Fox Family Lawyers
Cynthia Moseley Fox
Attorney at Law
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Suite 700
Clayton, Missouri 63105
(St. Louis)
314.727.4880

The New Missouri “Chart” Says The Cost of Raising Children Has Declined for Upper Income Families

Did you know that the state of Missouri believes that the cost of raising a child has declined for many Missouri families since 2002, and by as much as 26% for some? I didn’t either until I reviewed the latest Missouri Schedule of Basic Child Support Obligations that becomes effective July 1, 2005. 

 

Known as the “Child Support Chart” (or more simply “The Chart”), this schedule estimates the core cost of raising children based upon the number of children in the family and that family’s gross income. The Chart is relied upon by Missouri’s Family Courts for determining the child rearing costs of divorcing parents, and then allocating those costs between the parents to set the child support one parent will pay the other. This latest Chart replaces the one issued in 2002.

 

Since every situation is unique, the Chart allows for adjusting the “basic level” to include the “extraordinary” expenses many families incur. Typically, these are health insurance for the children and any uninsured medical expenses over $250 annually, as well as the work-related child care each parent pays. However, the court has also allowed expenses for private schools and college, for a child’s car, and even for a child's extracurricular activities.

 

Extraordinary costs aside, the “basic” expenses are supposed to represent the essential costs of raising a child and, according to the 2005 Chart, these have declined since 2002 for higher income Missouri families. In comparison, the Chart estimates that child rearing costs increased modestly for low income parents, while remaining relatively stable for lower-middle and middle income families.

 

For example, the Chart’s estimate of the “basic” expense for raising two children for a divorced couple with just $2,000 a month in combined income has increased 6% since 2002. However, the same-sized family earning $5,000/month has seen only a 2% increase in their expenses. Conversely, if your 2-child family has the good fortune to earn $8,000/month, then Missouri says your expenses are now 9% lower than they were on the same income in 2002. And, if you are among the very fortunate to be earning $20,000 per month, then you are doubly lucky because the Chart says your child rearing expenses for two kids are down a whopping 21%.

 

In addition to these varied outcomes at different incomes, whether your family has experienced a decline in its child-rearing costs also depends on the number of children you have. For a family with three children, the Chart projects declining child care expenses for families earning $5,000 or more a month, but with two children, the decline doesn’t occur until a family earns at least $7,000/month. If all this seems hard to follow, I’ve prepared my own chart highlighting what the trends in child rearing expense, according to the Chart, at selected income levels.

 

 

New 2005 Chart versus the 2002 Chart

Estimated Change in Child Rearing Costs Based On Family Size and Income

 

 

 

 

 

 

Gross Income/Mo.

1 Child

2 Kids

3 Kids

4 Kids

5 Kids

6 Kids

$2,000

+9%

+6%

+4%

+4%

+6%

+8%

$5,000

+8%

+2%

(2%)

(1%)

+1%

+2%

$7,000

+6%

(1%)

(5%)

(5%)

(3%)

(1%)

$8,000

(2%)

(9%)

(13%)

(12%)

(11%)

(9%)

$10,000

(4%)

(11%)

(15%)

(14%)

(13%)

(12%)

$12,000

(-6%)

(13%)

(18%)

(17%)

(16%)

(15%)

$15,000

(10%)

(17%)

(22%)

(22%)

(20%)

(19%)

$20,000

(12%)

(21%)

(26%)

26%)

(25%)

(23%)

 

 

To those paying attention to what things costs, this seems a little unreal. Inflation has been pretty tame, but I don’t recall paying less today for any of life’s essentials than I did in 2002. Craving an explanation, I turned to Judge Thomas Frawley of St. Louis City, who chaired the committee that presided over the creation of the new Chart.

 

“It doesn’t make intuitive sense to me either” was Judge Frawley’s reaction to the Chart’s projection that wealthier people are paying less today for child rearing than 3 years ago. Judge Frawley quickly added that his committee of lawyers and judges had not made the calculations themselves but relied on the experts at the Policy Studies, Inc out of Denver. So, that’s who I turned to next.

 

According to Jane Venohr, PhD, an economist with Policy Studies, Missouri’s last three Charts have been based on the work of a Dr. David Betson, Professor of Economics at Notre Dame University, who had been hired by the federal government to measure child rearing costs. Dr. Betson analyzed consumer expenditure information from the Bureau of Labor Statistics by family size and income that compared the total cost of living for families with children versus families without. The difference between the two were assumed to be the cost of raising children.

 

His work was national in scale, not specific to Missouri, but still the basis for the Missouri Charts of 2005, 2002 and 1998. The latest Chart uses consumer expenditures data for 1996 to 1999, adjusted for consumer price inflation and changes in taxes since then. The 2002 and 1998 Charts used consumer expenditures from 1980-86, also adjusted for price inflation and tax changes.

 

Judge Frawley said that his committee had the option in 2001 of using Dr. Betson’s 1996-99 expenditure information for the 2002 Chart, but opted not to because that data was still pretty new. “By the 2005 Chart, Dr. Betson’s data was verified,” said Judge Frawley, and “his new information was incorporated into that Chart.”

 

Had the committee decided to use the later information for the 2002 Chart, it is likely that these puzzling declines in child rearing costs would have surfaced then. But, whether the turnabout in costs first appeared in 2002 or now matters less to me than learning why I should believe these new trends at all.

 

Next week, I’ll delve into the key economic factors impacting the latest Chart and why this has resulted in the Chart concluding that child-rearing costs have declined for wealthier families.