Why Trump's 'Baby Bonus' Won't Work
Plus THIS graph explains everything....
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In this week’s edition:
Pro-natalism comes to America
A graph to show your parents (and possibly grandparents)
Photo by Alexander Grey on Unsplash
Elon Musk calls it a crisis more serious than climate change. J.D. Vance warns of the “rejection of the American family.” Now, Donald Trump is reportedly floating a $5,000 “baby bonus” to reverse America’s plummeting birth rates. The urgency isn’t misplaced. Between 2007-2022, America’s birth rate dropped 20 percent. Today, the average woman has just 1.6 children - a sharp fall from the Baby Boom era’s three-child average. Predictably, Trump’s plan has faced backlash. Critics argue the government should first fix America’s lack of paid family leave and affordable childcare. But that’s not why this cash scheme won’t work.
Financial incentives to boost birth rates have been tried worldwide, and mostly fail. Every wealthy country, bar Israel, now has a fertility rate below the 2.1 replacement level necessary. By 2050, China’s working-age population will shrink by 25%. The UN forecasts Italy and Japan will lose over a third of their populations within 80 years.
Trump’s approach isn’t new. Italy and Greece have both dabbled in per-child payments, while Russia have been testing these policies out since 2007 and now offers $7000 per child.
Hungary forgives $30,000 marriage loans if couples have three children. Yet global experience shows cash bonuses fail to shift the dial. Nor has greater state provision. Germany poured funds into childcare and parental leave. Austria stretched maternity leave to 2.5 years. The Taiwan state has spent $3 billion on family initiatives. Even the famously family-friendly Nordics haven't reversed their fertility declines. If anything, disincentives seem more powerful: U.S. birth rates rose during the Vietnam War draft because men with children were exempt. Sending people to war isn’t exactly a viable strategy today. Besides, the bigger change is not war - it’s women.
Since the 1960s, birth rates have halved alongside gains in women’s rights, contraception, collapsing religious conformity, and greater educational and professional opportunities. A win for progress - but one that many modern pro-natalists now frame as the root of the problem. Whether it’s J.D. Vance lambasting the “childless left” or the Chinese idea of “leftover women,” the accusation is clear: women have traded babies for books and careers, abandoning traditional roles.
But this misses the real story. It’s not college-educated women driving the fertility collapse - their birth rates have stayed relatively stable. The sharpest declines are among working-class women, who are delaying motherhood much longer. In 1994, the average first-time mother without a degree in the US was 20; today, two-thirds of non-graduate women in their twenties are childless. This reflects not just education, but the collapse of stable working-class male employment and family structures.
There’s also a broader cultural shift. Hyper-individualism means that across all classes, parenthood is seen less as a rite of passage and more as a sacrifice of personal freedom and financial security. Governments will struggle to persuade people who don't want children to change their minds. Better to encourage those with one child to have another. Surveys show many Americans want more children than they have. In 2018, a quarter said they had or planned to have fewer than they wanted - with 64% blaming childcare costs.
But the real issue isn’t just the expense of early parenthood. Yes, nursery fees are high, but the more systemic issue is stagnant wages and impossible housing costs, which have redefined adulthood in the 21st century, towards greater dependency on parents and delaying having a family. Would-be parents now see children as a 30-year financial project, with the most expensive years coming after age 18. The rise of the "Hotel of Mum and Dad" - adult children stuck at home - hits working-class families hardest. Offspring were once a net gain to the household; now they are a net drain.
This has been brewing since the 1970s - long before Millennials or Gen Z could be blamed. But now rising life expectancy plus low birthrate has pushed demographics into crisis. We’re unlikely to ever return to the 1940s Baby Boom - that was a historical blip. Adulthood has been reshaped by self-expression, economic precarity, and extended dependency.
If governments really want to tackle falling birth rates, they must ditch quick fixes and start being honest about the new reality: a society with few babies, a disproportionate number of elderly, sluggish growth, longer working lives, and higher immigration - and yes, a very different economic model.
Graphic of the Week
Our new brilliant Head of Data, Maria, has been crunching the numbers on adulthood and assets in the 21st century. I feel like this graph explains the shifting sands. Wages have barely climbed since the 1980s (obviously they have in some professions), but the key is the dramatic rise in the value of housing, really from the mid-2000s and the decline of any relationship between earnings and house prices. The main thing that has closed that gap. Yep, parental wealth.
This isn’t just a housing problem. It’s reshaping what success, security, and independence look like for a generation.
The Reading Room
AI predictions are everywhere right now…. Are people doing more talking than doing, though? I heard from one lawyer that one of his top clients has suggested that they will not pay a premium for any work done by anyone with less than 4 years’ experience because they now assume that anything done below that level can be automated. If I had to be looking for an entry-level job right now, however, my sense is that companies are still in the roll-out stage. But it is only a matter of time before it will begin to impact the labour market quite dramatically. I also read this week that: ‘Employment was once the norm, entrepreneurship the exception. Soon, it will be the reverse.’ Is this true? Maybe solo-preneurs at least?!
California Governor Gavin Newsom has just launched a podcast about young men. Specifically, why they’re drifting right — and whether Democrats can win them back. This Is Gavin Newsom, he’s positioning himself not just as a presidential maybe, but as a politician who listens. His guest list proves it. Charlie Kirk. Steve Bannon. Critics on the left accuse him of giving airtime to extremists. But this is also a strategic listening exercise. Podcasts as we know are now the chief political tool, but Newsom’s might suggest something more interesting than just his ambition; namely a shift in liberal strategy — from defending ideological silos to bridging divides through engagement.
Thanks for reading,
Eliza