My sister shared this article yesterday and I had to share here. Maybe the topic is close to my thought as I listen to what my sister and friends have to go through to ensure their newborn, infants, or toddlers receive quality, educational, and appropriate care while they work to support (or share in the support) their families. Depending on what city you live in, for some cities (especially larger ones) that requires both parents to work in order to pay their bills. And, that can even be before having children. Once you add children into the mix, costs only increase exponentially.
The article she shared: “What Stalled the Gender Revolution? Child Care That Costs More Than College Tuition” discusses the cost of child care. It can range anywhere from $1200 a month to $2100 a month. Childcare can be similar or twice as much of some families mortgages, and that can be for one child. If you have two or more young children it can increase even more. How do these families make it work? How about families that are lower-income and do not make enough to cover their bills and childcare?
It reminds me of my recent blog post: “We are in last place” that discusses maternity benefits in the United States compared to other countries. Do we at all value women, mothers, and the place of families? We give little to no “time off” to bring the little one into the world, and then when a woman decides to go back to work, or has no choice, the costs can be mind-boggling.
Please read the above article. It is well written on the conversation that needs to happen on affordable childcare. I know I was in the dark on the topic, and only when it impacted people close to me did I better understand the depth of the need.
So, having two boys at the ages of 10 and 7, and living in the New York metro area (actually about 6 miles from New York City) i continue to pay child care and, yes, when they both were in daycare was paying more for their care than what i paid for my mortgage. The comparison, though shocking, shows no correlation to one another for one reason, each product / service was purchased mutually exclusive of each other. and if anyone is to blame, it is us, the consumer.
When we all stopped buying Troll Dolls, they all went away – we so no oversupply of Troll dolls inundate urban markets and we did not see landfills become overwhelmed with billions of homeless trolls. my business school example is the buggy whip, no matter how awesome a company made a buggy whip, the automobile industry killed the buggy whip industry because no one needed them anymore. Supply / Demand is a wonderful thing. Price sensitivity is also a wonderful thing as I only buy a type of product that I can afford (most often seen in cars and how an Acura is a statement even though it’s built by Honda – when the Acura Integra was introduced in the US, while in the UK noticed that they were Honda Integra’s). We buy products and services and brands that we can afford.
Now, back to child care – given that this industry is driven by dual income parents (DIPs) and single income parent (SIP), i will argue that the price of daycare is driven by the DIPs. The latter is not driving these prices since a SIP’s price sensitivity to everything is much higher because they, on average, make less than DIPs. And with a lower income, milk is more expensive, cell phones are more expensive and so on. Now, according the National Association of Child Care Resource & Referral Agencies (NACCRRA), average child care in the United States is $11,666 per year ($972 a month), but prices range from $3,582 to $18,773 a year ($300 to $1,564 monthly). Given that the average number of children per family in the US is 1.9 (need to confirm but am 99.9% of this statistic), the average family will mostly likely pay a $2K per month for childcare for a period of time.
Now the biggest competitor of childcare is a work at home parent. I will assume that if this is to happen, the lower income parent will become the care giver. If you take $2K and divide by (1 – total tax rate) you get $36.9K or $24K/.65 (assuming a 35% tax rate). This states that the lower income spouse must make at least $37K to cover child care expenses. So, if we assume arbitrage, $37K should be the average annual salary for the lower income spouse. Now, since stay at home moms outnumber stay at home dads 25:1 according to the US Censor data (Time magazine resource), so I will use the average weekly salary for a woman by the Bureau of Labor Statistics to prove/disprove my assertion of the arbitrage. And Guess What? The average weekly salary for a woman is $700 or $36,400 per year pretax.
Net/net, if you earn more than $36,400 per year, you will have extra money or greater purchasing power than an equally sized single income family. if you are married and earn less than $36.4K per year and are the lower income spouse, you be a stay-at-home parent.
Totally agree that this is nuts. We are figuring out now what is best for us, as we are expecting at the beginning of May.
Congrats! Such a tough decision.