U.S. families are spending 24% of their annual income on childcare

 

By Pavithra Mohan

The pandemic upended the childcare industry, forcing providers to shut their doors—in many cases permanently—and leaving parents with even fewer options than they had prior. By now, the $24 billion in federal aid that was secured for the childcare industry during the pandemic has dried up, leaving many providers and parents in the lurch.

All this upheaval has driven up the already steep cost of childcare, a business where labor costs are high out of necessity: A recent analysis by the Bank of America Institute found that monthly childcare payments this past September were 32% higher than during the same period in 2019. The result is that parents are spending 24% of their annual household income on childcare—and a significant portion of them are being forced to dip into their savings, according to a new report by online childcare marketplace Care.com.

The report found that 35% of the 2,000 parents surveyed had to use their savings to afford childcare, and that they had burned through nearly half of their savings on average. About 68% of respondents said they would exhaust their savings within about six months. More than a third of parents have relied on family and friends to assist with this care, with nearly all respondents making some kind of significant change to manage the cost of childcare—taking on an additional job, moving closer to family, or even exiting the workforce altogether.

 

It’s also clear that parents are already feeling the effects of the recent expiration of federal funds: Most respondents said they were anticipating more fallout from the lack of federal funding this year, while 40% said they had already been impacted through increased childcare costs. More than half of parents have also seen waitlists for childcare grow even longer.

While parents seem to want additional support from their employers—with more than 28% advocating for subsidies or on-site childcare—the report bolsters the argument that there is no easy fix when childcare costs have risen so dramatically over the past decade. The average cost of a nanny is currently $766 per week, according to Care.com, as compared to about $472 in 2013; daycare centers charge parents $321 each week on average, up from about $186 in 2013. (In regions with a steep cost of living, those averages are even higher, well over $800 a week for a nanny, for example.)

Even family care providers, which are typically more affordable, have increased pricing significantly, by more than 80% in the past 10 years. Without consistent federal funding and other measures that address the structural issues underpinning the industry, childcare will continue to remain out of reach for countless families—or push many of them further into debt.

U.S. families are spending 24% of their annual income on childcare

Fast Company – work-life

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