Families with younger children in the United States pay a lot of money for child care. Whether it is after-school or full-day care for infants, childcare consumes a large share of family income among those who pay for childcare services.
Childcare remains out of financial reach of many families
Child care is one of the most significant expenses for working parents. In over half of states, full-time care for an infant costs more than college tuition, according to Child Care Aware of America, which advocates for more affordable child care. For many families, child care was more expensive than the price of housing and health insurance, the report found.
- In 2020, the average cost of child care was over $10,000 a year, and in 2021, childcare costs rose by an average of 5% from the previous year — a rate that outpaced inflation in 2021 (report by Child Care Aware).
- In 2022, a reported 63% of parents say child care has become even more expensive than in previous years, according to a survey from Care.com.
- When families don’t have access to affordable, high-quality child care, children miss out on meaningful child development opportunities, employers face losses as they struggle to find workers, and our economy sees overall challenges.
- “Parents continue to face the challenge of finding and affording high-quality child care,” said Lynette M. Fraga, Ph.D., CCAoA Chief Executive Officer. “Recent public investments in child care have been a lifeline and helped keep programs open. But robust, long-term public support is needed to make child care affordable for families and ensure more children have access to high-quality early learning experiences to prepare them for success in school and beyond.”
- Governor Gavin Newsom’s 2023-24 proposed budget includes $230.5 billion for all California Health and Human Services (CalHHS) programs. While the primary focus of the budget for CalHHS is on Medi-Cal, the state plans to invest in several other key areas, including child care, supplemental security income (SSI), and opioids.
- The state reached a historic agreement with Child Care Providers United – California to bargain reimbursement rate increases collectively. The Budget maintains over $2 billion annually to expand subsidized childcare slot availability.
- The Budget includes $301.7 million in General Funds for Child Care and Development Programs and $1.5 million for the Child and Adult Care Food Program to reflect an estimated statutory COLA of 8.13 percent.
- The Budget maintains the commitment initiated as part of the 2021 Budget Act to continue funding 110,500 new subsidized childcare slots added in 2021-22 and another 36,000 new slots added in 2022-23 to fund over 200,000 expanded slots eventually.
- However, thousands of newly available slots since 2021-22 have not yet been filled. To accommodate the time necessary to utilize recent slot expansions, the Budget assumes that 20,000 new slots that would have been funded in 2023-24 will instead be funded in 2024-25.
- The US spends less than 0.5% of its GDP on early childhood education and care, while some countries allocate triple that share.
The lack of affordable child care has particularly hard-hit women.
- Recent findings from the RAPID-EC survey indicate that 40% of female respondents had left their jobs or cut back on their work schedules – most of them due to childcare constraints.
What is this crisis costing us?
What is a childcare desert?
- Childcare deserts are areas where there is no childcare available, meaning daycare, nanny, and full-time babysitting. It is a literal desert to find childcare. So, half of Americans live inside childcare deserts. That doesn’t exist for the majority of Americans, and that means one for every three kids. There’s only one daycare slot available, and that in and of itself just is mind-blowing if you think about it. Also of the pandemic, more than 16,000 daycares have permanently closed.
- Today, the average weekly rates are 226 bucks. That’s up 5% since the pandemic, and nannies are also up significantly. They’re at $694 with a much-deserved wage increase and labor pool, but it’s still more expensive, hitting the bottom line for the parents.
Key findings on the impact of high childcare prices
- Counties that had higher childcare prices had lower rates of maternal employment.
- On average, counties with higher wages for women did have higher maternal employment rates. Still, higher earnings did not fully compensate for the reduction in maternal employment associated with higher childcare prices.
- Higher childcare prices remained a barrier to maternal employment even in higher-wage areas.
- Reducing out-of-pocket childcare expenses for families can help support employment, especially for mothers.
- And while childcare is expensive in the U.S., childcare workers receive meager wages – a median of $13.22 an hour.
High cost of child care keeping parents at home, exacerbating a labor shortage
- According to a ZipRecruiter survey of jobseekers, 54% of those with young children said they would choose to work more hours if their employer or the government provided more childcare assistance.
- The current funding system relies primarily on overburdened families and underpaid childcare workers.
- Even though child care is expensive, childcare providers operate on thin margins, and childcare workers receive meager wages – a median of $13.22 an hour.
- Low pay in the childcare sector means employers cannot attract sufficient workers, and many areas are considered childcare deserts, leaving families with limited options. Yet, families cannot afford to pay more, meaning the childcare sector needs substantial government investment to function adequately and eventually prosper. Quality, affordable, accessible childcare supports higher employment and full-time work hours, reduces poverty, and reduces socioeconomic disparities in employment, early care, and education.
The National Database of Childcare Prices is a new data source showing how prices vary by childcare provider type and children’s age in 2,360 counties across 47 states.