How Much Does Daycare Cost? It May Be Family’s Largest Household Expense

How Much Does Daycare Cost? It May Be Family’s Largest Household Expense

How much does daycare cost?

As we reported earlier, the national cost of child care has risen faster than the cost of other consumer goods. Now, Child Care Aware‘s 2017 report, “Parents and the High Cost of Child Care” provides additional new details — including a 3 percent cost increase over the previous year alone.

“Despite the rising economy and promises of a great future, we are living in a country where most parents are struggling to afford one of the most significant expenses in their family budget—child care,” writes Lynette Fraga, Executive Director of Child Care Aware (CCA).

High-quality child care is a crucial ingredient in children’s readiness for school as well as service that enables more parents to join and stay in the workforce, to their families’ and employers’ benefit. For example, as we noted in our discussion of public support for state-funded child care, the absence of reliable child in Louisiana resulted in a $1.1 billion loss annually for that state’s economy.

Child Care Costs

As the study shows, the costs can be significant:

  • CCA’s estimate of an average annual cost for family- and center-based child care cost, in the range of $8,600-$8,700 based on 2016 data, represents more than 10.2 percent of household income for families with one child, and 35.6 percent of household income for a single-parent family.
  • In contrast, the U.S. Department of Health and Human Services standard for affordability for child care is 7 percent of household income.
  • In more concrete terms, typical annual child care costs for two children (an infant and a four year old) exceed the cost of housing in the Midwest and Northeast—and comes a close second in the South—while exceeding the combined costs for food and transportation or college tuition in all regions of the country.

In 2016, the average annual cost for an infant in center-based care was higher than a year’s tuition and fees at a four-year public college in 28 states and the District of Columbia. In 15 states and the District of Columbia, even the annual average cost of care for a 4-year old in a center, which is less expensive than care for an infant, was higher than public college tuition and fees in 15 states and the District of Columbia.”

How Do Child Care Employees Fare?

Not only is child care unaffordable for low-income families, but also many child care workers themselves live in poverty.

The report notes: “Last year (in 2016), the median hourly wage for child care workers in the U.S. was $10.18, making wages of child care workers comparable to fast food cooks. They are less likely to receive work-based benefits like health care and many have difficulty making ends meet. Many are unable to afford child care for their own families. According to our calculations, in every state, child care workers would need to spend more than half of their income in order to afford center-based child care for two children.”

While arguing for an increase in the supply of high-quality child care, CCA recognizes: “Making sufficient quality [child care] available to all children will require significant investment in the child care workforce, and increasing family access to quality programs by building their supply.”

It offers a number of proposals—with examples—to both improve child care accessibility and reduce the cost of high-quality child care, such as:

  • Having multiple child care centers pool administrative and shared service costs, such as human resources, food services, and insurance.
  • Creating child care networks that provide professional management services and technical assistance to home-based child care businesses.
  • Involving other business sectors to support greater investment in child care.
  • Promoting tax policies at the state and local level, including tax increases to pay for child care investment and tax credits for businesses and lower-income families.

The report also offers a number of recommendations for Congressional action, to expand funding to states for publicly-funded child care, to lower the out-of-pocket costs of child care for families and to increase compensation for child care providers—all steps that that would increase both supply and accessibility.