Often ranking as one of the fastest-growing states in the nation, Nevada saw the nation’s fifth-largest drop in birth rates over the last decade — a demographic trend that experts say could have major implications for economic growth, tax revenue and state budgeting.

According to a Pew report released earlier this month, Nevada’s fertility rate fell 17.2 percent from 2011 to 2023 — about 6.6 percentage points more than the national average, which was a 10.6 percent decline. 

Researchers recorded nearly 51 babies born per 1,000 women in 2023, a measurement that was Nevada’s lowest recorded birth rate in 30 years. However, the state wasn’t alone — 40 other states and Washington, D.C., also hit a three-decade-low birth rate.

Why the decline? The Pew report identified several potential causes, including steep declines in teenage pregnancies and Hispanic fertility rates, but regardless of cause, report authors said states need to be ready to deal with downstream consequences of smaller populations.

“As these smaller birth cohorts age into the workforce, states may see a decreased labor force, [workforce] growth and then a drop off in tax revenue as the tax base shrinks, with that leading to slower economic growth,” Page Forrest, a co-author of the report and senior associate with Pew’s Fiscal 50 team, said in an interview.

In the short term, declining fertility rates could help the state realize short-term K-12 and health care savings, the report stated.

States such as Minnesota saw short-term savings thanks to reduced student counts that helped offset rising costs of special education and nutrition programs, Forrest said.

There was a 6.1 percent overall increase in K-8 enrollment in Nevada from 2013 to 2023, but from 2019 to 2023, student enrollment decreased by 3.1 percent.

Falling fertility rates and the consequently smaller workforce has implications for long-term economic planning and state budgeting. 

A shrinking tax base puts pressure on lawmakers as they decide which priorities to fund, Forrest said. Those decisions could also have major implications on the future solvency of the state’s public worker and retiree programs.

“Another thing for states to consider in the long run is that a smaller workforce means there are fewer people who, through their taxes, will help cover the cost of long-term liabilities, which include public pensions, retiree health care and debt,” Forrest said.

Tax implications

Personal income tax and sales tax are the two revenue streams likely to be most affected by falling birth rates. Nevada does not collect a state income tax, but the state budget is highly dependent on sales tax.

Revenue from sales and use taxes made up 31 percent of the state’s general fund in fiscal year 2024, according to an Economic Forum report.

“A potential decrease in the consumer base caused by the fertility rate decline could impact Nevada in a substantial way,” Forrest said.

At least for economic development, Nevada would still be in better shape than other states that heavily rely on income tax to finance those projects, said Steve Scheetz, a research manager at the Governor’s Office of Economic Development. Scheetz added that dips in revenue can change the timeline and scope of major public-private projects.

“Large developments often depend on projected sales or payroll taxes to justify investment. A smaller population, if not offset by higher productivity or spending per capita, could narrow the fiscal runway,” Scheetz said.

Women in the workforce

Nevada’s tax base could be expanded with more female participation in the workforce, said Joanna Biernacka-Lievestro, a senior manager with Pew’s Fiscal 50 team and co-author of the report. 

More than 70 percent of women between the ages of 25 to 54 were employed in Nevada, according to a Pew report on female employment. Compared with other states, Nevada ranked in the bottom half of states when it comes to employment rates for women in that age group. 

“You can also think about the potential that's still unlocked among women in the workforce,” Biernacka-Lievestro said.

The report highlighted policies in other states that sought to boost female employment rates, such as child care, paid parental leave and flexible work arrangements. 

Nevada’s 83rd legislative session, which ended in June, saw several of those policies brought forward without much success. 

Among those failed attempts was Gov. Joe Lombardo’s economic development bill (SB461), that sought to give up to $12 million in tax credits for new and expanding child care facilities. It never received a committee nor a floor vote.

Another bill (AB388) that sought to give workers 12 weeks of paid family leave, including paternity and maternity leave, passed out of the Legislature but was vetoed by Lombardo.

Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) intended to expand universal pre-K in the state, but she backed away from fully funding it after indicating that lackluster revenue projections made the concept unfeasible during the session.

However, Cannizzaro’s SB460 appropriated $50 million to expand early childhood literacy and gave another $10 million to expand early childhood education facilities. That bill was signed into law after reaching a compromise with the governor.

Migration

Migration could offset the effects of a shrinking workforce. 

From 2014 to 2024, Nevada was one of a handful of states that saw a net gain in domestic migration. Per 1,000 people, researchers counted at least five who had migrated to Nevada  within the last decade. However, domestic migration rates in Nevada had been slowing down since 2018.

Declining fertility rates have made its way into state budget recommendations, including in North Carolina, where officials pointed to migration as the only way for the population to grow. There was no mention of fertility rates in Lombardo’s most recent budget.

Migration to Michigan is expected to delay the negative effects of declining fertility rates for 5-10 years, Forrest said. 

Expected migration to Southern Nevada will largely offset the consequences of declines in natural population growth, said Stephen Miller, an economics professor at UNLV and research director for the Center for Business and Economic Research. 

Miller points to a population forecast predicting Clark County’s population to surpass 3 million people by 2060. However, how the state collects tax revenue is still a problem, he said.

“Even though we're growing fast and revenues are increasing, the revenue structure isn’t keeping up,” Miller said. “The growth in revenues was slower than the growth in population.”

Scheetz has a more optimistic outlook, emphasizing that state leaders can adopt intentional and adaptable economic development strategies and ensure that Nevada remains attractive for working-age adults to move to the state.

“If the future has less people, it doesn’t mean it will be less dynamic,” Scheetz said. “Fewer hands on deck doesn’t mean this ship can’t sail; it just means we need to design better sails.”