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Is exploding cost of raising kids going to shrink Southern California?

Andre Mouchard, The Orange County Register on

Published in Parenting News

Want to have a kid or three?

"Want" is a key word here. Contrary to some pop culture chatter about the supposedly expanding number of young adults who don’t want kids, at least some new polling suggests the opposite might be true. Not only do most people who can have kids want them, the desire for bigger families – three or more kids – is more common than at any time in the past half-century.

In a Gallup poll released last fall about 45% of respondents said the ideal family includes three or more kids. That figure reflected the most widespread desire for that particular family size since 1971, and nearly matched the number (47%) who want just two or fewer kids, a family size that’s been considered ideal for most of the past two generations of Gallup polling on the subject.

What people want and what they do, however, increasingly are different. A chief reason, experts say, is money.

“Our research has found that most young adults still want children,” said Sara Srygley, a sociologist and demographer with the Population Reference Bureau who recently has tracked the living arrangements of young adults. “But they face a lot of barriers.”

Ah, those. Health care expenses; housing prices; inflation; retirement fears – a lot of financially themed forces in modern American life create small-to-big barriers to having a kid at any particular time.

And, collectively speaking, those barriers seem to be creating a powerful buzzkill to anybody’s wish list for a big, or even medium-sized, family.

In April, the Centers for Disease Control and Prevention issued a report saying America’s birth rate last year has hit an all-time low.

Not only did federal data reveal a dip in baby production to about 1.66 kids per woman (a number that reflects the total number of children a woman is expected to have in her lifetime), the new number is well under the so-called “replacement” birth-rate of 2.01 kids per woman. It also reflected the continuation of a slowdown in American fertility that began in the early 2010s but was interrupted by a short-lived baby boom during the last two years of the pandemic.

The baby bust has been particularly pronounced in rapidly aging populations like Southern California. Since 2015, local county-by-county birth rates have shifted from gradual decline to full-on free fall – down 22% in Los Angeles County, 17% in Orange County, 16% in San Bernardino County and 12.8% in Riverside County.

Experts offer a lot of reasons for the broader trend.

For example: Fewer teenagers are having kids, according to federal data. Also, fewer people of all ages are having unplanned pregnancies. Both have been public health goals for generations.

On the political side, a wild-card factor is abortion. While it’s unclear how changes in abortion law might affect population growth going forward, the Dobbs decision of 2022, which struck down Roe v. Wade and let states set their own rules about abortion, has yet to be reflected in any change in birth rates.

And, in terms of biology, the numbers suggest a long-term population decline.

Currently, about 38% of all Americans are of a prime age for reproduction (16 to 44), while another 42% are age 45 or older. But the older group is growing much faster than the younger group and, soon, the combination of lower birth rates and fewer people in their baby-making years could become an anchor on overall population growth.

If current immigration rules stay and birth rates don’t change, the United States isn’t likely to see an actual decline in total population until about 2080; if immigration ends or is severely reduced, experts believe a population downturn could start in the mid-2040s.

But, in the here and now, there’s another issue – an elephant in the nation’s collective nursery – that might dwarf all others when it comes to younger people having kids: money.

The cost of raising a kid has jumped so high, so quickly, that some experts – and a lot of would-be parents – suggest that babies soon could become similar to luxury items or so-called “quality” experiences, like tiny, diaper-wearing Prada bags or squirmy eco-tourism trips to Costa Rica.

“I don’t know about the Prada stuff,” said Johnathan Yi, a CPA who lives in Santa Monica and became a first-time father late last year at age 38.

“But there’s no question: Kids are expensive.”

Like housing

For much of the 20th century, particularly before the rise of Social Security and Medicare and, later, the emergence of pensions and 401(k) plans and home equity and baby boomer inheritance checks, you could squint hard and see a kid making some kind of financial sense.

Having several children could provide a family farm with lots of cheap labor. Or, for nonrural families, large broods of children might eventually provide aging parents with eldercare when (and if) that becomes necessary.

Those were reasons – not the only ones, but big ones – why kids, for a long time, defied the most basic rules of supply and demand. Poorer families have tended to have more children while wealthy families had fewer.

But the dynamic has changed. These days, having children is what economists like to call an “irrational act,” a calculated decision that runs counter to the decision-maker’s financial interests. Or, as noneconomists might note, they’re pricey.

In 2017, the Department of Agriculture pegged the cost of raising a kid – from birth through age 17 – at about $270,000. By late 2022, a study by the Brookings Institute, using the same criteria used by the feds (and adjusted for inflation) found that the cost had risen to about $311,000. Since then, experts say inflation alone has added at least another 10% to that total price tag.

 

“We spent $117 on diapers in one month a few months ago,” Yi said. “I only remember that number because I thought, at the time, ‘How is this happening?’” Yi added that his son’s diapers “aren’t particularly bougie.”

But diapers are just part of it. Most of the basics of having kids – from the price of having a baby in a hospital, which jumped from about $11,000 in 2000 to about $27,000 in 2022, to the monthly fee for daycare – have jumped faster than inflation, according to several reports. And two of the items that used to hold steady or drop (clothing prices; food) have, in a new era of higher inflation, started to jump again.

The Yale School of Medicine recently pegged the cost of baby food at between $760 and $2,280 a year, depending on what you’re getting, an increase of more than 25% from four years earlier.

“I can see how money might lock a lot of people out of having kids,” said Yi, who studied economics at UCLA in the early 2000s.

“It makes sense, even though I guess that isn’t necessarily the test when it comes to having kids.”

Some demographic experts agree, noting that wealth and higher income are starting to merge with a propensity to have more kids. But the idea is relatively new, according to Srygley and other demographic experts, and few studies have supported the idea one way or another.

One real-life experiment took place in the mid-1970s, when a sudden shift in energy prices boosted incomes in some – but not all – coal-mining communities in the Appalachian mountains. Researchers later found that in counties where incomes jumped 10%, the birth rate also grew, by about 8%, while counties that didn’t see higher incomes also didn’t see an increase in babies.

And a new book, “Not So Weird After All: The Changing Relationship Between Status and Fertility,” by Rosemary L. Hopcroft, Martin Fieder and Susanne Huber, argues that the long-standing inverse relationship between wealth and reproductivity is starting to shift in real time.

They point to a recent demographic shift in Japan, where an aging population has led to a birth rate that’s well under replacement level. Specifically, they note that younger Japanese men who have high-paying jobs are far more likely to marry and become fathers than are their less-financially secure peers. Assuming that’s true, it would reverse a dynamic that had been in play in Japan since the end of World War II.

But those studies don’t touch on the real-life expenses that come with raising kids. The Department of Agriculture report, from 2017 (using data collected in 2015) did.

For example, federal researchers found that childhood is priciest between the ages of 15 and 17. “It’s at these ages that spending on transportation, health care, and food peaks,” they wrote.

The report also noted that spending on kids shifts over time, depending on the child’s age. Child care expenses – which, in Southern California, can run about half the cost of a typical rent or a mortgage – peak when a kid is out of diapers but not yet in full-time school, typically ages 2 through 5. Spending on other categories, such as food and clothing, jumps when children enter grade school. And spending on miscellaneous items (uh, cell phones?) peaks when the kids are teenagers.

Many experts and recent parents suggest that the overall rise of the cost of childhood could push having kids into the same economic category as home ownership – meaning kids would be aspirational for many, but a financial possibility for only a few.

Data on local child expenses suggests that’s already happening in Southern California.

The Economic Policy Institute, a nonpartisan think tank that specializes in issues connected to work and economic fairness, offers a cost-of-living calculator pegged for families of various structures and sizes. When factoring in everything from housing and transportation costs to child care and taxes, the EPI found that a family with two parents and two kids living in the Inland Empire spends $9,273 a month on the basics, meaning they would need an annual income of $111,272.

That same family in Los Angeles County would spend $10,841 a month, or $130,094 a year, and in Orange County the expenses would be $12,252 a month, or $147,022 a year.

None of those calculations include so-called “extras,” such as retirement savings, phone and internet services, or fees for sports or music.

All of those calculations peg spending for families at well above – roughly 25% to 40% higher than – the median household income in each of those counties.

“We have a good income, and it’s still hard,” new father Yi said.

“I can see where this becomes sort of a dream for a lot of people.”

That, too, might already be in play.

Remember the Gallup poll? That one focused on what young adults want. A different poll, conducted by Pew Research in 2021, looked harder at what young adults actually expect when it comes to becoming parents. And, in that one, the numbers reflect a possible long-term decline in population.

About 44% of young adults who don’t have any kids told Pew they’re either “not too likely” or “not at all likely” to have children; a whopping 54% who have at least one child said they were not going to have any more.

About 17% of those respondents said the key factor was cost.

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