August 19 2014
Oh, Baby, You're So Expensive!
“I suspect that Millennials are experiencing some trauma,” wrote Patrice Lee about why her generation isn’t buying houses:
Given how quickly a job can be lost or your financial position changed, many young people are far more cautious about entering into a 15-and 30-year commitment to a property. Homeownership ties one down to an area which may not be appealing to a generation that is so transient. That's not to say we won't settle down, but perhaps not anytime soon.
Want another milestone that 25-34 year olds might decide to delay? Having kids—which has become just too darn expensive.
As USA Today reports, the Department of Agriculture has issued its latest annual report on the cost of having a child and it is a stunner. “A middle-income family with a child born in 2013 can expect to spend about $245,340 for food, shelter and other expenses up to age 18, an increase of 1.8% from 2012,” the government reports.
If people in their prime child-bearing years aren’t going to commit to a 20 or 30-year mortgage, with a fixed monthly payment, why commit to raising a child when the cost are so high and the monthly outlay for a child is most definitely not fixed?
Indeed, housing and child-bearing are related because growth in home purchases and procreating are negatively affected by the economy. As the Pew Research Center recently explained:
The Great Recession of 2007-09 was followed by a sharp drop in the U.S. birthrate, which has yet to reverse. The birthrate in 2013 was a record-low 62.9 births per 1,000 women ages 15 to 44, according to preliminary data from the National Center for Health Statistics. But just as the recession hit some states harder than others, birthrates generally declined more in states most affected by the slump.
In short younger Americans aren’t having babies or buying houses and that’s especially true in areas where the economy is bad and there aren’t jobs. So what to do?
Although slight, last year’s increase in the number of babies born bodes well for the economy. Many hospitals have already expanded their nurseries and the number of their pediatric doctors and nurses. Stores that specialize in cribs, carriers, baby clothes and toys are also experiencing a bulge in sales.
If he’s correct, even the current slow economic recovery will encourage more people to take the plunge and have kids just as previous generations. An improving economy is key when couples want children. Once getting a job, keeping a job and then getting a better job becomes easier, we can look forward to the pitter-patter of more and more future workers.