Is Raising Kids a Fool's Game?

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The "good news," says the College Board, "is more than $130 billion in financial aid is available."

Then, after college, many parents are welcoming their children back home until they find a job. In fact, 25% of employed parents have kids aged 18 to 29 living in their home at least half the time. Parents contribute $2,200 annually (on average, in 2001 dollars) to children aged 18 to 34, according to a 2003 University of Pennsylvania study. This transition to adulthood "is a very risky period," says Arlene Skolnick, a visiting scholar at New York University and research scholar at Counsel on Contemporary Families.

"It's a period when people can fall into the cracks," Skolnick says, especially if they don't acquire high-level skills to earn at least a middle-class salary to survive on their own. (Whereas after World War II, high school graduates could usually find a decent job and achieve a middle-class life.) Children that earn a bachelor's degree stand to earn over 60% more than those with only a high school diploma, the College Board says. Over a lifetime, the gap in earning potential between a high school diploma and a B.A. is more than $800,000, it says.

Along with college, the USDA report doesn't count "indirect" costs such as leaving the workforce to care for a child. "Studies have estimated that indirect costs, such as foregone earnings, oftentimes exceed direct costs, especially if one parent has to drop out of the workforce," says Fino at the USDA. "Many parents forgo promotions to spend more time with their children."

On top of all that, growth in wages for U.S. workers has been minuscule or stagnant, while inflation has crept higher. Average hourly earnings rose just 0.7% last year after declining in 2005 and 2004, versus the peak annual growth rate of 4.1% for 1972, according to the Labor Dept. Meanwhile, prices for food, energy, and other goods keep rising, as measured by the 3.2% rise in the consumer price index last year.

A Lifestyle Choice

It's costs such as these that make 28-year-old Bahar Zaker in Syracuse, N.Y., want to put off having kids, maybe forever. "We can't imagine how we would manage the costs of kids," says Zaker, who has been married for three years to a philosophy professor and is finishing her thesis on French surrealist art at the University of California. One big hurdle for her is the price of education, and she questions whether it pays off. "The costs of education are going up, and you're not always sure the value of the education is going up with them," she says. But she also admits that not having kids is a lifestyle choice. "We both like to travel," she says.

As more young folks like Zaker delay or don't have children, birth rates in Japan, Russia, South Korea, all of Europe, and parts of Asia have fallen below the 2.1 children per woman needed for population growth. Many industrialized countries such as France have introduced or increased economic incentives such as tax breaks, longer maternity leaves, and cash bonuses to get women to have children.

These programs have had mixed results. One reason they may not work comes from Phillip Longman in his book The Empty Cradle: How Falling Birthrates Threaten World Prosperity and What to Do About It (Perseus Books Group, 2004). Now that "children no longer provide any economic benefit to their parents, but are rather costly impediments to material success, people well adapted to this new environment will tend not to reproduce," Longman writes. "And many others who are not so successful will imitate them, and for good reason." Families might choose to have only one child so they can afford to splurge on one while maintaining their own comforts of living (um, that would be me).

The U.S., on the other hand, still has a birth rate of 2 and a growing population, thanks to immigrants, who on average have higher birth rates (particularly among Hispanics). Still, a great portion of the U.S. population is aging. A low birth rate along with an aging population means there are fewer people of working age and more retirees, making the financing of Social Security and Medicare tougher because these funds for the elderly are raised through taxes on the working population, as in most nations, says Gary Becker, professor of economics at the University of Chicago and senior fellow at the Hoover Institution.

The problem, experts say, is that U.S. lawmakers and corporations aren't addressing many of the challenges facing families. Longman points to the continuing culture wars between work and family: "Everyone who wants to may join the paid labor force, but almost no one gets a family wage or enough help from government to defray the costs of raising children." He figures the critical moment will emerge during the next decade, "as millions of Baby Boomers start crashing past the boundaries of old age, and as today's teenagers find themselves saddled with massive student loans, rising taxes, and growing frustration over the difficulty of forming or affording a family."

The hope is that some savior will invent policies to ease parents' financial pain. "We need somebody somewhere to think of a new vision of what families can be," Skolnick says."People want to get past the family value wars."

Until then, as Longman puts it bluntly: "Child rearing is fast becoming a sucker's game. Though the psychic rewards remain, the economic returns to individual parents have largely disappeared, while the cost of parenthood is soaring."

Click here to join the debate on whether kids are worth the cost.

McCormack is senior producer for BusinessWeek.com's Investing channel .