New estimate projects cost of raising a child at $310K
New figures show the cost of raising a child is becoming more expensive as the nation grapples with rising inflation.
A recent estimate conducted by the Brookings Institution projected the cost of raising a child for a middle-income, two-parent married family with two kids to be north of $310,000.
The estimate assumes the youngest child would be born in 2015 and covers raising the child through the age of 17. It does not include the cost of sending the child to college.
Brookings uses a methodology from a previous report on child expenditures from the U.S. Department of Agriculture (USDA).
The figure is roughly $80,000 more than the estimate USDA released in 2017, when it calculated the average child-rearing costs for a middle-income, married couple with a child born in the same year.
The estimate was first reported by The Wall Street Journal.
To calculate the number, experts used an average inflation rate of 2.23 percent, similar to the rate used in the USDA report, to estimate the total cost from 2015 to 2020. But the new report also factors in a 1.77 percent increase in the rate for 2021 and subsequent years.
Isabel Sawhill, a senior fellow in Economic Studies at the Brookings Institution, told The Hill the calculation was based on past trends in the nation’s inflation rates.
“I said, what is the most comparable historical period to right now? And it turns out, in my opinion, that it was the late 1970s, when we had double digit inflation,” said Sawhill, who produced the estimate along with Morgan Welch, a senior research assistant for the Center on Children and Families.
Sawhill pointed to the actions taken by then-Federal Reserve Chairman Paul Volcker to combat the rising costs that helped spur a recession.
“We had a big recession in the early 80s, actually two back-to-back recessions, and eventually, the inflation rate got back to normal,” Sawhill said, which she added the Fed considers to be around 2 percent.
“I looked at all that data, and I estimated that on average over this period, the inflation rate would be 4 percent,” Sawhill said.
The new estimate only crunches numbers for middle-income, married parents, and doesn’t include projections for single parent households, or consider how race factors into cost challenges.
But Sawhill said lower-income families are likely to bear a significant burden from the higher costs, calling it “a much more important expense for lower income than for higher income families.”
“Bill Gates is not going to worry about how much it costs to raise a child,” she put plainly, while saying she thinks the sharp rise in costs in recent years show it’s “a greater burden than it used to be to have children.”