Do Teenage Mothers Save Taxpayers Money?

Do teenage mothers save taxpayers money?

July 15, 2007

What a disgusting question this is, one which expresses the American hostility toward the young, poor, and dark. The notion that babies—selectively applied to poor people’s babies—“cost too much money” is an appalling question on many dimensions. It reduces human beings and human potential to a predetermined red or black bottom line. It is almost impossible to calculate in unbiased fashion. And, in the case of teenage mothers, the calculations have been warped by academic fraud and rank bigotry to produce a politically pleasing result. And so it’s not surprising that this reactionary throwback to long-discredited eugenics has become the central argument for preventing what we call “teenage motherhood”—advanced by liberal lobbies.

On top of all that, the latest, most widely respected study of the social costs of teenage motherhood shows they may well save taxpayers money compared to poorer women who wait until their 20s to have babies. In short, the argument against teens having babies is really a veiled attack on poorer people reproducing that liberals are too craven to state openly.

Beginning in the 1980s or ‘90s, the liberal family planning movement has split into the good and the ugly:

The health rights and access advocates:  Storefront, high school, and community programs that provide professional, personal family planning services in the interests of health, youth access, and reproductive choice.

The eugenics lobbies: State and national lobbies such as the National Campaign to Prevent Teen Pregnancy, California Wellness Foundation, Family Research Council, Advocates for Youth, major foundations such as W.T. Grant, and other high-dollar interests that invoke moral lectures, condescending myths, and “social cost” claims that accuse, in effect, black, Latino, Native, and poorer teens of costing richer folks money.

The crux of the argument made by modern eugenicists against “teenage” motherhood is the same one its predecessors made against “excessive breeding” by darker and immigrant underclasses: that privileged academic and political authorities have determined that poor, young, mostly minority women are engaging in self- and societally-destructive reproductive behaviors and must be educated, cajoled, or punished into cutting it out. The crusades of the eugenics lobbies have become so ugly and dishonest that better motivated health rights and access groups should join in denouncing them.

The most dishonest argument—one that is directly eugenicist—is (in the words of the NCTPTP) that in 2004, “teen childbearing in the United States costs taxpayers (federal, state, and local) at least $9.1 billion, according to a new report by Saul Hoffman, Ph.D. and published by the National Campaign to Prevent Teen Pregnancy.” Hoffman reported:

These costs include $1.9 billion for increased public sector health care costs, $2.3 billion for increased child welfare costs, $2.1 billion for increased costs for state prison systems, and $2.9 billion in lost revenue due to lower taxes paid by the children of teen mothers over their own adult lifetimes… The average annual cost associated with a child born to a teen mother is $1,430.

Of course, the same social-cost tactics could be aimed at any poorer group in society; “teenage childbearing” is just a euphemism for “childbearing by poor people.”

Hoffman’s study contains an interesting note, however, about the seminal 1999 study for the federal white paper, Kids Having Kids, by economists V. Joseph Hotz (University of California), Susan McElroy (University of Texas), and Seth Sanders (University of Maryland) that came to a diametrically opposite conclusion.

In Kids Having Kids, researchers Hotz, Sanders, and McElroy used a new and innovative research approach that potentially controls for individual risk factors that cannot be directly measured and that can potentially lead to misleading (biased) estimates of the impact of a mother’s age at birth. This new approach used a “natural experiment”—that is, a group of women who became pregnant and had a birth as a teen are compared to a group of women who became pregnant as a teen but had a miscarriage—as a way to approximate the results of a random assignment to having a teen birth. While there are concerns about sample sizes and other related measurement issues in this particular application, the Hotz et al. approach has substantial value in measuring true causal impacts… and its results have become the research standard at this point and they are used here for that reason (pp 20, 22).

What was interesting was that Hotz et al’s study found the opposite of what the National Campaign was saying:

Our results suggest that much of the “concern” that has been registered regarding teenage childbearing is misplaced, at least based on its consequences for the subsequent educational and economic attainment of teen mothers. In particular, our estimates imply that the “poor” outcomes attained by such women cannot be attributed, in a causal sense, primarily to their decision to begin their childbearing at an early age. Rather, it appears that these outcomes are more the result of social and economic circumstances than they are the result of the early childbearing of these women. Furthermore, our estimates suggest that simply delaying their childbearing would not greatly enhance their educational attainment or subsequent earnings or affect their family structure… For most outcomes, the adverse consequences of early childbearing are short-lived. For annual hours of work and earnings, we find that a teen mother would have lower levels of each at older ages if they had delayed their childbearing (emphasis mine).

Hoffman did not use Hotz et al.’s findings, however, due to a calculation error. Hotz and colleagues corrected that error in a second study published in the Summer 2005 Journal of Human Resources. Hotz et al. found the supposed social costs of teenage motherhood had been exaggerated by failing to account for the fact that most were only temporary and reversed in later years:

Teen motherhood does not appear to increase the utilization of various forms of public assistance as suggested by earlier studies” such as Temporary Assistance for Needy Families, Food Stamps, and Medicaid, they noted.  While teenage mothers were more likely to receive public assistance in teen years, they were less likely than their similarly disadvantaged counterparts who delayed motherhood to receive assistance in their early 20s and thereafter.

As they aged into their 20s and 30s, former teen mothers also received more financial support from partners, were less likely to live in poverty, had equal education achievement, were more successful in employment, and earned considerably more money than similarly situated women who waited until their 20s to become mothers. “Forcing teen mothers to postpone their childbearing” would mean they would “actually end up doing less well in the labor market than if they had been able to follow their preferred life cycle plan,” Hotz et al. found.

The startling results from the best economic study clearly challenge most of what we “know” about teen mothers. What explains them? Hotz et al. continue:

Concentrating their childbearing at early ages may prove to be more compatible with their labor market career options than postponing their childbearing to older ages would be…The magnitudes of these estimated effects of teenage childbearing on subsequent labor market earnings are sizeable. Over the ages of 21 through 35, teen mothers earned an average $7,917 per year (in 1994 dollars). Based on the “All Covariates” estimates in Table 6, teen mothers would have earned an average of 31 percent less per year if they had delayed their childbearing.

If we update Hotz’s estimates to 2007 dollars and apply them to California teen birth trends, a surprising result indeed ensues. Rates of births by mothers under age 18 declined by 54% from 1991 to 2005, occasioning loud self-congratulation by various “teen pregnancy” prevention lobbies led by the Public Health Institute. Indeed, these lobbies, based on several “studies” by PHI and others that can only be called fraudulent, claimed teen mothers cost California taxpayers several billion dollars per year. They further claimed, without evidence, that their programs caused the decline in births by teen mothers and saved taxpayers money, meriting more funding for prevention lobbies.

However, the Hotz et al. analysis persuasively argues just the opposite:

Births by mothers age 10-17

Rate/1,000 girls
Number
1991 17.0 27,383
2005 births if 1991 rate persisted 38,340
2005 actual births 17.496
2005 teen birth deficit 20,844

 

Assume these 20,800 girls who would have had a baby in 2005 if 1991 teen birth rates had persisted waited until their 20s to begin motherhood, as the “teen pregnancy prevention” lobbies insist. That decision would have cost California state coffers millions of dollars:

Item Amount
Average annual income of teenage mother, 2007 dollars
$11,110
Average annual income of same mother who has baby in 20s
$7,665
Income loss by waiting past teen years to become mother
$3,445
Total annual income lost by deferred childbearing (20,844)
$71,800,000
Taxes lost to state by deferred childbearing
– Income (head of household, one dependent)
– Sales (at 4.3% of income)
– Total state tax lost
$3,850,000

 

Thus—if “teen pregnancy prevention” programs actually are responsible for the reduction in teen births as they claim—then their efforts cost poorer younger mothers nearly $72 million in income and the state of California nearly $4 million in tax revenues in 2005. If the costs of the reduced teen births are apportioned over the entire 1991-2005 period, teen birth prevention has cost young mothers over $280,000,000 in income and the state $15 million in income and sales tax revenues in 2007 dollars.

Having undertaken this exercise, it is highly unlikely that the above analysis is an accurate reflection of the economics of teenage motherhoods, even if it is more so than the absurdly biased “social cost” studies claiming billions of dollars in costs. Calculating social costs is so complicated and subject to arbitrary rigging in favor of desired results that applying it selectively to teenage mothers amounts to a hatchet job.

For a final example, look at the one “social cost” cited by Hoffman’s study that Hotz et al. did not evaluate: the $2.1 billion in annual prison costs supposedly generated by the children of teenage mothers committing more crime than those born to older mothers—which works out to around $330 per teen-mother offspring. Put aside for the moment racial or economic biases in the criminal justice system that could lead to greater incarceration of the poorest black and Latino youth and focus on the bias inherent in only tabulating prison costs.

Prison costs are only a fraction of the total costs of crime. Suppose Hoffman had used instead the total cost to the economy of crime? In 1997, Chamber of Commerce tabulations showed white-collar (mostly corporate) crime cost the economy $338 billion; estimates for 2002 range up to $600 billion. Meanwhile, all street crime (robberies, thefts, burglaries) cost around $20 billion per year. Assume that all street crime is committed by black and Latino offenders (though some is by whites), and all corporate crime is committed by white offenders (though a scattering involve nonwhites). Assuming both are constant costs that will persist into the future, divide the annual cost of corporate crime for a year (say, 1997) by the number of white babies born that year (the future’s corporate criminals) and the costs of street crime by the number of black and Latino babies born that year. Then, as is done for teenage mothers, apply collective guilt: that is, assign the costs to the entire cohort. The calculation would look something like this:

A. Costs of crime, 2002 B. Babies born, 2002 “Social costs” per baby (A/B)
White-collar $338 billion
White 2,298,156
$152,300
Street $17 billion
Black/Latino 1,454,977
$11,700

 

One could conclude from this “social costs of crime” analysis that each white baby born represents an annual cost 13 times higher than for each black or Latino baby born. Therefore, preventing white people—particularly the over-25, more affluent classes most likely to generate corporate criminals—from having babies should be a national priority. Note that these total-crime costs dwarf the paltry $330 in annual imprisonment costs alone attributed to children of teenage mothers.

Further, what about the “social costs” of the much higher rates of resource consumption and pollution (the “ecological footprint”) generated by more affluent classes, resulting in more illnesses, deaths, and higher costs of goods and services? Clearly, a child born to affluent, older parent is far more socially costly to the environment than a child born to a poorer teenager. Similarly, what about the “social benefits” of the fact that poorer people provide labor at lower wages (reducing the costs of goods and services to the population as a whole) and die younger, reducing their burden on Social Security and Medicare systems in old age? What about the “social costs” to public assistance and insurance payers of much higher rates of pregnancy, birth, and infant health complications generated by parents over age 35 compared to younger parents?

Because social cost analysts pick what costs to include and which to ignore to suit political agendas, the alleged “social costs of teenage childbearing” are a grotesque sham. They represent the same ideology as 19th century eugenicists concerned about excessive breeding by “inferior stock.”

In the end, what is truly troubling is not that politicians and elitists attempt to sell long-discredited racial and class prejudices about who should be allowed to have babies and who should not be, but that America’s progressive lobbies have bought into the “social costs of teenage motherhood” scam so eagerly. Assigning costs to babies has no place in a humane society. The effort to do so is what separates the latter-day eugenicists from those truly concerned about reproductive health and family planning options—just as the latter should vigorously separate themselves from the former.