A recent CNN Money article, Moms: ‘I can’t afford to work‘, introduces the reader to a suburban Maryland mother who states that the high cost of employment—commuting, clothing, childcare—make working infeasible. Her decision to give up her career raises questions: When does it actually become too expensive for a spouse or partner to work? When do expenses such as childcare and transportation become greater than a second after-tax income? It turns out that for the typical two-worker American household, having as few as two children can tip the scales.
According to WOW’s Basic Economic Security Tables for the United States, the typical American family of two workers and an infant pays $625 per month for childcare and spends more than $500 per month per car, all told. If a typical mother or father of an infant stayed home long-term to care for the child and gave up the family’s second car, she or he would “save” roughly $19,000 per year after taxes—assuming the family did not lose or need to pay more for employment-based health insurance.
Naturally, parents in larger families have smaller incentives to work full time. A typical American family of two workers, an infant and a preschooler pays $1,294 per month for childcare. If a mother or father of an infant and preschooler stayed home long-term to care for the child and gave up the family’s second car, she or he would “save” nearly $31,500 per year after taxes. As a result, if a parent is earning less than $14.90 per hour and a spouse or partner is earning an income they feel allows the family to get by, it is to his or her immediate financial advantage to stay at home and take care of the kids.
Of course, for families headed by parents who earn low or moderate wages, the calculus is quite different. $19,000 is nearly $4,000 more than the annual federal minimum wage. $31,500 is approximately $2,500 more than the nationwide median worker income in 2010. Low-wage workers will not save as much money by not working because they cannot possibly spend average amounts on childcare or transportation. And they are less likely to have a spouse or partner who earns an income that allows a family to get by.
The CNN article and several others like it appear at a time when policymakers and the media are mired in pre-election politicking and debating which major political party better understands that stay-at-home moms work, too. Instead of revisiting settled debates of the past, they should be focused on the quickly rising costs of goods and services, particularly childcare, and the choices that rising costs force families to make. Finding affordable, quality childcare has long been a largely ignored challenge faced by low-income parents. Now workers with moderate or even middle class incomes are having trouble affording care—to the point where many feel they must give up careers, abandon the goal of economic security, and settle for barely getting by. A critical challenge for the coming decade is figuring out how the economy can simultaneously meet the financial, professional and family needs of parents, children and caregivers.