child care

The Cost of Raising a Child, Revisited

Jeremy Horpedahl1 Comment

Last week my post was about a new article I have with Scott Winship on the “cost of thriving” today versus 1985. That paper has gotten quite a bit of coverage, including in the Wall Street Journal, which is great but also means you are going to get some pushback. Much of it comes in the form of “it just doesn’t feel like the numbers are right” (see Alex Tabarrok on this point), and that was the conclusion to the WSJ piece too.

Here’s a response of that nature from Mish Talk: “There’s no way a single person is better off today, especially a single parent with two kids based on child tax credits that will not come close to meeting daycare needs.”

He mentions daycare costs, but never comes back to it in the post (it’s mostly about housing costs). Daycare costs are undoubtedly an important cost for families with young children (though since Cass’ COTI is about married couples with one earner, they may not be as relevant). And in the CPI-U, daycare and preschool costs only getting a weight of 0.5%. Surely that’s not reality for the families that actually do pay daycare costs! If only there was an index that applied to the costs of raising children.

In fact, there already is. Since 1960, the USDA has been keeping track of the cost of raising a child. Daycare costs are definitely given much more weight: 16% of the expenditures on children got to child care and education. And much of that USDA index (recently updated by Brookings) looks similar to what COTI includes: housing, food, transportation, health care, education, but also clothing and daycare. I wrote about it in a post last year and compared that cost to various measures of income (including single-earner families and median weekly earnings). But what if we compared it to Oren Cass’ preferred measure of income, males 25 and older working full-time? Here’s the chart.

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Mom Life and Dad Life

Jeremy Horpedahl8 Comments

Earlier this week my co-blogger Mike had a really great post on work-from-home, and how we might turn former workspaces into new home spaces. It’s a really great idea, and an excellent example of a “second best” solution to the housing shortage.

I’d like to talk about a related but very different topic, which is the things we do in our homes. And for many working couples, that thing is raising children (and generally, keeping up the house).

If you spend much time on Twitter or Instagram, you’ve probably run across the account “Mom Life Comics.” It’s a very popular Instagram account, and lately some of the comics have been shared widely on Twitter (sometimes sympathetically, sometimes mockingly). The running theme of the topic, in short, is that moms carry much more of the “load” than dads do, both the physical load of doing stuff, and what’s sometimes called the “mental load” as well.

There’s a reason the comic is striking a chord with women: just ask any young mom today, especially a young mom that is also working. They have all felt this way at some point, and some of them probably feel this way all the time.

The idea is nothing new, of course. Sociologists have been using the term “invisible work” since at least the 1980s to describe the unseen, unpaid work that women do around the home. But the concept has, of course, been around for much longer. But how has the balance of work changed over time?

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The high cost of day care and demographics

Joy Buchanan1 Comment

When I moved half-way across the country to take a new job, I had no local support system for my 2-year-old. Putting him in a full-time day care was the plan. I wanted a day care center with a good reputation that is located near work and home. My story, like so many others, includes phone calls and long wait lists. At first, it was hard to understand how I could be willing to pay for a service and it could just not exist.

Opening a large daycare center is risky. Who wants to take that risk? I joked that I’d quit my professor gig and start a daycare in response to the huge demand. Of course, I did not. Fortunately, I don’t live in one of the American counties that lost population over the past ten years.

The WSJ on demographics describes this situation in a shrinking county:

In Lincoln County, Kan., pop. 2,986, about 40 miles west of Salina, Kan., economic development director Kelly Gourley set out to build the county’s first day-care center not run out of someone’s home. A child-care shortage was making it difficult to work and raise children, she saw. The town’s handful of in-home daycares were the only options, and they tended to come and go.

Ms. Gourley estimated it could cost as much as a half-million dollars to build the facility, and she didn’t think it could weather fluctuations in demand. “In a rural community, you lose one kid and you might be in the red all the sudden,” she said. She shelved the plan and instead is working to increase the supply of in-home caretakers.

Allison Johnson, a 32-year-old nursing home speech pathologist, grew up in Lincoln County and hoped one day to have three children. She no longer thinks that is feasible after she had to wait a year to get an in-home daycare spot when her first child was born. Now she and her husband, who owns a residential-construction business, are trying to figure out how they would juggle having a second child.

Her father, a farmer, watches her son, now 2, when her in-home daycare provider isn’t available. But he and her brother are in their busy season, and “they’re not going to be able to do anything but throw him in the tractor.”

There are attractive economies of scale for day-care centers. This economic fact is part of the reason that young people are leaving rural areas, which in turn makes it harder for rural areas to support services for young families.

There has always been a huge amount of value created at home within families that is not fully captured by GDP. As more childcare is moving to the formal market, we are starting to see just how valuable those services are that used to be provided in the family.

Whatever your views on the matter, it’s not surprising that politicians are talking about subsidized day care.

Allowing for flexibility through policy moves like vouchers and de-regulating in-home daycares is important. Some communities can’t support a day-care center facility, like the one in this article. I think the if you build it they will come philosophy, if applied too widely, would be hugely expensive and not efficient. On the other hand, there could be situations in which more day care would be provided if the local government would take on some of the risk currently faced by entrepreneurs.