The shock of soaring child care costs
American families are having a tough time catching a break, thanks to stagnant wages and an uneven recovery. But a less-known issue may be playing an even bigger role: child care costs.
This expense is now a major stress on many American families, given that only a handful of cities meet the Department of Health and Human Services' affordability threshold for the service -- 10 percent of family income -- and that child care costs more than college tuition in 33 states and the District of Columbia. That's according to a new report from The Economic Policy Institute.
The issue increasingly isn't a problem only for low-income families but also for middle-income and even upper-income Americans, given that the median household income peaked in 1999.
"In 500 out of 618 budget areas, child care actually exceeded the cost of rent. It was so shocking" given that rent is considered one of the major expenses in a family's budget, said Elise Gould, a senior economist at the EPI who wrote the report with Tanyell Cooke.
While costs vary wildly based on location, the common theme is that most Americans are struggling to pay for quality child care. That's why so many families create a network of friends and family to provide care, or sometimes cobble together staggered shifts so that one parent is at home with the kids.
Young families might be aware of the cost of sending their children to college, but many may not be prepared for the financial stress of five years of providing care before their child enrolls in kindergarten. Given this rising pain, one New York City mayoral candidate even proposed a plan to create loans for families seeking to fund their kids' child-care payments.
"The problem that poor families have long faced has become really challenging for middle-class families," said Joya Misra, professor of sociology and public policy at the University of Massachusetts, who studies issues about gender and the labor market. "Mid- and even-upper-class families are having trouble paying for child care. What's going on there, and why is it so expensive and so unaccessible?"
America has taken a market-based approach to child care, relying on private businesses to create enough services to meet demand, she noted. But the problem is that child care is labor-intensive and pays its workers very little, so turnover is high.
"It's not like the workers are making a ton of money off of this," Misra said. "It's not that parents are being treated in a predatory way. There's a reason why we don't have enough of a supply of child care in this country, and that's because it's extremely poorly paid."
Child care workers earn a median wage of $10.60 per hour, or less than what dog trainers earn, according to a 2014 study from University of California, Berkeley's Center for the Study of Child Care Employment.
The better solution, Misra said, would be to treat child care as a public good, the same way the country now handles public education, law enforcement and roads. While some might balk at the idea of another public service that will need funding through tax dollars, she argues that's missing the bigger picture.
Women who have children are increasingly stepping out of the workforce because of costly child care, which crimps their long-term earnings potential. In countries that provide government support for quality child care other family policies such as paid parental leave, Misra said, "it's the most powerful driver of economic outcomes for mothers and women." And it helps reduce the wage gap between mothers and women without children, she added.
Government support for quality child care would also help prepare students for school. Today, poor American children are arriving at kindergarten with lagging skills and a learning gap that has only become more pronounced in recent generations as more kids get born into poverty.
Some Americans espouse a rhetoric that says "we're all individuals, and we're making decisions individually, and we shouldn't expect people to take care of us," Misra said. "The thing that I find not compelling about this rhetoric is I really believe children are a public good. They pay into our retirement system. There are so many reasons why we need people to keep raising children."
Of course, that becomes tough when families are strapped by stagnant wages and high rents, which may make the cost of raising a child seem unmanageable. Tuition at in-state public colleges was exceeded by child care costs from Florida to Washington state, the EPI found.
"Families look at in-state tuition as a dream to be able to afford that for your kids," the EPI's Gould said. "But you don't have 18 years to save for your infant's care in the same way people think about saving for college."