The Staggering New Cost Of Raising a Child in America

How much does it cost to raise a kid these days? Apparently, a lot more than it used to. The estimated cost for a middle income family to raise a child born in 2012 to age 18 is $241,080. The estimate rose 2.6% since last year, an increase that has outpaced general inflation.

The data, based on the USDA's annual Expenditure on Children by Families survey, suggests that even when adjusting for inflation, it is now more expensive than ever to raise a child. What, exactly, is driving the increase and what does it mean for the future of families in America?

Comparing this year's results with the inflation-adjusted figure from 1960, the sources of the growing costs become clear. The 1960 cost of raising a child, adjusted for purchasing power parity to the year 2012, was $195,690. Health care made up 4% of expenditures while child care and education made up only 2%. Fast forward to the current year: health care has doubled to 8% while child care and education has sky rocketed to 18%.

Contextualizing the rise in total cost in terms of these particular expenditure groups does a great deal to illuminate the specific concerns that a couple must consider when planning on starting a family. With more dual-income families than ever before, a rise in child care costs is an obvious concern. However, this does not necessarily reflect the totality of the situation. With larger changes in our social fabric come changes in expenditure sources. Just as there are more dual-income families, individuals are retiring later. Where older relatives may have been able to provide an affordable care options for young couples, many grandparents are staying in the work-force later. Similarly, the options for care are much more varied, representing potential increases in quality with increases in price. While child care may have been cheaper in the past, parents have a plethora of options in today's economy that they may not have previously had.

However, while there is an opportunity cost associated with parents deciding whether to keep two incomes or opt for one stay-at-home parent, health care costs likely vary on circumstance more than choice. The cost of health care weighs greater on lower income families and, given the trend over the past 40 years, will likely continue to do so. This means that for lower-income families who look into the cost of having a child, the choice may not be who stays home, but whether or not it is possible to carry the costs in the first place.

But just people are working longer, they are having children later. So while the cost of raising a child is greater, it appears that people are not writing off the possibility of having children altogether. Rather, they are opting to marry later, work longer, and have children after more years in the work force.

Unless they want to save $241,080. Then maybe they should reconsider.

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Julie Price

Graduate Student.

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