Two big expenses that people sometimes embark upon in early adulthood are buying a house and having children. This is kind of bad timing, because young adults don’t have as much money as they will later on.
For houses, there’s an established solution to this problem: the mortgage. You pay part of the price, get your house, and pay the rest over the years. Obviously the mortgage market has its problems, but I think a world with mortgages is better than one without them. Otherwise virtually no one would buy their own home.
For children, we don’t have a similar way to spread out expenses over the years. The cost of childcare, either by paying someone to watch your child or through lost wages of a parent who stays home, is highest in the child’s first years of life. (It gets cheaper because one daycare teacher can only watch three babies, but eight toddlers or thirteen older children.)
Everyone knows that it’s expensive to send a child to college, and people talk about saving for college as soon as their kids are born. In-state public college costs around $9,000/year for tuition and fees. The first four years of childcare cost something like $12,000/year (more in cities – the nearest infant slot to us is $28,000/year). So why aren’t families talking about saving for their child’s first years?
Because there’s no application or qualification process to conceive a child. I suspect a lot of families basically don’t plan on the realities of how expensive it is to raise a baby.
Unsurprisingly, this is what child poverty looks like by age in the US:
Developmentally, this is bad news. One-year-olds, who should be growing their brains, are the poorest age group in the nation (poorer than retirees). At the time when children most need attention and good nutrition, their parents may not be able to give them enough of either.
Some improvements I can think of:
First, free birth control should be easily available to everyone, preferably through walk-in clinics as well as regular doctor’s offices. I did once qualify for free birth control while I was an intern after college, and I’m grateful, but you should not have to present the Planned Parenthood receptionist with paperwork on your income so she can ask (in full hearing of the rest of the patients), “Really? That’s your income? That’s below minimum wage.” If the government provided free birth control for everyone, especially long-term methods, I think there would be big reductions in welfare costs, healthcare costs, crime, etc. It should pay for itself many times over.
Once children are born, we should support them better. WIC (Special Supplemental Nutrition Program for Women, Infants, and Children) is a success story. It provides food assistance to low-income pregnant and postpartum women and to children up to age 5. It more than pays for itself—families with WIC have fewer pregnancy complications, fewer premature births, better health for moms and children, and smarter kids. Yay nutrition!
So what about childcare? I’d like to see more aid for families with young children. We could do this through paid maternity leave, as many European countries do. Or we could provide childcare vouchers. But both of these privilege one form of care over the other. A friend in Germany tells me it’s very difficult to find childcare there, as everything is set up assuming that mothers will be home with their children (particularly during the first year). And free daycare or daycare vouchers don’t help parents who would rather stay home.
Cash payments would be more flexible—they could be used to replace a stay-at-home parent’s lost income. They could be used to compensate another caregiver (whether that’s a grandparent, neighbor, nanny, small daycare, or large daycare center). Or they could be used for something else the family needs, perhaps better housing, better food, medical care, or a car. I think it’s pretty likely that by making a dent in child poverty, you’d see savings later on, though perhaps not as dramatic WIC’s. Maybe we should even just expand it to a guaranteed minimum income, though I’m not too sure.
I’ve been trying to think if it would make sense for young families to take out loans to cover childcare or other baby-related expenses. Banks are willing to give you a mortgage because they can repossess the house if you default, but nobody wants to repossess your baby. Student loans are more equivalent, though in this case they would be taken out by parents rather than children.
Lastly, I can’t think of any way to have a pre-child qualification process in the real world, but it does seem like a good idea in theory.