The rising cost of child care services in the United States has created a challenge for many working parents: Should they keep paying for child care, adjust their work schedules to reduce expenses, or leave the workforce?
Government subsidies like the Credit for Child and Dependent Care are designed to assist parents with increased costs but in recent years prices continued to rise, while the number of day care providers dropped amid the pandemic.
Between 2014 and 2021, estimated revenue of employer firms classified as Child Day Care Services increased all but one year– 2020, according to the U.S. Census Bureau’s Service Annual Survey.
The Census Bureau’s County Business Patterns (CBP) shows the number of child care services businesses dropped from 2020 to 2021.
There were 77,383 U.S. employer establishments with 875,114 paid employees during the pay period of March 12, 2021 — down from 77,629 employer establishments and 1,015,242 paid employees in 2020.
The Nonemployer Statistics (NES) shows that from 2019 to 2020, the number of child care services with no paid employees also went down.
According to the 2020 NES, there were 517,983 U.S. nonemployer firms with a total revenue of $8.5 billion in 2020, down from 564,700 nonemployer firms with total revenue of $9.4 billion in 2019.
TheNational Database of Childcare Prices, which reports child care costs in 2,360 U.S. counties, shows that child care expenses are untenable for families throughout the country and highlights the urgent need for greater federal investments, according to the U.S. Department of Labor.
The database — which uses economic and demographic data from the Census Bureau’s American Community Survey along with data collected by the Department of Labor — is the most comprehensive public federal source of child care prices at the county level.
The Labor Department’s Women’s Bureau also created interactive county-by-county maps ofchild care pricesand costs as a share offamily income.
Abriefdrawing of available data across 47 states show child care prices for a single child ranged from $4,810 a year for school-age home-based care in small counties to $15,417 for infant center-based care in very large counties. When adjusted for inflation, this equals between $5,357 and $17,171 in 2022 dollars. These price ranges were equivalent to between 8% and 19.3% of median family income per child in paid care.
TheEconomic Policy Instituteranked thetop 10 statesor state equivalents with the highest child care expenses for preschool, infant care, and day care:
- Washington, D.C. ($24,243)
- Massachusetts ($20,913)
- California ($16,945)
- Minnesota ($16,087)
- Connecticut ($15,501)
- New York ($15,394)
- Maryland ($15,335)
- Colorado ($15,325)
- Washington ($14,554)
- Virginia ($14,063)
Given the rising cost of child care, many parents are looking for ways to make ends meet without leaving the workforce. Data on Child Day Care Services help monitor economic trends in that industry.
FAQs
In 2019, approximately 59 percent of children age 5 and younger and not enrolled in kindergarten were in at least one weekly nonparental care arrangement, as reported by their parents.
What percentage of income is spent on childcare? ›
American families who pay for child care spend an average of 18.6% — or nearly a fifth — of their income on it. Families with children younger than 18 earn $1,751 weekly, while those who pay for child care spend $325 a week on it. This percentage is up from 17.8% when we last published this study in January 2023.
How much does the average American spend on daycare? ›
On average, Americans spend $321 per week on daycare
Many families rely on their income and savings to cover this important expense. Finding affordable solutions can be a struggle, and waitlists are often long. According to the study, 47% of families spent over $1,500 on monthly childcare costs in 2023.
What is typically the largest expense in a child care programs budget? ›
Personnel costs will be the largest expense, frequently averaging at least 80% of total expenses. The following are salary levels for key positions in child care programs.
How big is the daycare market? ›
The U.S. child care market size was valued at USD 59.87 billion in 2023 and is expected to surpass around USD 88.22 billion by 2033, growing at a CAGR of 4.3% between 2024 and 2033.
Where does the U.S. rank in childcare? ›
“The results show that America is by far the worst country for childcare in the developed world.” The U.S. is the only country on the list to offer zero paid maternity leave.
Why is childcare so expensive in the US? ›
Federal guidelines show that adults at child care centers shouldn't care for more than a few toddlers or infants at a time, with these restrictions becoming more lax the older the children. Because of these limits, that means more staffing, which means higher payroll costs.
What percent of household income typically goes toward childcare in poor households? ›
Specifically, the report found:
45 percent of families earning less than $100K annually will spend more than $18,000 on child care in 2023, amounting to 18 percent of their household income. 43 percent of families earning less than $75K will spend more than $18,000, amounting to 24 percent of their household income.
How much money is spent on a child per year? ›
Raising a Child Can Cost More Than $30K Per Year in the U.S. – 2023 Study. The ongoing costs of child-rearing can be hard to size up – and digest. The average cost to raise a child in the U.S. is $20,813 annually.
How many children are in day care in the US? ›
More than 12 million children younger than age five are in some form of child care in the United States.
Daycare worker salary ranges between $21,000 - $39,000, with the average total compensation falling around $28,520 per year as of May 2022 data.
What is most families biggest expense? ›
The largest expense for most Americans is housing. At $1,050 per month, the cost of having a roof over our heads accounts for 21% of a household's monthly budget. Percentage of income is based on after-tax income.
What is an early childhood program's largest source of income? ›
Tuition is an early childhood program's largest source of income.
What is the biggest expense for families? ›
What Are the Main Household Expenses?
- Housing: 33.3%
- Transportation: 16.8%
- Food: 12.8%
- Personal insurance and pensions: 12%
- Health care: 8%
- Entertainment: 4.7%
- Other expenditures: 4.1%
- Cash contributions: 3.8%
There's quite a lot of research on the issue, which isn't surprising considering how ubiquitous child care is in this country: According to the U.S. Census, 16 percent of babies under the age of 1 are enrolled in center-based day care, while 26 percent of 1- to 2-year-olds are.
Is daycare better than staying home with mom? ›
If the parent wants to work, the baby will be better off in daycare. If the parent doesn't want to go to the office, the baby is better off at home. Daycare has a wealth of developmental toys, social interaction and learning how to follow social cues. Home can offer the same, when the at home parent is engaged.
What state has the highest childcare ratio? ›
The highest child-staff ratios can be seen in the 10 years and older group, which goes as high as 26:1 in Texas.
How many people in the U.S. cannot afford childcare? ›
Among U.S. parents of children younger than 18, 43% said it is difficult to afford child care, while nearly 3 in 5 of those parents in households making less than $50,000 a year said the same. 51% of women with young children said it is difficult to afford child care, compared with 33% of men with children under 18.
