If The Heritage Foundation’s “Manhattan Project for Babies” works, what will the impact be on emerging business trends?
getty
The Heritage Foundation recently proposed a “Manhattan Project for Babies,” a sweeping set of pro-natalist incentives designed to boost U.S. birth rates. Whether such a project could succeed is doubtful. Fertility is at a historic low, childcare costs are soaring, and young adults have delayed starting families for financial and personal reasons. That uncertainty makes the “Manhattan Project for Babies” an unlikely solution, but it does highlight how demographics, trade policy, and technology collide to create emerging business trends that companies can’t afford to ignore.
What interests me about this proposal is the contradictions it exposes. The push for bigger families while tariffs drive up the cost of everyday goods. The worry about the next generation’s prospects while AI steadily erodes entry-level jobs. These kinds of conflicting ideas—whether born of enthusiasm, short-term thinking, or the absence of a core organizing theory—risk canceling one another out and producing unintended consequences.
That tension is worth exploring. What if the push did succeed, and the U.S. experienced a surge of births in the next decade? How would that demographic shock collide with tariffs that make consumer goods more expensive, while at the same time AI is reshaping the workforce? The answers don’t form a neat forecast, but they do reveal an interconnected set of pressures and opportunities, and suggest emerging business trends that could benefit from our attention now.
Family Economics: When Tariffs Meet Strollers and Diapers
A baby boom would create new demand for cribs, diapers, strollers, and car seats. Yet tariffs on imported steel, plastics, and textiles, all of which feed directly into these products, are driving costs higher. This is a contradiction in plain sight: policies encouraging family growth running headlong into trade rules that make raising a family more expensive. The immediate pressure falls on households, but the underlying lesson applies to business as well. When strategies conflict with one another, whether in supply chains, pricing, or customer experience, companies face the same risk of undermining their own goals.
The realities for first-time parents are stark. Already, mortgage payments stretch budgets, childcare rivals the cost of college tuition, and trade policy adds a premium to basic goods. Government incentives like baby savings accounts will barely register against those structural pressures.
That tension creates opportunity for businesses willing to adapt. Local and regional manufacturers can gain an edge by reshoring or near-shoring production of baby gear, clothing, and household staples. Domestic toy manufacturer Step2 illustrates the middle ground. Its play kitchens and outdoor toys do cost more than the cheapest imported versions, but they are firmly mass-market. That difference reflects the reality of U.S. labor costs, which will always exceed those in labor-arbitrage markets. Yet when you factor in efficient domestic production, durability, lower freight costs, and the tariffs layered onto imports, U.S.-based manufacturing can be more competitive than it first appears. For businesses, it’s a lesson in aligning strategy—pricing, supply chain, and customer value—so the pieces reinforce rather than undermine one another.
Emerging Business Trends in Product Design: Affordability and Flexibility
When consumers feel squeezed, they look for ways to stretch the budget. That opens the door for business model innovation. Examples already exist: stroller rental services for traveling parents, clothing subscription boxes that swap sizes as children grow, or marketplaces for refurbished cribs and car seats.
These approaches may become mainstream rather than niche. Subscription models create predictable revenue streams for companies, while easing the budget shock for families. Trade-in programs, like those pioneered in electronics, could migrate to baby goods, turning depreciation into loyalty.
These emerging business trends have been sitting at the margins. The intersection of tariffs and family economics could push them into the center.
The Workforce Collision: AI and Disappearing Entry-Level Jobs
The workforce is another critical piece to consider. Entry-level jobs have traditionally given young workers a way to build basic skills, gain experience, and learn how to operate in professional settings. But AI is already eroding the entry point for careers.
If a larger youth cohort enters the labor market two decades from now, what will their prospects look like? Without deliberate intervention, we risk widespread underemployment or a frantic scramble to create new career paths. Business leaders who miss this disconnect in their own strategies risk undermining their future talent pipelines.
Other countries offer useful models. In Germany, apprenticeships are deeply woven into business culture, blending classroom learning with structured, paid work experience. For the U.S., a renewed commitment to apprenticeships could also serve another urgent purpose: rebuilding the manufacturing base. As companies re-shore or near-shore production to offset tariffs, they will need a workforce trained in advanced manufacturing, including AI. Yet trade education has largely disappeared due to offshoring and underfunding. Revived apprenticeships and technical programs could rebuild the skilled labor needed for domestic production and integrate AI training into the process.
Building educational and training infrastructure would create the capacity to respond if demographic shifts, trade policy, and technology collide—something the current system is not prepared to handle.
Layoffs: Dividend or Warning Sign?
Headlines celebrate layoffs as “shareholder-value boosters,” but the reality on the ground tells a different story—and it’s already undercutting long-term resilience. Job seekers now outnumber job openings for the first time since 2021, fueling longer job searches and rising unemployment among younger and mid-career professionals.
Rather than delivering long-term value, layoffs often erode it. Academic and market studies show they rarely improve long-term returns while undermining trust, institutional knowledge, and innovation. And when workers lose income, overall spending drops, eroding the very shareholder value layoffs are meant to protect.
AI is already playing a role. Salesforce has eliminated nearly half of its customer support staff—cutting from 9,000 to 5,000—by replacing jobs with AI agents. That mirrors broader trends: industry reports suggest more than 10,000 layoffs in 2025 were directly linked to AI adoption, and employment among young workers in AI-exposed roles has dropped significantly. These shifts aren’t a future risk—they’re happening now.
Cutting fat can be healthy, but cutting into bone causes lasting weakness. Removing too many entry-level or mid-tier roles starves the talent pipeline companies will need when demographics shift or AI transforms job requirements. And if a baby boom arrives, a system hollowed out by short-term cuts won’t have the capacity to meet future demand for labor, care, housing, or services.
The question leaders must explore is: are we trimming margin or destroying resilience?
Services and Infrastructure: Beyond the Nursery
A surge in births would further strain the systems that support daily life. Within a decade, schools and pediatric care could buckle under growing demand, even as current trends move the opposite direction with shrinking education funding and worsening teacher shortages. Employers would find that childcare and flexible scheduling become as important in attracting talent as salary and health insurance. Other areas that would be affected include public health programs, transportation, community safety, and local government services: all would have to expand to support larger families.
Some companies are already testing services in this area. A handful offer on-site childcare or subsidized backup care, but in a baby boom environment, those programs could move from perk to necessity.
Demographic change doesn’t stop at consumer demand; it reshapes the infrastructure that supports both households and businesses. Leaders who anticipate those ripple effects will be positioned to meet needs others don’t yet see coming.
Skepticism Is Warranted, But Rehearsals Have Value
So, how plausible are these scenarios? Fertility rates don’t shift easily. Countries from Hungary to Japan to Singapore have tried pro-natalist policies with very limited success. Cultural norms, economic realities, and personal choices appear to matter more than incentives.
That means this “Manhattan Project for Babies” will likely never deliver its intended boom. But as a thought experiment, it pushes us to consider how multiple forces might interact, and how their intersections can create unexpected challenges that are difficult to navigate.
The real lesson for business leaders is not to bet on one outcome, but to build strategies resilient across many. Scenario planning is less about predicting the future than about rehearsing it. Leaders who practice this discipline are less likely to be blindsided when unexpected combinations—like tariffs plus AI plus demographics—arrive.
Scenario Planning as an Emerging Business Trend
Large companies have long used scenario planning to model oil prices, geopolitical shocks, or regulatory shifts. But today, even small and midsize businesses have the tools to adopt the same discipline, whether through consultants, SaaS forecasting platforms, something as simple as Google Trends, or those same AI tools causing the aforementioned disruption.
The goal isn’t to predict a single future, but to stress-test multiple plausible ones. For example, a manufacturer might model:
- A baseline where fertility stays low, tariffs persist, and AI adoption continues steadily.
- A high-demand scenario with rising births and more localized supply chains.
- A labor-constrained scenario where AI adoption outpaces workforce retraining.
- A policy-reversal scenario where tariffs vanish and demographics remain flat.
Each scenario leads to different investment choices, but the process itself builds agility. And just as important, the process helps reveal internal contradictions: cases where a company’s own strategies pull in opposite directions. Recognizing those misalignments early can be as valuable as anticipating external shocks.
What Leaders Should Do Now
Even if the baby boom never arrives, the exercise of gaming out scenarios may reveal insights worth acting on: insights that can strengthen strategy whether or not the future unfolds as imagined. For example:
- Localize production where margins are sensitive to tariffs. Build dual sourcing strategies that include at least one domestic or near-shore option.
- Redesign products for tariff durability. Use materials with lower duty exposure and create circular models (trade-ins, refurbishments, rentals) that extend consumer value.
- Reimagine career paths. Replace eliminated entry-level roles with apprenticeships or stackable credential programs. Partner with community colleges to shape the talent pipeline.
- Invest in childcare as infrastructure. Negotiate corporate rates, offer stipends, or create employer-supported networks. Treat it as an essential retention tool.
- Practice scenario planning. Don’t predict one future. Stress-test multiple plausible futures and prepare responses.
The “Manhattan Project for Babies” may never come to pass, but this exercise underscores a larger truth: neither business nor social strategy can be built in silos. Demographics, trade policy, and technology don’t shift on their own. And sometimes, they collide. The companies that will thrive are those that recognize these intersections early, spot emerging business trends before they gain traction, and ensure their own initiatives reinforce rather than undermine one another. The future will always be unpredictable, but coherence and alignment are choices leaders can make, and those choices are what create resilience across any version of the future.