Cost of Raising A Child is Overstated

Fake Government Statistic: It Costs $241,000 to Raise a Child by Gary North

The U.S. Department of Agriculture issues this statistic every year. Reporters dutifully report it. There is no more misleading statistic that the government releases each year. It is clearly preposterous. It is never challenged by the media.

No one asks this: “Why should the USDA be gathering these statistics?” Food absorbs less than 20% of the typical household’s budget. The USDA is not an expert organization in anything else. This is what we call mission creep. A bureaucracy expands its jurisdiction and therefore also its budget.

Here is a typical example of the media’s dutiful gee-whiz reporting.

What’s wrong with this? First, attributing 30% to the cost of housing. If a family puts three boys on one bedroom, and three girls in a second bedroom, the cost per child will plummet.

In fact, the housing expense for children is close to zero. Here’s why. All costs are marginal, economic theory teaches. What is the cost of those extra rooms? Almost zero.

When childless couples buy a home, do they buy a one-bedroom home? No. They buy at least a two-bedroom home. Most of them buy a three-bedroom home. But if the average American family buys extra bedrooms for show, the marginal cost of having a child live in that bedroom is zero. This is basic economics.

Do they immediately move out when the children depart? No. So, the marginal cost of the children’s occupancy was zero. Americans pay for bedrooms they don’t need. It’s aesthetic. It’s cultural. It’s the American dream.

I live in a three-bedroom home. Two of them are empty. I could easily convert two more rooms into bedrooms. I could adopt 10 children, and the housing costs would not rise much: the loss of one office, which could be moved into the basement, where there is another empty room. What did I pay for the house, plus the basement? About $225,000. I bought it in 2009. So, spare us the cries of high housing costs for children. These costs are marginal. The more kids you stick into a bedroom, the more marginal the costs are.

Second, what about food? What does it cost to feed a family of four? Not much, according to the USDA.

Look at families with four or five children. They are middle-class families. Does it really cost a million dollars to raise these kids to age 18? The families that are this large don’t have that kind of income. I know of a small middle-class church in Alabama where some families have 8 children. These are one-income families. It will not cost each family $2 million after taxes to raise these children. They will not make $2 million after taxes over the next 30 years. They will not make $2 million before taxes — not at $50,000 a year (or less).

The video reporter speaks of day care costs. But these last at most six years, and most families do not use day care. At $200 a week, that is about $10,000 per child, times six. That is $60,000. That leaves $180,000 per child. In 18 years, that is $10,000 per child after day care. The government wants us to believe that the average household, which makes $50,000 per year, spends $24,000 on two kids. That is $24,000 after taxes and after day care.

This statistic is fake. It is obviously fake. This is zero population growth twaddle. The media report it as gospel truth.

The public is gullible. People do not examine the nonsense they are being fed by the USDA in terms of their own experience. If readers simply thought this, the whole illusion would vanish: “What is it costing us to raise our kids?” But they do not think. They read the USDA’s twaddle and think: “Times are tough.” They aren’t tough if you have a job at the USDA as part of a high-paid team that issues an obviously fake report every year.

Source: Tea Party Economist, Written by Gary North on August 15, 2013 http://teapartyeconomist.com/2013/08/15/fake-government-statistic-it-costs-241000-to-raiseachild/#YShJwbykKEeITZTh.99

Comments
Real inflation caused by Federal Reserve “money printing” over the last 5 decades has increased the cost of living 10 fold.  In 1963, families lived comfortably on $10,000 a year. With the cost of houses at $20,000, new cars at $2,000 and gasoline at 20 cents a gallon and lots of manufacturing jobs, our economy was able to keep real unemployment under 4%.  

Inflation at 7% per year kicked in with the Vietnam War and Welfare spending and continued until 1974 when it took $20,000 for families to continue to pay their bills. This increase required many Moms to find a job.

By 1984, it took $40,000 a year to pay the bills and most couples were employed. By 1994, it took $60,000 to pay the bills. By 2004 a $100,000 per year family income was required to maintain the same standard of living that used to take $10,000 a year income.

Education and Health Insurance increased 20 fold during the same period, due to the infusion of tax subsidies for these components.

Norb Leahy, Dunwoody GA Tea Party Leader