career — a woman’s, notably — roughly ends in their late 30s, which is now “not the time of life when young people can aspire to home ownership.”

“It’s really become apparent that our adult children aren’t able to get settled in a house on the same timeline we did,” said McKitrick, who’s in his late 50s. “They’re looking at best at maybe being able to afford to buy a house when they’re 50, instead of thinking about it in their late 20s.”

Housing isn’t by any stretch the only factor keeping people from procreating. However, fertility dips as the cost of living rises, his analysis for the Macdonald-Laurier Institute showed, and the decline in Canada’s domestic birth rate should be recognized as a major public policy problem, for several reasons, he said.

Canada’s social programs and pensions and health benefits were designed and implemented on the assumption there would be “large, young populations coming up behind us to pay the bills,” he said.

In addition, surveys suggest young Canadian women are having fewer kids than they’d like, which suggests a gap between “the life that people aspire to and the life they’re actually getting,” McKitrick said.

“If that’s what they want and it’s not happening, there’s some obstacle there. There is something that’s impeding people from achieving this life goal.”

Pro-natal policies encouraging “the more babies, the better,” aren’t without critics, with some worrying of a more troubling trend that exalts masculinity while oppressing women. Critics have argued the planet is in a state of “ecological overshoot” and that climate change and growing scarcities of resources like fresh water are bigger problems than countries not producing enough babies. Fertility rates are also strongly correlated with gender equality and giving women more liberated reproductive choices.

When Poilievre said his party “will not forget that young 36-year-old couple whose biological clock is running out faster than they can afford to buy a home and have kids,” his Liberal opponents accused him of engaging in “absurd” and “misogynistic” rhetoric.

Some of the backlash “comes from not wanting a ‘conservative man’ to talk about issues pertaining to fertility,” said Andrea Mrozek, a senior fellow at the non-partisan think tank, Cardus.

However, globally, the dialogue is switching from “we have too many people and a malthusianism kind of falling off the edge of the globe picture,” to one of understanding the data for what they are and that populations across the world will be in decline, Mrozek said.

“For a long time, we’ve viewed fertility as a linchpin of family life and understanding why we are not having kids is an important conversation to have,” she said.

In 2022, Cardus did just that, employing pollster Angus Reid to survey nearly 3,000 women ages 18 to 44 on their fertility preferences and plans. The survey found that few women in Canada “have ‘excess’ (undesired) births but that a considerable share of Canadian women will end their reproductive years with ‘missing’ children, that is, reporting that they desire more children that they will not likely have.

Women with 'missing' children are not an exception

“Women with ‘missing’ children are not an exception,” Cardus senior fellow and demographer Lyman Stone wrote in his report, She’s (Not) Having a Baby.

“They make up almost half of women near the end of their reproductive careers, and they reported lower life satisfaction than women who achieve their family-size desires.”

In other words, Canada’s slumping birth rate is not so much about wanting fewer, or no, children as it is about barriers to childbearing.

Most women in their 30s said they would like two or more children, despite the pandemic and other global events that may have left them rethinking having kids, Stone wrote. While women in the Prairie provinces reported the highest fertility desires, and women in Atlantic Canada the lowest, “in general, across every province, women intend to have fewer children than they say would be ideal for them.”

What’s stopping them? Women under 30 who want more children — women “in the immediate process of making decisions about their fertility and family before too much is ‘locked in’ by the passage of time,” Stone wrote — were presented with a list of 33 possible concerns. The top five reasons that lowered their likelihood of having a child in the next two years were “want to grow as a person,” “desire to save money,” “need to focus on career,” “kids require intense care” and “no suitable partner.” Lower on the list were lack of paid leave, global overpopulation and housing costs.

Caring for “tiny humans” is intensive, Mrozek said. “Work-life balance issues are, of course, real problems for families,” Stone acknowledged.

However, the level of intense parenting that’s become the norm today — lots of extracurricular activities, “carefully curated cognitive-development experiences” — may be leaving couples feeling overwhelmed and daunted by the idea of having children, he said.

Personal growth was the top rated reason cited for not planning to have children in the next two years. “The surprise to me is that we live in a culture today where we no longer view having children as part of personal growth,” Mrozek said.

The housing issue is part of the financial picture, the “desire to save money” piece, for young people today, she said. “While people will disagree on the levers that can be pulled to help — more affordable housing, especially entry-level housing? Enhanced maternal leave? — we need to understand first that we’re facing low fertility and go from there,” Mrozek said.

It’s important for policy makers to help women avoid unwanted pregnancies, Stone wrote. However, “in a society in which women have agency over their reproduction,” it would also seem reasonable to help women achieve wanted ones, he said. “Currently, one half of the women in Canada effectively achieve only one side of that equation by the end of their reproductive careers.”

However, another Macdonald-Laurier report found that younger Canadians are delaying leaving home (which, again, requires access to affordable housing) and delaying marrying or living common law. The proportion of “single and never married” 25- to 29-year-olds rose from 45.2 per cent in 2001, to 58.5 per cent in 2021. For 30- to 34-year-olds, the single and never marrieds rose from 25.1 per cent to 34.3 per cent over the same time period.

“Not only are young people not having babies, but they’re also not even forming couples,” McKitrick said. “They’re not getting married and forming households in the way previous generations did, and marriage and fertility are closely tied together.”

There are limitations to using immigration to try to solve the problem, he said. “The barriers to fertility affect immigrants and Canadians alike,” he said. “We bring people to Canada, and then they stop having babies.” Family reunification is one of the pillars of Canada’s immigration policy; many older relatives also come. “We end up importing a demographic profile that’s not all that different from what we already have here,” McKitrick said.

His recommendations focus on tax policy changes. “Hungary made aggressive tax changes (tax breaks and loans) to signal to young people, ‘We want you to have children and if you do it, we’ll reward you.'”

Canada needs longer maternity leaves, higher income replacements and higher dependent deductions, he added.

It’s not entirely obvious what the answers are, or what policies tried by other countries, if any, have been effective at budging birth rates in a meaningful way, McKitrick said. High-income nations have only begun to grapple with the problem. But it should be a matter of public discussion, though he understands why politicians are reluctant to broach it. Consider the reaction to Poilievre’s comment. “People take offence,” he said.

“But if a large number of young people are thwarted in one of the most important elements of wellbeing, that would be very sad.”

This is the latest in a National Post series on How Canada Wins. Read earlier instalments here.

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