The Impact of the High Cost of Child Care
How the High Cost of Childcare Impacts America
How the High Cost of Child Care Impacts America
The country’s lack of affordable and accessible child care shortchanges children, costs the American economy billions of dollars a year, stymies women professionally and is pushing families to the breaking point, according to the 2023 KIDS COUNT® Data Book, released by the Annie E. Casey Foundation. Each year, the report sheds light on the well-being of America’s kids; in 2023, the report focused on how expensive, hard-to-find child care affects parents. It also describes low pay leading to a chronic shortage of providers and demands that policymakers at the state and national levels enact real solutions.
Download the 2023 KIDS COUNT Data Book
Effects of Incompatible Childcare & the Average Cost Per Year
Too many parents cannot secure child care that is compatible with work schedules and commutes. The Data Book reports that in 2020–21 13% of children birth to age 5 lived in families in which someone quit, changed or refused a job because of problems with child care. And women are five to eight times more likely than men to experience negative employment consequences related to caregiving.
Even if parents can find a childcare opening near their home, they often can’t pay for it. The average annual national cost of childcare for one child in 2021 was $10,600, a tenth of a married couple’s median income and more than one-third of a single parent’s income, according to one analysis. The shortcomings of the childcare system disproportionately affect the financial well-being of women, single parents, parents in poverty, families of color and immigrant families.
“A good childcare system is essential for kids to thrive and our economy to prosper. But our current approach fails kids, parents and child care workers by every measure,” says Lisa Hamilton, president and CEO of the Annie E. Casey Foundation. “Without safe childcare they can afford and get to, working parents face impossible choices, affecting not only their families but their employers as well.”
Rankings & Cost of Childcare by State
Each year, the Data Book presents national and state data from 16 indicators in four domains — economic well-being, education, health and family and community — and ranks the states according to how children are faring overall. New Hampshire, Utah and Massachusetts rank first, second and third in overall child well-being in the 2023 KIDS COUNT Data Book; Mississippi, Louisiana and New Mexico ranked 48th, 49th and 50th.
Factoring both the price of care and median income in each state, center-based care for toddlers creates the largest cost burden for married couples with children in Nevada (15%), Colorado (14%) and New York (14%), and home-based care for married couples with children in New Mexico (12%), Nevada (11%), California (10%), Colorado (10%), New York (10%) and Washington (10%).
How the High Cost of Childcare Impacts America
Effects on Childcare Workers
While childcare costs burden families, childcare workers are paid less than 98% of professions. Median national pay for child care workers was $28,520 per year or $13.71 an hour in 2022, less than the wage for retail ($14.26) and customer service ($18.16) workers.
Some 94% of childcare workers are women; 14% are Black and 4% are Asian. Across all races, 24% described their ethnicity as Hispanic or Latino.
In addition to low wages, childcare workers face other burdens inside the classroom. Most childcare workers have minimal time for lesson planning and must contend with high teacher-child ratios. These challenges are often compounded by a lack of resources for their learning environment.
Effects on Parents & the Economy
The failings and high cost of the childcare market also affect the health of the American economy, costing $122 billion a year in lost earnings, productivity and tax revenue, according to one study. All of these challenges put parents under tremendous stress to meet the dual responsibilities of providing for their families and ensuring their children are safe and nurtured. The report also found:
- While 10% of white children (birth to age 5) lived with a family member who had to quit, change or refuse a job because of child care, this figure was 17% for Black and 16% for Latino children.
- More than 60% of child care workers reported having difficulty paying their own food and utility bills in the most recent month.
- Infant child care is so expensive that one analysis indicates it costs more than in-state college tuition in 34 states and the District of Columbia.
- The main federal mechanism for subsidizing care, the Child Care and Development Block Grant, partially offsets costs for only 1.3 million of the more than 12 million kids in child care. Of children eligible for subsidies under federal rules, only 1 in 6 receives them.
Effects on Child Development
The high cost of childcare means that young children are missing out on care and early learning during a period of important brain development. Access to early childhood education is invaluable in preparing young learners for elementary school, which is why it is one of the 16 indicators that make up the KIDS COUNT index in each year’s Data Book. Despite gains in recent years, our country is still failing to deliver early childhood education to more than half of its children (54%, a one-point increase over the previous measurement).
Without a significant early childhood education, children are more likely to fall behind their peers — and closing the gap will likely prove to be difficult. Research has shown that the consequences of inadequate early education include: academic struggles, behavioral issues and even poorer health outcomes in adulthood. Additionally, children who miss out on early childhood education are more likely to drop out of school and more likely to never attend college.
How We Can Improve the Childcare System
Transitioning from a faltering childcare system to creating a flourishing one will take new thinking and investing at the local, state and national levels. Collaboration among the different levels of government could pioneer a significant change, but more work is needed:
- Federal, state and local governments should invest more in childcare. State and local governments should maximize remaining pandemic recovery act dollars to fund needed child care services and capacity. Congress should reauthorize and strengthen the Child Care and Development Block Grant Act and increase funding for public prekindergarten and Head Start.
- Public and private leaders should work together to improve the infrastructure for home-based child care, beginning by lowering the barriers to entry for potential providers by increasing access to startup and expansion capital.
- To help young parents, Congress should expand the federal Child Care Access Means Parents in School program, which serves student parents.
Download the 2023 KIDS COUNT Data Book at www.aecf.org/databook.
