Too Expensive to Have Children

On October 2, 2015 (Buy Your Leave), I wrote: “We know that the United States joins Papua New Guinea, Lesotho and Swaziland as the only countries that do not have a national paid maternity leave requirement, and clearly we are the only developed country without that policy. A couple of states have limited programs that pay rather small amounts for short periods of time to young mothers, and a number of companies have added this as a benefit.

“Oh sure, you can take time off; the Family and Medical Leave Act of 1993, which does not apply to small companies, requires 12 weeks of unpaid leave annually for mothers of newborns or newly adopted children. Our pre-school programs have suffered under budget slashing conservative legislators, and childcare remains not much more than a tax deduction that offers little solace to lower income women who either can’t afford it anyway or don’t have enough of an income for the deduction to mean much.” Not good if you are a newly-minted parent, but there is more to be concerned about.

Today, I want to explore the next phase of child-rearing in a world where, among married couples, it takes two incomes to survive in a modern world and puts super-strain on single working parents. After the last mega-depression, we know that lots of folks were laid off, their jobs given to those who remained, and this latter group simply got a whole lot more hours with no real pay increase (in fact, the true spending power of most Americans continues to fall, year after year). Today, I want to talk about a nation with a particularly unfriendly attitude about childcare, even where there are modest tax deductions aimed at benefitting those families.

“Juggling career and family is a given for almost every working parent today. According to Ernst & Young’s Global Generations Survey, the biggest challenge U.S. workers face is finding a balance between lengthening hours at work and spending more time with family. Data from Child Care Attendance Automation (CCAA) that tracks attendance in care facilities reveals that nearly 11 million kids under the age of 5 are in some type of child care arrangement in the U.S., where they spend an average of around 36 hours per week.

“This comes at a high cost. Recent analysis from the Economic Policy Institute (EPI) found that in 33 states and the District of Columbia, infant care costs exceed the average cost of in-state college tuition at public four-year institutions. It’s ironic, given that as millennials become parents, many are still paying back loans for their own college educations…

“Children between infancy and preschool are the costliest to care for. According to the EPI’s findings, ‘When 10 family budgets in various areas are reconstructed to include two-parent, two-child families with an infant and a 4-year-old (instead of a 4-year-old and an 8-year-old), child care ranges from 19.3% to 28.7% of total family budgets.’ For older children, the costs range from 11.8% to 21.6% for families with a 4-year-old and an 8-year-old.

“The EPI also found that child care costs as a percentage of total family budgets often exceed the 10% affordability threshold established by the Department of Health and Human Services (HHS).

“[One, pretty average working mom states], ‘We currently pay $23,000 per year in child care, which is 10% of our salary.’ When the second child is born, she says the cost will jump to $46,000 per year (or 20% of their two-income household's earnings). This will exceed that 10% affordability guideline issued by the HHS.” FastCompany.com, January 12^th. How does that EPI measurement work?

“The EPI developed a 2015 Family Budget Calculator to determine the income level necessary for families to secure an adequate but modest living standard based on these differences in the cost of living per city. More than just an exercise in city versus country living, the EPIs calculator is a more accurate measure of what it means to be poor or middle class in specific locations in the U.S. Based on cost of living factors, like housing, food, transportation, taxes, health care, childcare and other necessities, EPI determined the income families need in order to reach a secure yet modest living standard in hundreds of cities around the U.S.

“Child care averages about $12,500 nationally, but drilling down to the city-level, it reaches on average $31,158 a year in Washington, D.C., the most expensive city in the U.S. for families. According to the EPI's calculator, a family of four in D.C. needs $106,493 just to get by.” Mom.me, January 11^th. Ritzy communities in New York and Connecticut are next on the list, then San Francisco. Los Angeles and the Silicon Valley don’t even make the top ten.

What makes it worse, with massive student loans, not only are recent college grads not helping rebuild the consumer economy (they have very little discretionary income) but they are postponing by years both marriage and having children. So many more millennials are opting not to have children at all or limiting their child choice to a single kid. This trend has had a fascinating impact on U.S. population growth trends, a factor witnessed in other expensive countries including Singapore, Japan and most of Western Europe, where even getting enough space (real estate) to raise a child has become super-expensive.

According to the National Center for Health Statistics, the “general fertility rate in the United States — the average number of babies women from 15 to 44 bear over their lifetime — dropped to a record low last year, to 1.86 babies, well below the 2.1 needed for a stable population.” New York Times, December 4, 2014. Americans are not having enough babies to replace the existing population.

Ironically, in an era where there are political strong pressures to limit immigration, the growth we are experiencing in our overall population is the result of immigration. For businesses to grow, dependent on more consumers, this is strange phenomenon, since business owners are normally on the conservative side of the immigration issue.  At every level, from increased hours required at work today to the absence of paid parental leave, dwindling buying power of existing pay, outrageous cost of childcare and tuition costs rising at a multiple of inflation with a concomitant reduction in financial aid, the United States is becoming one of the developed world’s least child-friendly countries.

I’m Peter Dekom, and we are increasingly the country of uncaring meanness; not only do we not love our neighbors, we don’t even seem to like our own children either.