“Fallacy that time spent in activity X can be converted into dollars at hourly rate to arrive at realistic opportunity cost”
I’m not arguing that “time spent with children” should be converted to dollars and counted as a cost of raising children. Instead I’m saying we should apply that to time you would work if you didn’t have kids, but now that you have kids aren’t working. For example, here’s a post that claims raising kids is not that expensive, but they do it by having one of the parents stay home. If that parent were to work for pay instead they would bring in $X, which is a real non-fallacious opportunity cost.
“in most parts of the world people have kids in order to make more money”
I agree that child labor changes the economics of having children a lot, but I live in the US.
Instead I’m saying we should apply that to time you would work if you didn’t have kids, but now that you have kids aren’t working. For example, here’s a post that claims raising kids is not that expensive, but they do it by having one of the parents stay home.
I think that is rather missing the point of the post which has some very good suggestions about restructuring your life around having kids, of which some methods are very practical just not in line with social norms.
For most people (by which I mean >50% of the population) the post you linked to is correct. Day care is f#&@ing expensive. Where I live it is $1500 per child, per month which amounts to about ~$9/hr. That’s above minimum wage. (Sadly I’m not sure where I’d find median numbers for this.) Factor in other costs associated with working (food, gas, clothing, car maintenance, etc.) and you’d better be making >$12 or $15/hr for it to make any kind of sense. And that’s assuming you have someone else paying your rent. And that’s just where it economically breaks even—you’d have to be making more than that to make it worth spending 8-9hrs a day at a grueling job instead of playing with your kids. And it had better be 8-9 hrs—daycare doesn’t get cheaper if you do a half-day, and gets more expensive per hour if you cut down the number of days.
The median wage in the U.S. is about $13.25 (and not all Americans work). So yes, having someone watch your kids while you go off and work is the lifestyle of the rich minority.
I agree that child labor changes the economics of having children a lot, but I live in the US.
The entire debate becomes much less interesting if it’s just about your socioeconomic status and geographic location.
“Day care is f#&@ing expensive. Where I live it is $1500 per child, per month which amounts to about ~$9/hr. That’s above minimum wage. (Sadly I’m not sure where I’d find median numbers for this.)”
Here’s some 2007 data from the National Association of Child Care Resources and Referral Agencies via USA Today. I think it’s extracted from a previous version of this document. Taking a straight up median of their state-by-state numbers gives an average cost of daycare of $6499.75/year. This is very rough, but no state had numbers as high as the $18k/year you give.
“spending 8-9hrs a day at a grueling job instead of playing with your kids”
A lot of people don’t see it this way. Taking care of a young child can be similarly grueling and I know a few people who have taken jobs that only paid about the same as the cost of daycare because that’s what they preferred to do with their time.
“The median wage in the U.S. is about $13.25”
Source? It seems low to me. The median annual income for full time workers over 25 is $39,509 (US Census, 2006, via wikipedia) and if you divide that by 40 hours a week you get $19/hour. To get the median wage down to $13.25 you’d need people working about 57 hours a week.
Taking care of a young child can be similarly grueling and I know a few people who have taken jobs that only paid about the same as the cost of daycare because that’s what they preferred to do with there time.
The issue isn’t only whether you find taking care of kids “grueling”. In comparing staying at home to working, don’t think only about the immediate balance of salary vs. day care, think about the situation in the future. What will be your salary in 15 years if you stay in the workforce and if you try to re-enter the workforce after a 15-year break? What will you work skills be?
The SSA link gives a median annual compensation of $27,519 but doesn’t give an hourly rate. I notice that if I divide that number by 40 hours a week and 52 weeks a year I get about $13.25; is that what you did? The SSA data includes lots of people working less than 40 hours a week, so if you want to use their numbers you need some way to connect that to hours worked. While I can’t find median hours worked, I found a mean of 33/week. Matching up the median compensation with mean hours worked is very dodgy, but lets assume it’s ok and also that this average employee gets no vacation or holidays. This gives us 33*52=1716 hours per year earning $27,519, or $16/hour. This is below the $19/hour I estimated from Census data above, which we should expect if part time workers tend to be paid less, but nowhere near as low as $13.25. And lots of people do get vacation, holidays, sick time, etc.
Sorry, I’m confused. To estimate how much people are paid per hour, you took total pay and divided it by the number of hours their kids would need to be in daycare? Dividing total pay by hours worked would make much more sense.
“very good suggestions about restructuring your life around having kids, of which some methods are very practical just not in line with social norms.”
Agree. If you’re optimizing for life satisfaction I think the MMM posts are excellent.
“the post you linked to is correct … having someone watch your kids while you go off and work is the lifestyle of the rich minority.”
I’m not saying the post is wrong or that people should put their kids in day care even if they lose money, I’m saying that this is a situation where opportunity cost argument is totally applicable. Imagine a married couple deciding between two options: (1) don’t have kids and give any extra money to effective charity (2) have kids and give any extra money to effective charity. If they choose option #1 they earn $X and $Y each and need to spend $Z to live, so they can donate $X+$Y-$Z. If they choose option #2 and they don’t earn enough for daycare to make sense then say the person earning $Y stays home full time. They also have additional costs related to having children like needing a bigger house; let’s call that $W. Now they have available to donate $X-$Z-$W.
In terms of money they actually pay, the cost of kids is just $W. But they no longer earn that $Y/year, so their money available to donate has also gone down by $Y. The “cost of kids” for this couple as measured by decreased donations to charity is $W+$Y not $W.
“Fallacy that time spent in activity X can be converted into dollars at hourly rate to arrive at realistic opportunity cost”
I’m not arguing that “time spent with children” should be converted to dollars and counted as a cost of raising children. Instead I’m saying we should apply that to time you would work if you didn’t have kids, but now that you have kids aren’t working. For example, here’s a post that claims raising kids is not that expensive, but they do it by having one of the parents stay home. If that parent were to work for pay instead they would bring in $X, which is a real non-fallacious opportunity cost.
“in most parts of the world people have kids in order to make more money”
I agree that child labor changes the economics of having children a lot, but I live in the US.
I think that is rather missing the point of the post which has some very good suggestions about restructuring your life around having kids, of which some methods are very practical just not in line with social norms.
For most people (by which I mean >50% of the population) the post you linked to is correct. Day care is f#&@ing expensive. Where I live it is $1500 per child, per month which amounts to about ~$9/hr. That’s above minimum wage. (Sadly I’m not sure where I’d find median numbers for this.) Factor in other costs associated with working (food, gas, clothing, car maintenance, etc.) and you’d better be making >$12 or $15/hr for it to make any kind of sense. And that’s assuming you have someone else paying your rent. And that’s just where it economically breaks even—you’d have to be making more than that to make it worth spending 8-9hrs a day at a grueling job instead of playing with your kids. And it had better be 8-9 hrs—daycare doesn’t get cheaper if you do a half-day, and gets more expensive per hour if you cut down the number of days.
The median wage in the U.S. is about $13.25 (and not all Americans work). So yes, having someone watch your kids while you go off and work is the lifestyle of the rich minority.
The entire debate becomes much less interesting if it’s just about your socioeconomic status and geographic location.
“that’s assuming you have someone else paying your rent”
This falls on both sides of the question.
“Day care is f#&@ing expensive. Where I live it is $1500 per child, per month which amounts to about ~$9/hr. That’s above minimum wage. (Sadly I’m not sure where I’d find median numbers for this.)”
Here’s some 2007 data from the National Association of Child Care Resources and Referral Agencies via USA Today. I think it’s extracted from a previous version of this document. Taking a straight up median of their state-by-state numbers gives an average cost of daycare of $6499.75/year. This is very rough, but no state had numbers as high as the $18k/year you give.
Minor:
“spending 8-9hrs a day at a grueling job instead of playing with your kids”
A lot of people don’t see it this way. Taking care of a young child can be similarly grueling and I know a few people who have taken jobs that only paid about the same as the cost of daycare because that’s what they preferred to do with their time.
“The median wage in the U.S. is about $13.25”
Source? It seems low to me. The median annual income for full time workers over 25 is $39,509 (US Census, 2006, via wikipedia) and if you divide that by 40 hours a week you get $19/hour. To get the median wage down to $13.25 you’d need people working about 57 hours a week.
The issue isn’t only whether you find taking care of kids “grueling”. In comparing staying at home to working, don’t think only about the immediate balance of salary vs. day care, think about the situation in the future. What will be your salary in 15 years if you stay in the workforce and if you try to re-enter the workforce after a 15-year break? What will you work skills be?
Agreed, though in both of the cases I’m thinking of the jobs weren’t ones where you build up long-term skills.
Or a lot of people with part-time jobs who are making less than $19/hour. Which matches observation pretty well.
Social security administration:
http://www.ssa.gov/oact/cola/central.html
The SSA link gives a median annual compensation of $27,519 but doesn’t give an hourly rate. I notice that if I divide that number by 40 hours a week and 52 weeks a year I get about $13.25; is that what you did? The SSA data includes lots of people working less than 40 hours a week, so if you want to use their numbers you need some way to connect that to hours worked. While I can’t find median hours worked, I found a mean of 33/week. Matching up the median compensation with mean hours worked is very dodgy, but lets assume it’s ok and also that this average employee gets no vacation or holidays. This gives us 33*52=1716 hours per year earning $27,519, or $16/hour. This is below the $19/hour I estimated from Census data above, which we should expect if part time workers tend to be paid less, but nowhere near as low as $13.25. And lots of people do get vacation, holidays, sick time, etc.
Yes, I divided by 40 hrs per week because that was the daycare hours under consideration.
Sorry, I’m confused. To estimate how much people are paid per hour, you took total pay and divided it by the number of hours their kids would need to be in daycare? Dividing total pay by hours worked would make much more sense.
“very good suggestions about restructuring your life around having kids, of which some methods are very practical just not in line with social norms.”
Agree. If you’re optimizing for life satisfaction I think the MMM posts are excellent.
“the post you linked to is correct … having someone watch your kids while you go off and work is the lifestyle of the rich minority.”
I’m not saying the post is wrong or that people should put their kids in day care even if they lose money, I’m saying that this is a situation where opportunity cost argument is totally applicable. Imagine a married couple deciding between two options: (1) don’t have kids and give any extra money to effective charity (2) have kids and give any extra money to effective charity. If they choose option #1 they earn $X and $Y each and need to spend $Z to live, so they can donate $X+$Y-$Z. If they choose option #2 and they don’t earn enough for daycare to make sense then say the person earning $Y stays home full time. They also have additional costs related to having children like needing a bigger house; let’s call that $W. Now they have available to donate $X-$Z-$W.
In terms of money they actually pay, the cost of kids is just $W. But they no longer earn that $Y/year, so their money available to donate has also gone down by $Y. The “cost of kids” for this couple as measured by decreased donations to charity is $W+$Y not $W.