In 1960, parents paid just $25,299 to raise their child to the age of 18. Adjusted for inflation, this total is $202,020. Sounds like a lot, doesn’t it? Only the actual figures today are even higher. Parents in the 2010s are spending upwards of $233,610 just to cover the same essentials.
Some statisticians point out that the median household income has gone up in this same time and is just shy of completely covering that cost difference. However, the number of two-income households, in which both parents are working, is the reason behind this increase in household income. Since much of the added cost of raising kids today comes in the form of daycare due to the lack of a stay-at-home-parent, the numbers are a bit misleading.
Below is the breakdown and explanation of these cost differences in raising children to adulthood. The 1960s costs are adjusted for inflation using 2017 dollars to provide a more accurate picture of the increases in child-rearing costs.
The cost of education in the 1960s was ten percent of the average family’s cost today. In 1960, families typically spent about $4,000 in today’s dollars on this category, usually on extracurricular classes, tutoring and books. It was very rare for a family to expend upon private schooling. Nearly all children went to public schools.
Today, however, the cost of educating a child from birth to the age of 18 is ten times higher. Most of the average cost increase comes from private tuition fees and technology. With 10% of all U.S. children in private schools, the tuition costs have driven up the average significantly. An additional three to four percent of school-aged children are now home-schooled.
Even for public school children, family costs have increased to accommodate standardized testing fees, field trips, sports and other activities.
Since computers and/or tablets are considered essential educational devices in most homes now, these costs are factored in, as well. Even graphing calculators for advanced high school math can drive up these overall costs.
This is one of the most shocking numbers in comparing the cost of raising a child in 1960 to today. In 1960, child care was not even a line item in most family budgets. In fact, the USDA did not even add a category for child care until decades later.
That’s because in the 60s, most families had a stay-at-home parent, typically the mother. One income was enough to get by, leaving the other parent to mind the children until they were at least school age. Beginning in the 1970s, family working dynamics began to change. It became more common for both parents to work, which often meant paying a significant portion of the secondary income to daycare. The increase in two-income households was a result of the economic crash at the end of the post-WWII boom combined with the encouragement of women taking on full-time work outside the home.
In 1967, nearly half of all women were full-time stay-at-home mothers; most of the working mothers worked only part time. By 2012, this number had changed dramatically, with 63.3 percent of mothers working outside the home, with 42% of all moms being the primary or higher income earners for their families. The lack of a stay-at-home parent means increases in child care costs.
Care.com reported in 2015 that U.S. families were spending an average of $18,000 per year on child care. For lower income families, this cost was spent mostly on external day cares, which cost an average of $188 per week for one child and $341 for two. In-home day cares were the least expensive option at $140 per week for one child and $267 for two. Nannies, who typically provide care in the family’s home, were the most expensive, coming in at $447 per week for one child but only $11 more for two.
The amount spent on children’s healthcare in 2015 is over 2.5 times the 1960 amount. Why are parents spending so much more on their children’s healthcare?
The Congressional Budget Office reports that this increase comes mostly from the improvements in healthcare technology. The scientific advances since the 1970s have led to more expensive equipment which can be used for diagnosis and treatment. Our survival and recovery rates are higher, but so are our medical costs.
For example, a typical child birth in a hospital setting in 1960 cost $120, or about $1,000 in 2017 dollars. In comparison, the average hospital child birth today costs 11 times as much at $10,958, and that’s on the low end, factoring for an uncomplicated vaginal birth. The number of cesarean sections is on the rise, and those can cost $18,570 with no complications.
Some of this cost is covered by insurance, but maximum out-of-pocket costs can still run as high as $14,300 per family, nearly twice as much as the 1960 average. Yet there is more behind the increase in costs for children’s healthcare.
With insurance as back-up, families are demanding more services than they would have in 1960, which also increased their overall costs. Similarly, the medical community is more likely to order tests and treatments today that they might have skipped in 1960. This is due to the increased prevalence of malpractice lawsuits.
Transportation has changed in several ways over the past 50 years. For one, the average cost of a new car in 1960 was $2,600, which is about $21,700 today. By 2016, reports were suggesting that new cars were ‘too expensive for the typical family.’ The average new car price is $34,000, about a 60% increase. The market for used cars increased accordingly. Making it more complex, in 1960, most families got by with only one car, but today’s families often require two.
The cost of gas has also influenced transportation costs associated with raising children. In 1960, the cost for a gallon of gas was around $0.25, or about $2.09 in today’s dollars. In May 2017, the national average was $2.33 per gallon, though some parts of the country routinely saw prices over $4.00 per gallon in the past decade. On the flip side, cars today have much better fuel economy, costing far less to travel each mile.
Families today are also driving more frequently and farther distances than in 1960. Kids, in particular, are driven today when they would have walked or biked 50 years ago. They also have more extracurricular activities to attend that are farther from home.
In the 60s, housing was far more affordable. According to the U.S. Census Bureau, a new home could be purchased in 1963 for a median price of for $17,200, which would be about $138,349.11 in 2017 dollars. As of March 2017, the median price for housing is $315,100.
Looking at all homes owned, both old and new, the Census Bureau analayszed median home values across time. In 1960, the median home value was $11,900, which is about $99,311 today. Because this is a national average, many states featured home values far lower than this, making it quite affordable to live in places like Alabama, Mississippi, Kentucky, and Oklahoma. As you would expect, even in 1960, it cost far more to live in states like New York ($15,600 median home value) and California ($15,100).
Today, the median home sales price across the United States is $236,400. This, like healthcare costs, is nearly 2.5 times more expensive. So why do homes cost so much more now? Is our lust for granite countertops and stainless steel appliances driving up our housing costs?
As it turns out, the main contributor to this rapid increase in housing costs is size. We’ve decided we prefer to be much roomier despite having fewer children per family. In 1950, the average new home size was less than 1,000 square feet and featured just 2 bedrooms and one full bathroom. Today, the average home size is 2,500 square feet. See where the 2.5 time cost increase comes from? An average new home in 2017 has at least three bedrooms and at least two full baths.
Ultimately, we spend more on housing today because we can. With changes in the mortgage industry aimed to help more families become homeowners, families were able to put their same down payment toward 10 percent of a $250,000 home instead of 50 percent (the percentage required in the 1950s) of a $50,000 home, while stretching out their payment terms over 30 years instead of 20.
We often look at historical food costs in two ways. One is the cost per month or per week to feed a family of four, with two parents and two children. The other method is to look at specific staple items.
For example, a gallon of milk in 1960 cost $0.95 ($7.93 adjusted for inflation), while a dozen eggs cost $0.53 ($4.42 in today’s dollars). Today, parents will spend far less on these staples, paying just $1.54 for a gallon of milk and an average of $1.26 for a dozen jumbo eggs.
The Bureau of Labor Statistics and reports that a typical family in 1960 spent $1,414 per year on food, which was about 24 percent of their take-home pay. That’s about $27.19 per week spent at the grocery store, which computes to about $227 in today’s dollars.
Surprisingly, although individual food prices have gone down in the past 50 years, we are spending about the same amount each week at the grocery store. The USDA reports that families on a ‘moderate’ budget food plan are spending $203.80 for a family of four. While the cost of staples like milk and eggs have gone down, today’s families are spending more on other kinds of food: processed foods, sodas, candy and other ‘junk’ foods as well as an increase in red meat.
Clothing children is cheaper than ever. This is the only category of child-rearing in which costs have actually gone down since 1960.
The cost of clothing has come down significantly with recent decades of international trade. Imported goods from China, Bangladesh, Vietnam, and other Asian countries have allowed more affordable clothing for U.S. families. In fact, over 97.5% of all clothes sold in the U.S. today are imported.
However, some families find there is a trade off. Cheaper clothes also wear out sooner, requiring us to buy clothes more often. Many older Americans fondly remember the quality of their clothes purchased decades ago, and many of these clothing items can still be found in vintage thrift shops looking good as new.
As touched on earlier, the differences in household income has had a great effect historically on the cost of raising children. In 1960, the median family income was $5,620, which is about $46,901.87 in 2017 dollars. By 2015, this number was $55,775. So in real numbers, American families today are making more money, although they often require both parents working to do so.
26.3% of married mothers participated in the workforce in 1960. By 2017, this number would skyrocket to 68%.
In summary, American families are paying more for kids today versus 50 years ago, and they are often having to work twice as hard to make ends meet.
While the cost of clothing children from birth to 18 has gone down, nearly every other barometer of consumer spending has gone up. Parents today pay more for housing, though they could choose to live in a more 1960s style home with less square footage. They also pay more for food, since we have so many more choices and processed foods available. The one inescapable expense increase is in healthcare—our advanced technologies save lives and infant mortality is down, but these benefits come at a steep price.
Still, with proper budgeting and the eschewing of our increasingly materialistic lifestyles, it is possible to raise a child (or two or three) to adulthood without totally breaking the bank. Living within our means and planning for big expenses can go a long way toward making life more financially comfortable. In fact, many families are now returning to a stay-at-home mom dynamic, taking the decrease in pay and cutting their expenses to provide a better foundation for their children to grow.