PARENTS
12/21/2016 12:58 pm ET | Updated Dec 28, 2016

This Is Exactly How Much Money You're Losing If You Have Young Kids

Federal lawmakers need to get a grip on this.

AVolke via Getty Images
Cuteness comes at a huge cost.

Having a child under the age of 5 is hard enough, but in the United States, parenting comes with the added bonus of near-financial ruin.

If we don’t do something about this, the economic consequences for the country are not going to be pretty.

Parents of young kids see their income fall by an average of 14 percent compared to those without children, according to a study released last week by liberal think-tank Demos, which looked at 2015 Census data. In two-parent households, that amounts to a loss of $14,850. For single mothers, it’s worse: $16,610.

Researchers came to the figures after controlling for other factors that affect income, including race, age and education. They call the issue part of the “parent trap” ― the horrendous economic situation faced by mothers and fathers in the U.S., the only advanced economy with no policy mandating paid maternity leave or sick leave. There is no consistent-quality, inexpensive day care for young kids in the U.S. 

Our federal policies ― including tax policies that benefit married couples where one parent doesn’t work ― were written for a different time, when men were expected to be breadwinners for their families. This is simply not reality.

In 2015, 42 percent of mothers were sole or primary breadwinners, a recent report from the Center for American Progress found. Another 22 percent of mothers are co-breadwinners ― taking home one-quarter to nearly one-half of household income.

Although incomes seem to “recover” after the child gets a little older, for women, the penalties can last throughout their career.

These women need help. When a baby arrives, new mothers― unless they’re one of a lucky small percentage that gets paid parental leave through their job ― are faced with terrible choices. You recover and bond with your baby while earning zero money. Then, at some point ― often too soon ― you either stash the baby with family or expensive daycare you’re lucky enough to secure. Some may instead decide to stop working entirely or figure out some kind of stressful middle ground.

Parents on almost all rungs of the income scale fall into this trap. “We’re not talking about whether or not you can afford having a child,” Robert Hiltonsmith, a senior policy analyst at Demos, told The Huffington Post. “It’s the sacrifices, the dilemmas parents are put in because of the complete lack of support from society for having a young child and also to earn an income at the same time.”

Hiltonsmith notes that parents must weigh the high cost of childcare ― in some states daycare is pricier than college tuition ― for young children against the hit to their incomes by leaving the workforce. For black and Hispanic parents, the decrease is even more devastating, since they already earn less on average than white workers.

“For families up and down the income spectrum none of the choices are ones they want to make. You can’t afford to not work, you can’t afford to work. You can’t afford to pay the $12,000 a year for childcare. It is impossible to get by on one income for most households,” he said. “That is the crux of the trap. If you think about that $12,000 a year, a lot of people would have to be earning a decent income to make paying for that worth it.”

To be clear, it’s not “just” mothers who are making sacrifices, Hiltonsmith points out. Fathers may pass up promotions or scale back to help at home. Or, on the flip side, faced with a steep loss of income when a partner stops working, a father might go all-in at work and lose out on time raising children.

The impact that policies supporting families with young children could have is clear from the Demos report. When children reach school age, parents’ incomes begin to recover, Demos finds. When a child hits the age of 5, parents see incomes rise a stunning $30,000 on average. For single mothers, household income increases by $9,980. Single mothers of school-age children are 6 percent less likely to be in poverty than their counterparts with children under 5. Unemployment rates drop. Women return to the workforce.

There’s a consistent conservative argument against a policy solution to the trap. It goes something like this: Parents “choose” to take the financial hit of having children, and those who can’t afford to do it shouldn’t. (Bizarrely, often the same people making these arguments also don’t support birth control or abortion rights.)

However, those arguments fail to reckon with the economic benefits for a country with a healthy reproductive rate. See: Japan, where a declining birth rate, fueled by an historic lack of support for working women, has had devastating economic consequences. 

We’re in big trouble if only people who can afford children have children.

But at the federal level, lawmakers have accomplished nothing. The Demos authors are skeptical of a plan floated by President-elect Donald Trump to give birth mothers six weeks off from work after the arrival of a baby. The measure leaves out adoptive parents and fathers. And even if that passes, they say the measure would do little to help parents during those first five years.

“I’m not optimistic about something that’s helpful for working parents being passed by the Trump administration,” Amy Traub, an associate director of policy and research at Demos, told HuffPost.

Traub mentioned Trump’s pick to head up the Labor Department, Andy Puzder, as a troubling sign. Puzder strongly opposes paid sick leave or raising the minimum wage ― two policies that would help working parents.

But Traub is more optimistic about policy changes at the local level. Indeed, just this week, the Washington, D.C., City Council passed a generous paid parental leave law.

It’s one of several cities and a handful of states leading the way on this issue. That’s something to hope for, certainly. But it’s not enough.

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