The daddy bonus sucks once you consider childcare

Daddy bonus? Not so much — and it’s worse for Mommy

CNN Money wrote a story called “It pays to be a dad” yesterday, which starts like this…

Being a dad might entail dirty diapers, but it also tends to come with big bucks.

The premise: New research shows the median income of dads is about $20,000 higher per year than men without kids. Time to make some babies?

Except here’s the start of another CNN Money story from just two months ago…

New parents be warned: It could cost nearly a quarter of a million dollars to raise your child — and that’s not even including the cost of college.

This older story isn’t mentioned in the new one, but it should be — because if you do the math, you learn that the “daddy bonus” isn’t the windfall it sounds like. Even if dads got a $20,000 raise the day after their kids were born, it would take 15.2 years to “break even” on childcare costs if they’re the only household income.

But what about moms? The news CNN didn’t report is even worse for them.

The mommy tax

The dads-make-more story is based on the research of Justine Calcagno, a Ph.D student at the City University of New York. She published something similar about the “daddy bonus,” in May, but that was specific to New York City. Now she’s shown the same thing is true nationally, and CNN isn’t highlighting it.

The point Calcagno is making: People who do the hard work of carrying the child and giving birth don’t get the credit for it.

Yes, they make more as moms than other working women — but only about $5,000 more. It would take moms 63 years to break even on childcare costs if they’re the only household income. Why the huge gap between moms and dads?

It’s true women work fewer hours on average after giving birth, but Calcagno’s work shows that only explains about a third of the difference. The rest may come from the stereotypes that working dads are more dedicated and working moms are distracted, she suggested to The Wall Street Journal in May. (Other research backs her up.)

That double standard is mentioned only vaguely in the last sentence of CNN Money’s story, even though it’s the main point of the research. And CNN neglects costs — which were not the focus of the study, but matter tremendously to anyone considering children — entirely.

Doing the best-case-scenario math

The $245,000-per-kid figure from CNN’s older story, conveniently forgotten in the new one, comes from the U.S. Department of Agriculture. It’s not the best number to use for this comparison, because it doesn’t account for expected inflation. You aren’t buying 18 years’ of stuff in a single day.

Fortunately, the USDA crunches that number too — $304,480. With that, we can compare the extra money moms and dads will make with the extra expense of having a kid. We just divide that inflated cost by the pay increase to see how long before it’s “worth it” to have a kid for men and women. But first, a couple caveats.

Because we’re comparing two average numbers that each comes with its own set of baggage, you can’t look at these as anything more than ballpark figures. The “daddy bonus” figure is based on trends from 1990 to 2010. The cost-per-kid figure is a government estimate.

It’s also not like guys are getting a $20,000 raise the day after their babies are born. But since we’re not economists, we’re going to assume that best-case scenario. That provides enough evidence to blow up the idea that you should make babies for the money…

  • Dads who get a $20,000 raise would take 15.2 years to “break even” on childcare costs if they are the sole income.
  • Moms who get a $4,835 raise would take 63 years to “break even” if they are the sole income.
  • With both parents working, it would take 12.3 years to “break even.”

Remember, this assumes the financial gains are up front and parents have just one kid. While additional children wouldn’t cost $304,480 each, they wouldn’t be cheap, either. Even with one kid, it’s amazing more parents don’t retire in debt.

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