The New York Times has been running a series of stories about surrogate mothers (latest). In a July 6, 2014 article the Times says that the expected compensation for the woman who carries the baby for 9 months is about $25,000 (range from $20-30,000). Meanwhile the agency that carries a filing cabinet and a Web site around gets $20,000 and the lawyers who carry a PDF or two get $10,000. So the surrogate mom who does all the work gets paid less than the bureaucracy of surrogacy.
Per month of pregnancy the surrogate mother is receiving about $2800. Yet, according to attorneys interviewed recently for a book project the typical price received from a potential child support defendant in Massachusetts for an abortion is $250,000 after two or three months of pregnancy (the profitability of a pregnancy and abortion varies from state to state depending on each state’s child support guidelines and the extent to which obtaining custody of a living child will be profitable). So the woman who seeks to get paid for having an abortion gets paid at least $83,333 per month of pregnancy, 30X as much as the woman who gets paid for having a baby. Add in the fact that surrogacy fees are income and therefore taxable while abortion fees are potential tax-free if considered to be payment for physical damage and/or a pre-payment of tax-free child support (see this Forbes article), the abortion retailer may actually be netting 50X per month of pregnancy compared to the incubation retailer.
I can’t figure out if these discrepancies are a sign of an immature or a mature market…
Related:
The surrogacy market reflects more or less market returns. There are a lot of women capable of carrying surrogate babies – the barriers to entry in the profession are very low. Basically you just have to be a woman of child bearing age and you are in. Rarely does labor (in this case labor has a dual meaning) get most of the proceeds for a product. If a corporation has labor costs = almost half of the retail price of the product, that would be considered extremely high.
The price for an abortion in a child support case, OTOH, is based the value of avoiding the alternative – not having to pay millions in child support for the next 20+ years. Paying $250,00 is a bargain in comparison. So the situation is not comparable. The child support payment defendant is not in a market situation – he is in an artificially created legal bind stemming from the generous child support laws of MA.
Keep in mind that you are also talking about a very small sub-market – fathers with enough income/wealth to pay hundreds of thousands in a settlement payment or millions in child support. The vast majority of cases of unwanted pregancy involve parents who don’t have two nickels to rub together. This is like reading about people who pay $1,000,000 for a parking spot – this only concerns the 1% and has no relevance to most people.
Izzie: I don’t know that the ratio of what the consumer pays to what the person doing the work is paid should be the same as in an industrial setting. The surrogate mother does not go to work in an office provided by the surrogacy agency. The surrogate mother is not supervised on a daily basis by managers from the agency. Nor is her work coordinated with the work of others.
The Massachusetts child support guidelines provide for payments of $40,000 per year for 23 years (plus generally the defendant can be ordered to pay 100 percent of health insurance, day care, college tuition, etc.). That’s $920,000 in tax-free cash transfers to the plaintiff plus perhaps another $300,000 in payments to vendors. This is based on a defendant who earns $250,000 per year pre-tax. http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html shows that this was 6% of wage earners in the Boston area in 2011 (presumably 7 or 8% now due to the last three years of inflation and economic growth).
Note that if a defendant with an income over $250,000 can be found, the child support is potentially unlimited and can be whatever a judge thinks is fair.
[My “women in science” article provides a little more detail on how judges award child support to plaintiffs suing people with higher-than-guidelines income. As noted in the article, it is difficult to get precise data for the revenue from one-night bar encounters because those records are sealed (i.e., only when a married person sues his or her spouse do data become available to the public).]
You may be correct that “The vast majority of cases of unwanted pregnancy involve parents who don’t have two nickels to rub together.” However, to the extent that it is true that most women are not offering their wombs for rent, either via surrogacy or abortion retail, that should make womb rental more profitable, not less, due to the reduced competition. (And, separately, your observation is off-topic as the original posting regards planned pregnancies, not “unwanted pregnancy”.)
To your point that the opportunity to profit from an abortion is unique to Massachusetts, it would work just as well in some other states (e.g., see these Wisconsin guidelines, which result in a yield of $42,500 per year in tax-free revenue for one child from a $250,000/year defendant). Also, Boston is a JetBlue hub. There is no reason that a person from a state with capped child support cannot fly to Boston, become pregnant, return home and then collect child support from a Massachusetts defendant using the Massachusetts courts and guidelines. In fact, attorneys interviewed say that it works just as well for foreign citizens who can become pregnant here in Massachusetts.
Phil the nytimes link you cite shows $250K as the 6% level for Boston-area *households*, not individuals.
Stu: Good point. But even if you strip out the two-income households from the data where the two earners have roughly comparable incomes, that’s still a lot more than the 1% of the population that Izzie was positing.
http://bostonherald.com/news_opinion/local_coverage/2014/09/new_study_on_income_inequality_looks_at_mass says that the one-percenters in Massachusetts have a household income of $700,000 per year (presumably higher in the Boston area compared to this state-wide number).
And, actually, an abortion retailer/child support profiteer could target a household income almost as easily as an individual earner. If a married dermatologist is targeted following a one-night encounter, for example, a plaintiff could argue that she should get a share both of his income and his radiologist wife’s income. The attorneys that we interviewed reported having negotiated above-guidelines child support payments for women who became pregnant due to an affair with a married man and agreed to keep things quiet as long as the cash was flowing. Attorneys also report that plaintiffs seeking an above-guidelines award often argue that a spouse’s income should be considered as well, e.g., because the spouse pays a portion of household expenses thus leaving the defendant in a position to pay over a larger percentage of his income than standard.
OK, I take back 1%. Let’s say it’s 5% (taking into account 2 wage earner households). But what percentage of PREGNANCIES (planned or unplanned) involve such high income men?
Women with family incomes under $10,000 give birth almost twice as often as those making over $75,000. At the rarefied levels you are talking about, birth rates are probably even lower. http://www.statista.com/statistics/241530/birth-rate-by-family-income-in-the-us/
Do you know the actual number of $40,000+ child support awards made annually in MA? The # of $250K plus settlements leading to abortion?