Saturday, July 09, 2005
This is truly scary - the other side of the West's demographic decline coin:
Taking into account the absolute cost of raising children from 0 to 18 for a typical high-income family with a combined annual income of $150,000 or more, plus income sacrificed by the parent with primary responsibility for the child, the total cost of raising a first child in Sydney is, for the first time, more than one million dollars: $1,032,600, to be precise.I imagine the figures are comparable throughout the rest of the Western world, although I'm sure that different welfare and tax models make for local variations. The big question is: has the cost of child-rearing always been this high compared to average wages and the current middle class reluctance to have children is merely a result of growing selfishness, or have the costs (as well as expectations) been skyrocketing well above the increases in the standard of living? The answer is quite crucial if we are to work out appropriate solutions to the West's demographic freefall.
The figure emerges from two pieces of research: Henman's study shows more than $607,000 in spending in Sydney on a range of child-rearing expenses, including housing, electricity, food, clothing, childcare and household goods and services until the child reaches 18. Breusch and Gray's analysis identifies $425,000 in forgone income for university-educated parents in Sydney and Melbourne, including the short- and long-term effects of career interruption...
Henman has found even families on combined incomes in the middle range of about $70,000 a year spend between $240,000 and $280,000 on direct child-rearing costs. Add to this the income sacrificed by the secondary-educated parent with primary responsibility for a child, and even middle-income families face a bill of more than $550,000 over the lifetime of their first child in Sydney and Melbourne, and between $505,000 and $533,000 in the other capitals.