Are children more unaffordable these days? Kind of, but not exactly
Timothy P. Carney
“It’s too expensive” is the top answer I get when I talk to normal people about the plummeting rates of marriage and family formation.
A lot of baby boomers and the people in my generation are skeptical of this explanation. Is marriage or parenthood really more expensive or unaffordable than it used to be?
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The answer is: kind of, but not really.
Two recent publications make exactly that case. First check out Jean Twenge’s article in the Atlantic. Twenge studied the widely held belief that millennials are broke. The facts showed something different: “Millennials, as a group, are not broke — they are, in fact, thriving economically. That wasn’t true a decade ago, and prosperity within the generation today is not evenly shared. But since the mid-2010s, Millennials on the whole have made a breathtaking financial comeback.”
Specifically, “household incomes of 25-to-44-year-olds were at historic highs in 2021, the most recent year for which data are available.”
Housing is the part of family life that really has gotten the most expensive, but millennials are just about as likely to own homes as were prior generations. Millennials’ net worth is approximately the same at their age as prior generations. That small lag in net worth is partly explained by more education and thus a later start to their careers. More educated people, on net, continue to earn more over their lifetimes.
There’s a big exception to this sunny story about millennials, though: Millennial men, on average, are doing less well than Generation X or baby boomer men did, Twenge says. This matters because men’s earnings, more than household earnings, seem to predict enthusiasm about having families. There are a hundred reasons for this, which you can probably infer.
Relatedly, child care costs are higher. The problem with chalking up the baby bust to child care costs, however, is that greater increases in childcare expenses did not correlate with greater drop-offs in baby-making.
Nevertheless, millennials feel poor, and they feel like marriage and family are less attainable. Why would that be? Twenge puts it this way: “Incomes and wealth are not just objective numbers — there is a large element of perception involved in whether someone thinks they are doing well.”
She first blames social media websites, which show millennials, intimately, how the wealthy live. This makes them feel poorer. I didn’t actually know how Chipper Jones or Ethan Hawke lived when I was in my 20s because they didn’t have social media to pipe their daily lives into mine.
My AEI colleague Angela Rachidi has a new publication, too, with very similar findings. She concludes, “Declining incomes and rising costs from years past are not the primary force driving a deterioration of family life.”
Rachidi explains the perceived surge in unaffordability this way: “Some goods and services that people need or perceive as necessary today may have been seen as luxury goods in years past. And in some cases, tastes have outgrown means — evidenced by increased consumption, vehicle ownership, and housing size.”
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More importantly, though, Rachidi points to a real poverty for millennials compared to prior generations in terms of connection, belonging, and community: “Our stock of social capital — the value of our social networks — has declined in recent times. Strong connections to individuals and institutions offer social support, which can reduce the costs of raising a family. When these connections decline, so can the affordability of family life.”
It takes a village to raise a child, as a wise woman once said. Young adults without a village, and who might not really believe in the value of community, think it takes a million bucks. And that’s part of why family seems unaffordable.