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Skyrocketing Costs Of Child Care: 1960 to Today

1990
> Total Cost to Raise Child (Not Inflation Adjusted): $120,150
> Total Cost to Raise Child (Inflation Adjusted for 2011 dollars): $207,859
> Cost of Food (Inflation Adjusted 2011 Dollars): $38,665
> Cost of Medical Care (Inflation Adjusted 2011 Dollars): $37,531
> Cost of Housing (Inflation Adjusted 2011 Dollars): $68,404

The population of the U.S. increased just 9.8% between 1970 and 1980. This was the second slowest period of growth in American history. Only the 1930’s – period of World War II and the Great Depression – had slower growth. One of the possible causes of this drop off in childbirth was a sharp spike in the costs of raising them. The 1980’s was the decade where prices of raising children started to explode in the U.S. Between 1980 and 1990, the cost of clothing an eight year old for a year increased by more than 50%. Housing costs increased by nearly 10%, despite the fact that the USDA removed child care costs from this category in 1990. It was moved into a new category, where it was combined with education. Overall, non inflation-adjusted costs of raising a child through the age of 18 nearly doubled, from $70,000 in 1980 to $120,000 in 1990. Inflation adjusted, the increase is still over 10%. This is the biggest increase in child care costs over any decade on record.

2000
> Total Cost to Raise Child (Not Inflation Adjusted): $165,630
> Total Cost to Raise Child (Inflation Adjusted for 2011 dollars): $216,975
> Cost of Food (Inflation Adjusted 2011 Dollars): $37,531
> Cost of Medical Care (Inflation Adjusted 2011 Dollars): $15,248
> Cost of Housing (Inflation Adjusted 2011 Dollars): $72,272

By 2000, the U.S. population growth had fully recovered from the contraction it experienced during the 80’s. The economy boomed for most of the 90’s and families were growing again at a steady rate. The country added more than 40 million people between 1990 and 2000, a 13.2% increase. Gasoline was cheap, about $1.20 per gallon (the equivalent of $1.50 per gallon in 2011 dollars) which is nearly the same as it was ten years earlier. The cost of raising a child rose, but at only half the rate it did between 1980 and 1990. Most of the rising expenses came in the form of health care, which went up an astounding 64%, and the combined category of education, child care, and miscellaneous expenses which increased more than 25%. One of the reasons for the jump in this category is explained in the USDA’s 2010 report: “Much of this growth is likely related to child care. In 1960, child care costs were negligible, mainly consisting of in-the-home babysitting. Since then, the labor force participation of women has greatly increased, leading to the need for more child care.” The costs of things requiring energy dropped dramatically. Housing costs contracted 15%.

Click Image for Larger Chart of Change in Expenses 1960-2010

USDA: Expenditures On Children By Family (2010)

2010
> Total Cost to Raise Child (Not Inflation Adjusted): $226,920
> Total Cost to Raise Child (Inflation Adjusted for 2011 dollars): $235,996
> Cost of Food (Inflation Adjusted 2011 Dollars): $37,658
> Cost of Medical Care (Inflation Adjusted 2011 Dollars): $19,156
> Cost of Housing (Inflation Adjusted 2011 Dollars): $72,446

2010 represented the first year of the recovery since the subprime mortgage crisis in 2008 decimated the economy. Gas prices averaged around $2.70 per gallon. The profile of an American family’s expenses has changed dramatically.  Baby Boomers reached young adulthood in the 1960s. These people are now, in many cases, retired . Housing still represents 31% of total expenses, as it did in 1960. The absence of change is notable given that child care up to age 6 was considered part of housing expenses in 1960. Transportation has barely changed – 14% of total expenses compared to 16% in 1960. The biggest decrease in proportion came in clothing and food. These represented 11% and 24%, respectively, of costs fifty years ago. In 2010, clothing was just 6% of costs, while food had dropped incredibly to just 16%. In 1960, child care, education and health care combined to for just 6% of American parents’ costs in 1960. Now, nearly 25% of the costs of raising a child goes to those expenses. If prices were to remain constant, a family with a child born in 2010 will spend $226,000, nearly a quarter of a million, before that child reaches the age of 18. Even adjusted for inflation, that is 23% more than people were spending just 30 years ago.

Michael A. Sauter