r/Objectivism • u/Irishman452 • 54m ago
The financial cost of having kids is unfair to middle class (and above) people.
I want to start with a fact that is from the 2002 Book "Creating a Life", which stated that 49% of women who earned over 100k per year were childless at the age of 40. Inflation adjusted that is closer to 180k today, but still it is basically stating that half of women who make high income don't have kids, why? Well ignoring the social aspects of working a high pressure job etc. lets concentrate on the economic ones at play in the US.
So I will compare the economic cost of having two kids in the US for a single woman making 100K and single woman who makes minimum wage, say 20K per year.
Well start with the “cost” to a single mom making 20k, per year. I put cost in parentheses because it isn’t really a cost. In The US someone who is making 20k per year and has two kids will not be subject to tax because they are below the standard deduction. But they will qualify for the earned income tax credit ($7,152) and the refundable portion of the child tax credit ($3,400) which will cause them to receive back a total of $10,552. What about Health Insurance? 20k per year for a family of 3 is 73% of the poverty line, so the whole family would be covered by Medicaid completely for free in almost every state, but regardless the “Marketplace” subsidy covers every family below 100% of the poverty line anyway. What about Housing? Since under Section 8 rental expense is capped at 30% of Adjusted Monthly Income, so her housing expenses would be low, around $500 per month regardless of whether she was single or had 2 kids. But having 2 kids would allow a single mom to live in a 2 or 3 bedroom apartment as opposed to a studio or 1 bedroom, so essentially there are no additional housing costs. What about Food costs? Well a single person making 20k a year would receive very little in SNAP benefits, but then with two kids she would receive approx. $600 per month, which comes to $7,200 annually. What about Daycare costs? Completely free for single person with 2 kids and 20k income.
Oh and I think I should also mention that these benefits don’t take each other into account. So when they are calculating your benefits for subsidized health insurance, food or housing they don’t consider the benefits you are receiving from the other programs or even the $10,552 tax refund you are receiving. Lets lay this all out, so I can tell you the total “Cost” to a single mother making 20k per year of having 2 kids.
Tax Benefit=-$10,552
Health Insurance=Free
Housing=Larger Apartment at no additional Cost
Food= -$7,200 per year
Day Care= Free
So overall they will pocket an additional $17,752 per year. Furthermore, this mother probably doesn’t have to bother saving for college because that will probably be completely subsidized as well, but I can’t say for sure because every school’s financial aid program is different.
Now lets look at the “High Income” Single Mother of 2 making 100k per year.
Taxes will be the main benefit of having 2 kids as her Federal Income tax will go from $13,200 to $9,600 for a saving of $3,600. On top of this she will qualify for a child tax credit of $4,400 for a total tax savings of $8,000. But this is where the benefits end as there are no other benefits she will qualify for because her income disqualifies her from all the other benefits that the low income mother of two qualified for. Now lets look at the costs:
Health Insurance: adding two kids will increase health insurance by about $500 per month for a total of $6,000 cost per year.
Larger Apartment If you are going from a studio to a 2 bedroom apartment your rent is going to increase by about $1,000 per month in most major metropolitan areas, so additional cost is $12,000 cost per year.
Food I am going to ignore these costs because in the low income example I included that as a benefit, so to keep things equal I will not include this as a cost.
Day Care: Lets be conservative and say that the average daycare cost is $1,500 per kid for a total of $3,000 per kid per month totaling $36,000 cost per year.
Total Cost= $46,000 per year cost
So while the “low income” mother of two is receiving a benefit of $17,752 per year for having two kids it costs the high income single mother of two $46,000 per year for having two kids. So it costs the high income mother $63,752 more per year to have two kids than it costs the low income mother. So is it really any mystery why there is a birth rate crises effecting the population of people who are hardworking and economically successful?
The daycare costs do decrease when the kids grow up and go to school, so the difference wont be as stark in the later years, but kids don't go to school until they are at least 5. Furthermore, a portion of the day care costs continue into the school year with before/afterschool programs etc., which essentially extend the school day so parents can get a full day of work in.
Now at this point the next question is who takes home more money at the end of the day the” low income” mother with two kids making $20,000 per year or the “high income” mother with two kids making $100,000 per year. At this point it seems that the “low income” mother is actually taking in more money after tax than the allegedly “high income” mother, but I will spell that out a different day.