A new report shows child care expenses are now more than you'd pay for college.
According to Care.com's 2024 Cost of Care Report, parents on average spend 24% of their household income on child care with nearly half (47%) spending more than $18,000 a year -- and a staggering 20% spending more than $36,000 annually.
To compare, the average in-state cost of tuition and fees to attend a ranked public college is $10,662 for the 2023-2024 year, according to U.S News & World Report.
"Within the first five years of their child's life, parents are being forced into a financial hole that is nearly impossible to climb out of," Brad Wilson, CEO of Care.com, said in a statement. "A healthy economy depends upon the ability for people to save and spend, but given the crushing weight of child care costs, those pillars are crumbling."
Not only is an eyebrow-raising amount of income going towards child care, but many parents are also spending their hard-earned savings to shoulder the cost. The report shows more than one-third (35%) of parents are dipping into their savings, on average spending up to nearly half of their savings (42%) on child care and 25% using more than two-thirds of their savings, leaving them with little financial flexibility.
"Given the reliance on savings to pay for child care, it is alarming that a staggering 68% of respondents have only six months or less until their savings run out," the report noted. "Not surprisingly 37% of parents who responded cite the cost of child care among their top three financial stressors."
The U.S. Department of Health and Human Services considers child care "affordable" when it costs families no more than 7% of their household income. However, according to the Care survey, families are spending an average of 24% of their household income on child care -- with 60% spending 20% or more and 84% spending 10% or more.
The findings reveal that the "child care cliff" -- the abrupt loss of pandemic-era funding that kept thousands of programs afloat nationwide -- is making a tough situation even worse. Nearly 40% of parents are already paying more because their care provider has been impacted by the loss of funds, and nearly 80% anticipate being impacted in 2024 by fallout from the child care cliff. The majority (54%) of those concerned are expecting to spend $600 or more per month on child care, which totals more than $7,000 in additional care costs for 2024.
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Cost is not the only issue with which parents are wrestling. The cliff has also impacted availability of child care with 43% of respondents having a harder time finding a childcare provider versus prior years.
"With the majority of families in America being dual income, there is widespread demand for child care and not enough supply to meet it," said Bryan Jamele, head of government affairs and public policy for Care.com. "Following the child care cliff, the situation has gotten even worse as many daycare centers have had to close, shrinking availability even further. If this seems familiar, it's because it is. The imbalance of supply and demand existed pre-pandemic, got worse during and because of the pandemic, and is now at its most extreme due to the child care cliff."
The report breaks down the average weekly child care costs by type of care:
• Nanny cost: $766
• Daycare cost: $321
• Family care center cost: $230
• Babysitter cost: $192
The most expensive states for daycare are Washington D.C. ($419/week), Alaska ($375), Massachusetts ($372), Washington ($337) and California ($304). On the other hand, the least expensive states for daycare are Arkansas ($129), Louisiana ($139), Mississippi ($140), West Virginia ($141) and Alabama ($150).
"The child care crisis should be a major red flag for everyone, not just parents," said Wilson. "It is a systemic failure that will impact our nation’s economic growth, and that affects us all."
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