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Health care, childcare cause jumps in cost of raising kids
By STEVE BINDER
Illinois Correspondent

WASHINGTON, D.C. — It now costs more than $241,000 to raise a child born in 2012 until he or she turns 18, and that total doesn’t include college education costs, the USDA announced last week.
The average total is for a middle-income family and applies to the second of two children, according to the USDA’s annual report.

Generally, families with higher average incomes spend more on child rearing, particularly on entertainment expenses and reading materials, while families with lower incomes tend to spend less.
“The cost of raising a child increases as family income goes up because families have more resources,” said Kevin Concannon, the USDA’s under secretary for food, nutrition and consumer services. “The stresses and the challenges get worse as families have less access to resources.”

The $241,080 average child-raising cost is a 2.6 percent increase over last year’s total, with housing comprising 30 percent.
Concannon noted the average figure covers the entire nation, but certain regions and generally urban areas have higher costs of living. Rural areas generally posted the lowest average costs.
Childcare expenses were the second-biggest item in wealthier homes, while lower-income households spent a greater proportion on food; health care hit all households on an equal percentage basis.

The USDA study, first conducted in 1960 and completed annually since, tracks seven categories of spending, including: housing, transportation, education, clothing, entertainment, food and miscellaneous. Housing has continued to monopolize the cost of raising a child – while it is 30 percent of the cost in 2012 dollars, it was 31 percent in 1960, adjusted to 2012 dollars.

Big jumps have been health care costs, which doubled from 4 to 8 percent, and childcare expenses and education materials, up from 2 percent in 1960 to 18 percent in 2012.

Mark Lino, the USDA researcher who wrote the report, said, “Health care and childcare costs have been stresses to families over the past few years” more than housing has. And while depressed property values lessened some strains, “falling home prices created their own sets of problems.”

Low-income households have less to spend on personal care items, entertainment such as video games or sports equipment and reading materials, as basic necessities take a greater proportion of income, he said.

Since 1995, miscellaneous spending by the bottom one-third of households in terms of income increased by less than 1 percent, Lino said. Spending on such items in wealthier homes rose 37 percent.

While the middle-class average spending total is $241,080 (with average per-year spending of $12,600-$14,700), a family earning less than $60,640 a year will probably spend $173,490 in 2012 dollars, while parents earning more than $105,000 could pay $399,780, according to the study.

“As the economy continues to recover … this report gives families with children a greater awareness of the expenses they are likely to face,” Concannon said. “(It) is also a valuable resource for courts and state governments in determining child support guidelines and foster care payments.”

The entire report can be accessed at www.cnpp.usda.gov
8/22/2013