Fuck The Middle-Class

This is not a health policy post, just an observation from my life.

The New York Times reported that fertility rates are declining in America.

Americans are having fewer babies. At first, researchers thought the declining fertility rate was because of the recession, but it kept falling even as the economy recovered. Now it has reached a record low for the second consecutive year.

Because the fertility rate subtly shapes many major issues of the day — including immigration, education, housing, the labor supply, the social safety net and support for working families — there’s a lot of concern about why today’s young adults aren’t having as many children.

The Times asked the young adults who have fewer kids than they want why. The biggest reason (64%) was that childcare was too expensive. Most of the top responses were some variation on the simple fact that kids are expensive.

They are expensive even when you don’t take them to a baseball game where they want popcorn.

I have two kids. Both are out of daycare. The two of them were in daycare concurrently for two years straight and then my youngest was in daycare by himself for another three years. Paying for daycare was the biggest financial challenge that we have faced, it was a bigger challenge than me being out of work for almost all of 2010.

When my wife and I decided that we wanted to start trying for kid #2, we had a long series of discussions as to how we would handle childcare. We used a community based non-profit daycare for our daughter when we were both working and she was an only child. Its price point for full time care was below the Pittsburgh regional average. The two year overlap between our daughter and kid #2 both needing daycare and the first day of her kindergarten scared the ever living shit out of us. We were both doing okay in our careers. We were both employed at salaried positions, and probably a tad underemployed as this was still during the recovery from the Great Recession.

We had two major options conditional on us having kid #2. The first option was to suck it up, acknowledge that we would be broke and in debt and keep both kids in daycare. The other choice was for us to flip a coin to see who would stay home for two years. We figured that, after accounting for bus passes, work clothes and other job related expenses, one of us would be working solely for daycare expenses for two years. The upside of both of us working is that it would not leave another hole in our resumes, as we were reaching a point where careers either launched or flat-lined.

We decided to be broke. We put both kids in daycare. I went to referee every soccer game that my knees allowed. It was a close call. We lucked out. We made it through those two years and both of our careers were able to launch. Those launches would not have occurred if one of us was out of the labor force.

We also joked that at least paying for college would be easy. California University of Pennsylvania is a state school where I refereed too many games. It is a perfectly decent mid-tier school. In 2018, its tuition and fees for in-state students is less than what I was paying for my son’s infant year of daycare in 2013.

College is far less scary financially than daycare. The biggest difference between college and daycare is financing. I have access to relatively easy/cheap credit for college through the federal college loan programs. I am still paying off a chunk of grad school and will do so for another decade at 2.875%. My kids won’t get the same interest rate but we will be able to finance a year of college at a reasonable interest rate for ten to fifteen years. Daycare required payment in full for the upcoming month by the 28th of the current month every single month. We were paying effectively college tuition in cash every month.

The other, far more important challenge for financing daycare versus college is income life cycle. As cohorts, income tends to increase with age through middle-age and then stabilizes for a while. In less fancy terms, people are far more likely to make more money in their thirties than in their twenties and then they’re also more likely to make more money in their forties and fifties than in their thirties. If there was cheap financing that could shift financial burdens through time like student loans, this would not be a big deal. Daycare has no ten year financing option to shift burdens to better times.

Instead, it is a massive cash outlay at a point in one’s life when the odds of having a lot of cash available is fairly low. Helping my kids pay for college is going to be easy compared to daycare as we are likely to be earning more in nine years when my oldest will be a freshman than we are earning now and we can spread her expenses out over several years. We can also save money with seriously valuable and socially non-productive tax advantages to pre-pay a part of college unlike with daycare.

So when we, as a society, tie so many benefits to work and then tell young adults that they have to come up with state school tuition to pay for daycare in cash, some young adults look at the problem of working and raising kids as an impossibility and therefore they don’t have kids or as many kids as they would want.

Kids are expensivePost + Comments