Analysis: Latinos and the Demographic Cliff

Jan. 2, 2013 — -- The face of America is changing.

One of the most pressing implications is that immigrants and communities of color are poised to play a major role in helping fund pensions and healthcare for aging Americans over the next 50 years. However, shrinking birth rates, diminished immigration and a lack of investment in educating the next generation of workers could deal a serious blow to government programs like Social Security and Medicare, experts say.

Some have called the possibility a "demographic cliff." And, for better or for worse, Latinos are at the center of the debate, and will play an integral role in what happens to our tax and fiscal structure just a decade down the road.

First, the birth rate. Hispanic women are having fewer babies, a trend that has severely hastened the decline in the overall birth rate in the United States. In 2011, the fertility rate per 1,000 women was 63.2 births. And at our nation's fertility peak in 1957, the rate was 122.7 per 1,000. Gretchen Livingston, a researcher for Pew Hispanic Center said in an interview with NPR that Latina and foreign-born women have made all the difference in the national measures.

"Since about 2007, immigrant women have really led the dramatic decline in births that have occurred since that time," Livingston said.

This is where immigration comes into play. With lower birth rates, some say we should be looking to new immigrants to bolster a graying workforce. But whether they'll keep coming is questionable, judging by current immigration flows.

Immigration from Mexico, which has been the number one source of immigrants in the past decade, has slowed to net zero over the past year.

Both lower immigration and decreased birth rates, which are partially spurred by the the depressed economy, have some demographers worried. In an article called "Double Bind" in The Economist earlier this month, the author warned that the combination could bring "long-term trouble ahead," because there will be too few working-age Americans to bear the burden of pensions and health care for the elderly:

"A declining birth rate poses all sorts of problems for what's left of our social safety net. In 20 years, every last one of 78 million boomers will have reached full retirement age just as today's historically low number of newborns is entering the workforce. Without big changes Social Security, which is a pay-as-you-go system, will be overwhelmed.... Second, for many years it was widely assumed that falling birth rates among American women would be largely offset by births to the immigrant populations," the article argued, citing a U.S. Department of Agriculture report.

The author suggests that we solve this either by raising the eligibility age for Medicare and Social Security, or by letting in more immigrants, who tend to be younger and still tend to have more children than their native-born counterparts.

Critics of the latter theory, including groups like NumbersUSA, say that letting in more low-skilled labor only places further financial burdens on taxpayers and will not grow the population in a productive way. NumbersUSA cites New York Times' columnist Paul Krugman to offer statistical teeth to their argument.