Childcare costs have become so expensive that full-time childcare costs more than rent in 16 of the country’s 100 largest cities, according to a new report.
Personal finance site LendingTree compared the monthly cost of infant child care to the average rent for a two-bedroom home in a major city.
The analysis found that in a significant number of cities, childcare costs are a larger expense.
In Syracuse, New York, child care costs an average of $1,417, according to a study by LendingTree. Monthly rent for a two-bedroom unit is $1,126. In Spokane, WA, childcare costs average $1,588 per month. Average rent is $1,304. In Minneapolis, child care costs an average of $1,767. Rent will cost $1,622.
The LendingTree report, published Sept. 16, uses child care numbers from the nonprofit organization Child Care Aware of America and compares them to federal rent data.
This is the latest in a series of surveys and studies warning of soaring childcare costs.
Childcare costs have risen 220% since 1990
According to the Annie E. Casey Foundation, child care costs have increased 220% since 1990, significantly outpacing inflation.
According to a recent LendingTree analysis, the average household paying for childcare costs $325 per week, or 18.6% of their weekly income. Another report from Care.com, a website for caregivers, found that the average family spends 24% of their household income on child care.
Both numbers exceed federal guidelines for how much parents should pay for those services.
“You can understand the scale of this problem when you see that childcare fees are now the number one household expense, beating out rent and university tuition fees,” said the general manager of a daycare center. Sean Lacy says. care.com.
A recent report from the Directorate General of Public Health highlighted the rising costs of raising children and warned that parental stress is an looming “urgent public health issue”.
The childcare industry is under stress due to economic factors.
Several economic factors are driving up costs and tightening supply in the child care industry. One is inflation. The other is the coronavirus disease (COVID-19) pandemic, which has shuttered thousands of child care centers. Third, pandemic-era federal funding for child care centers expired last fall.
LendingTree’s report draws attention to childcare costs by comparing them to rents, which are also rising. Rent prices are now one-third higher than they were before the pandemic, according to Zillow.
Here are some of LendingTree’s findings.
The average cost of full-time center-based infant care in the 100 largest cities is $1,218 per month. For a family with an infant and a 4-year-old, monthly costs increase to $2,182. The average rent for a two-bedroom home in these cities is $1,566, which is more than the cost of child support for one child but less than the cost of child support for two. In 16 cities, child care costs per child are higher than rent. In 91 cities, childcare costs for two children exceed rent.
“Childcare numbers have increased astronomically,” said Matt Schultz, chief credit analyst at LendingTree.
Parents debate: Second income or full-time childcare?
Social media is filled with accounts of parents weighing up second income and child support calculations.
“My husband and I spend 50% of our take home pay on the mortgage and daycare for one of our kids,” one parent wrote in a Reddit discussion about parenting. “I can’t afford to send my child to daycare anymore.”
Another parent wrote, “Because of this, my wife and I work opposite shifts and we don’t see each other at all during the week, which is very tiring.”
The nursery teacher added: “The worst part is that we teachers are paid up to $15 an hour.”
It may sound counterintuitive given the high costs of childcare, but experts say the industry is struggling.
“We find that the average child care center has a profit margin of 1.5 percent,” said Leslie Boisiere, vice president of external affairs at the Annie E. Casey Foundation. According to the Bureau of Labor Statistics, the median hourly wage for child care workers is $14.60.
Nursery teachers’ salaries are low and profit margins are thin.
Boisière and other childcare experts say childcare workers are poorly paid and have thin profit margins. That’s partly because of state regulations that generally require high child-to-worker ratios.
Another factor is real estate. Day care centers located in wealthy suburbs are likely to face the same high rent and mortgage costs as the wealthy suburbanites who live there.
“Parents pay sky-high prices, yet child care providers actually make very little money,” said Sandra Bishop, senior director of research at Child Care Aware of America. ” he says.
The exorbitant costs of childcare are forcing many parents, especially mothers, out of the workforce. Research shows that childcare costs are one reason why women’s labor force participation in the United States has stagnated while growth continues in other wealthy countries.
Additionally, federal labor statistics show that tens of thousands of Americans are forced to take time off from work each month due to child care issues.
A 2023 report from the nonpartisan Council for a Strong America says the country’s “child care crisis” costs $122 billion in lost profits, productivity and revenue each year.
“The system is not working”
“The reality is this system isn’t working for everyone,” Bishop said. “Families can’t find child care. Even if they can get treatment, it’s unaffordable. It hurts parents, it hurts communities, it hurts businesses.”
Experts say policymakers can help fix the system by increasing funding for programs like Head Start, which help parents with early education needs.
Another option is to invest more in the Child Care and Development Block Grant, a federal program that helps low-income families afford child care. Bishop said only a small percentage of households qualify for the grant.
Surgeon General’s Warning: Parenting can pose health risks
Boisière said states could increase the supply of childcare workers by simplifying licensing standards for home-based childcare providers. Home-based child care can be “much more affordable” than daycare centers, she said.
According to a 2021 New York Times analysis, the United States invests about $500 per child annually in child care. The average wealthy country invests $14,000.
Boisière said childcare offers a “triple win.” “Children thrive, parents can go to work and support their families, and the economy thrives.”