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A new study by youth empowerment nonprofit Young Invincibles found that one in five Millennial parents is living in poverty. Last year, nearly 30 percent of Millennials were parents, and the Young Invincibles study found that this demographic has the highest poverty rates of all young parents over the past two and a half decades.
So why are young parents in such unfortunate financial situations?
Millennials take home lower salaries than their 1980s counterparts, face massive student debt that many of them will continue to pay off well into their careers, and graduated during difficult economic times. The report also found that people with a Bachelor's degree face 25 percent more debt if they have kids. On top of education costs, in 2014, the U.S. Department of Agriculture estimated that it takes nearly a quarter-million dollars to raise a middle class child (all the way to the age of 18) born in 2013.
Earlier this year, the Institute for Women's Policy Research published a report that found the average Millennial woman in America earns $30,000 and the average Millennial man earns $35,000 annually. It's hard enough to break even on such small salaries, let alone begin the expensive journey of parenthood. It's also a challenge to build up a savings account when your income is so low. Last year, Moody's Analytics found that the savings rate for people under 35 fell to negative 2 percent, as Millennials tend to live beyond their means. With all this in mind, it's no surprise that many young parents are impoverished.
Childcare costs are also prohibitive. According to Baby Center, the national average cost of daycare is $972 per month and $11,666 annually. A 2013 Census report also reveals that childcare costs have practically doubled since the mid-1980s.
This exorbitant cost of childcare is why 29-year-old Jessica Juárez Scruggs, who moved to Washington, D.C. to attend a master's program at American University, quit her part-time work before giving birth to her child. Juárez Scruggs told Yahoo! News that daycare would have cost her $1,200, where she and her husband live, so it didn't make sense to continue working just to give the money to a sitter.
“We would like to both work but there is literally no job that pays for childcare,” Juárez Scruggs told the publication. “I would have had to work part-time when I was in school and no part-time job would even let us break even in terms of child care."
Once she stopped working, however, her family fell below the poverty line for a household of three.
“[Having our son] has been a blessing but it is tough,” Juárez Scruggs told Yahoo! News. “We want to buy a house and we want to travel. We haven’t gone on a honeymoon yet. All of that is put on hold. I think it will probably take us decades to recover financially from the last years.”
Keisha, a mother in Washington, D.C. as well, told the Young Invincibles that she left her job because of the lack of support for parents from higher ups. “I was in economics in a government job and they just did not understand me wanting to be with my child. So, that’s why I stopped working.”
Of course, Millennial financial woes directly impact any children in the picture. Saundra, also a Washington, D.C. mother, told the Young Invincibles that she fears for what her kids' student debt will look like someday, so she sought the help of a financial planner, "[W]e are saddled with so much college debt, and I just can’t imagine doing that to my children."
Millennial women are having fewer kids
The Urban Institute recently released a report, which found a more than 15 percent drop in birth rates among Millennial women from 2007-2012. The Atlantic crunched the Institute's numbers on birth rate decreases among races:
The researchers chalked the low birth rates up to the recession and the decline in marriages. "If these low birth rates to women in their twenties continue, without a commensurate increase in birth rates to older women, the U.S. might eventually face the type of generational imbalance that currently characterizes Japan and some European countries, but it is too early to predict or worry about that eventuality," the report states.
The high costs of parenthood
Earlier this year, New York Magazine interviewed 29-year-old Lauren Rankin, whose long-term relationship was significantly tested because she didn't want kids but her boyfriend did.
"I know the importance and the life-changing nature of having a child," Rankin told the publication. "I definitely think it would affect a lot of things. We have good jobs and make decent money … but we barely have enough living outside of New York City."
The actual birth event is wildly expensive, and that's only the beginning. Two years ago, The New York Times found the average cost of vaginal birth was $18,329 and C-section birth was $27,866. Even with health insurance, the costs are still exorbitant: a Childbirth Connectionsurvey also revealed that insured mothers shell out roughly $3,400 in out-of-pocket birth costs with the rest covered by insurance companies.