Child care, on average, consumes $1 of every $5 in a family’s budget. (Los Angeles Times)
On October 17, 2014, Adam Schickedanz and Neal Halfon write in the Los Angeles Times:
Parenthood should be affordable in this country, but the cost of raising a child from birth to adulthood is now a quarter of a million dollars and projected to double by the time today’s toddlers reach their teens. Will having kids soon be out of reach economically for many American families?
A recent report from the Center for American Progress found that middle-class families are feeling an unprecedented economic squeeze — caught between stagnating wages and the exploding cost of basics like housing, healthcare and children’s education. Most families, it seems, are getting by on less and living closer to the financial edge to help their kids grow up healthy and get ahead.
The most striking growth in costs to families has been in child care, where expenses have climbed about $200 annually in each of the last dozen years, with nearly tenfold growth since the 1960s. Child care, on average, consumes $1 of every $5 in a family’s budget and exceeds the typical rent in every state.
In terms of their kids’ health, families increasingly have to choose between treating their children’s medical needs and paying household bills. Despite gains in the percentage of children with health insurance, per capita medical spending on kids has quietly ballooned faster than for any other age group, with families paying more for premiums and steeper out-of-pocket expenses.
For evidence to suggest that middle-class parents might already be getting priced out of parenthood, look to the national birthrate. It fell sharply in the recession but, unlike in previous economic rebounds, has continued to drop. This makes sense in financial context, given that most families haven’t seen their incomes grow since the recovery began and the median net worth of households has actually fallen below what it was 15 years ago. Most families today don’t have enough saved to meet basic needs for three months, let alone save for college or retirement.
For folks in the middle class, the economic calculus of raising kids must be daunting. Not only are the costs unaffordable, but parents also face a harsh ultimatum: “Keep up with the Gateses” or risk your children’s health, achievement and long-term well-being.
Higher-income families spend six times more than working-class families on child care and educational resources, such as high-quality day care, summer camps, computers and private schools, which are increasingly indispensable investments in long-term success. This spending inequity has tripled over the last four decades and is only accelerating, which is likely to widen the achievement gap, creating a vicious cycle.
The public education infrastructure, designed generations ago to drive a strong economy and give every child an equal footing for success, is crumbling from neglect — stuck between those who argue for repair and those who argue for redesign. As a consequence, it is unable to prepare most kids for the new economy. The statistics are grim: Two-thirds of preschoolers don’t have access to high-quality child care, two-thirds of public school students fail to meet math and language proficiency by eighth grade, and two-thirds of public high schoolers aren’t ready for college when they graduate.
To solve these problems we have increasingly relied on a public safety net designed to catch what used to be a small number of kids falling through the cracks. But over the last 50 years those cracks have become chasms. When funding constraints force programs such as Early Head Start to enroll just 4% of eligible children needing early intervention and half of pediatricians opt out of accepting kids on Medicaid, these are clear signs that it’s time to rethink our approach.
These economic realities are contributing to a swift loss of academic opportunity, health prospects and upward mobility among children whose parents cannot afford to spend top dollar. With this de facto economic segregation of opportunity leaving working families in the economic dust, we are risking the prosperity and social mobility of our kids for years to come.
We should be reinvesting in working families and modernizing our public infrastructure. Not only would this make parenthood more feasible, it also makes good economic sense. We know that investing early in kids yields considerable savings by reducing chronic health problems, building stable families and increasing earning potential.
The opportunity to raise healthy, smart and successful kids shouldn’t be an economic luxury. It’s time we made parenthood affordable again by investing more in kids and families. Given that what’s at stake is the success of our country, the alternative is unaffordable.
This op-ed is a sobering read that casts a dire outlook for America’s future as long as parenthood remains unaffordable at more than a quarter of a million dollars. Such costs are projected to double by the time today’s toddlers reach their teens, along with ever-escalating costs for basic necessities such as housing, healthcare and children’s education. This is resulting in a reality in which most families are living closer to the financial edge to help their kids grow up healthy, educated and get ahead.
While there are projections for the creation of new jobs, these jobs will necessitate more educated workers with the necessary education and training to meet the demand. And such jobs will only be realized with substantial economic growth.
The reality that we, as a nation, must face is that given the current invisible structure of the economy, except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or prevent a lifestyle, which is gradually being crippled by near poverty or poverty earnings. Thus, education is not the panacea, though it is critical for our future societal development. And younger, as well as older people, will increasingly find it harder and harder to secure a well-paying job––for most, their ONLY source of income––and will find themselves dependent on taxpayer-supported government welfare, open and disguised or concealed.
All this translates to the growing reality that, in addition to low-income parents, middle-class parents will be priced out of parenthood with a correspondingly sharp drop in the birthrate.
This scenario is reflective of declining incomes and the inflationary costs of living. The solution must be to empower people to increase their level of income while deflating the costs of living.
In the United States and other countries of the Western world, we need to realize that the welfare state’s policy of full employment does not work. This is a policy of contriving toil for the sake of making men and women appear to be productive. Under the present system, a job is their ONLY means of earning an income. Yet workers are constantly confronted with the threat that tectonic shifts in the technologies of production will destroy their job or further stagnate their wages. Yet they are trapped because they have allowed the financial system to enslave them under a system of wage and welfare slavery, where they are excluded from the ownership of wealth-creating, income-producing capital assets––the non-human instruments of production that are increasingly the predominant means for producing products and services. The wealthy ownership class, those who, by accident or inheritance or in some other way, own capital and therefore have designed the system to facilitate their access to increasing quantities of newly formed capital. Thus, the rich get richer as a result of their swelling capital ownership interests. Thus, according Schickedanz and Halfon, it is the rich who are able to spend “six times more than working class families on child care and educational resources.”
Yet, as Americans, we share the underlying principle that every citizen has a natural right to life, in consequence whereof binary economist Louis Kelso states “the right to maintain and preserve one’s life by all rightful means, including the right to obtain one’s subsistence by producing wealth or by participating in the production of it. When the great bulk of the wealth is produced by capital instruments, the principle of participation requires that a large number of households participate in production through the ownership of such instruments.”
The solution to broadening capital ownership and significantly increasing the income of the vast majority of Americans who are capital-less or under-capitalized is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street or the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and debt and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings.
The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk should be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
The Federal Reserve Board is already empowered under Section 13 of the Federal Reserve Act to reform monetary policy to discourage non-productive uses of credit, to encourage accelerated rates of private sector growth, and to promote widespread individual access to productive credit as a fundamental right of citizenship. The Federal Reserve Board needs to re-activate its discount mechanism to encourage private sector growth linked to expanded capital ownership opportunities for all Americans.
We need to reform the Federal Reserve Bank to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy.
The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.
This is the REAL solution to reversing the economic squeeze caused by job eliminations, stagnate wages and growing dependence on welfare state policies and to putting America on a path to prosperity, opportunity, and economic justice.
http://www.latimes.com/opinion/op-ed/la-oe-schickedanz-america-children-20141017-story.html
