Since the COVID-19 pandemic, childcare prices have risen sharply, adding additional strain to the burden on working-class families.
Child care now drains a significant amount of family household income, with families now dedicating 24% of their income to child care, as opposed to the 7% the U.S. Department of Health and Human Services guideline.
The National Database of Childcare Prices provides data on the price variance of childcare costs across the country, and it shows that while childcare costs are lower in some areas, families still struggle to meet rising childcare-related expenses.
In 2018, child care for one child ranged from $4,810 ($5,357 in 2022 dollars, factoring in inflation) to $15,417 ($17,171 in 2022 dollars). The costs differ according to the child’s age, county population size, and provider type.
This hike in price has led to families engaging in unhealthy financial habits to make ends meet.
A survey by Care.com showed that 35% of the 2000 surveyed parents relied on their savings to pay for childcare costs, but 68% of those parents shared that they had less than six months before their savings ran out.
The first five years of a child’s life can be so financially taxing that young parents are quickly drawn into a financial quagmire. Forty-seven percent of respondents reported spending $1,500 per month in 2023. Twenty percent reported spending more than $36,000 per year.
Outsourcing infant child care costs families quite a bit of capital, with a single nanny costing as much as $766 per week. Daycare and family care centers cost $321 and $230 per week, respectively.
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Rising childcare costs are impacting young parents’ ability to save and spend, with grave economic repercussions. Not only will it reduce their purchasing power, but it can also encourage some people to put off having children until later in life when they feel they can better afford it.
According to a Bloomberg report, childcare costs rose by 6% globally in 2023. But costs in the US jumped 9%, leading to more families sacrificing their careers and earning potential to ensure their children have adequate care.
One immediate effect is that rising childcare costs have led women worldwide to leave the workforce. The rise childcare-related expenses disproportionally impacts women in the workforce.
The Bureau of Labor Statistics (BLS) reports a notable workforce participation gap, with 71.5% of women with children under 18 in the workforce, compared to 92.5% of men. For women with children under the age of six, that number falls to 66.5%.
Additionally, women are significantly more likely to forfeit career-ladder opportunities. The BLS’s 2023 statistics shows that of all employed men with children under the age of 18, 4.3% work part-time jobs. For women, that figure is nearly 20%.
The end of the pandemic-era safety net funds led to many childcare facilities closing down or downsizing their accepted amount of children as operational costs proved more than they could handle.
As most American households rely on a dual incomes to stay afloat, companies can consider offering childcare-related benefits to attract more talent and decrease employee attrition.
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