Why Families are Feeling the Squeeze

black and white dollar sign

A couple of weeks ago, the Los Angeles Times business section ran a short article on the cost of raising children, Children Don’t Come Cheap. Grand total for middle class family from birth to 17 was $222,360, which doesn’t include college tuition. “That’s 22% higher than the 1960 cost – adjusted for inflation – of $182,857,” the article reported.

Where’s all that extra money going? The common narrative implies that parents are throwing away “extra” money on gadgets and fancy clothes and big houses and even organic groceries or dining out more. Not so. The data continues to confirm what I wrote about in my book This is Not How I Thought It Would Be and in this blog post, Busting Stereotypes about Families and Money, using information from Harvard professor Elizabeth Warren.
It’s the increase in fixed costs that are eating up families budgets these days and making them feel like failures because they can’t get ahead.

  • “the report called child care and education expense ‘the most striking change in child-rearing expenses over time.’ Those expenses grew from 2 percent of total child-rearing expenses to 17 percent.”
  • “Housing was the most expensive expenditure in both time periods in the USDA report, and it increased in real terms over time.”
  • “A child’s health care expenses doubled as a percentage of total child-rearing costs from 1960 to 2009. It also climbed in real terms.”

It’s that triple threat of child care/education, housing and healthcare that is eating up family budgets.  Even two-income families today have LESS left over after fixed expenses than their parents did a generation ago. As a result, families feel even more pressure to get their children a good education to ensure their children’s economic future and in the process driving up the cost of housing near good schools and the cost of private childcare and education.
Food and clothing costs have gone down over time.

  • “Changes in agriculture over the past 50 years have resulted in family food budgets being a lower percentage of household income”
  • “a child’s clothing and miscellaneous expenses decreased as a percentage and in real terms from 1960 to 2009, due partly to ‘globalization.'”

How about you? Do you feel these pressures on your budget? Do you compare your family to previous generations and wonder why you can’t get ahead?

4 thoughts on “Why Families are Feeling the Squeeze

  1. Hey, Kristin, great post, thank you so much for “doing the math” and showing that it’s not a kid’s cell phone that’s busting the budget, it’s the huge intractable things like health care and housing.
    just one thing to add: if, like a lot of educated families, you’re trying to eat local/sustainable/organic/cruelty-free/chem-free, food costs have probably risen, perhaps by a lot.
    I know that’s true in my household, but since it’s a priority for us health- and eco-wise, we try to make the budget for it.

  2. […] the result of families increasing the number of hours the woman works in an attempt to make up for increasing fixed costs and stagnant wages for men. On both ends of the income scale, we’re at the breaking […]

  3. don’t forget the inequality. 90% of income gains over the last 30 years went to the top 1%, meaning that everyone else has less money than they otherwise would have.

    1. So true, I shudder to think what Elizabeth Warrens data would tell us 9 years later. The inequality adds the squeezed feeling for middle class families – either do whatever it takes to move closer to that 1% or risk falling into poverty, there is no middle.

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