At $10,000 per year, the cost of childcare is 'a crisis,' and it's set to get worse in September

Story by insider@insider.com (Sabina Wex) • Yesterday 

The American Rescue Plan Act included funding for childcare that will end in September.

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It costs an average of over $10,000 a year for childcare in the US, causing many women to leave the workforce.

Many states have childcare resources, but the quality of those resources varies significantly.

The American Rescue Plan included childcare assistance, but that's set to end in September.

When Toi Smith's four boys were younger, she worked in corporate HR. Smith was a single mom and wasn't receiving child support from her kids' dads, so she qualified for food assistance and welfare. But even with her salary and subsidies, Smith couldn't afford childcare.

Smith eventually found a somewhat affordable in-home daycare on Craigslist that cost $1,300 a month. That was the same amount as her rent.

"It's a vicious cycle," Smith says. "You have to go to work. In order to go to work, you have to put your kids in daycare."

The cost of childcare is 'a crisis'

Smith isn't alone in finding it almost impossible to pay for childcare. Childcare prices often rival rent prices, averaging $10,853 a year, according to a 2022 report from childcare advocacy organization Child Care Aware of America.

The US Census Bureau reported that the median American household income is $70,784. If that average household has just one child, the $10,853 annual childcare costs eat up 15% of the family's income.

"Nobody can afford this. It's not you," Child Care Aware of America interim CEO Michelle McCready says. "It's everywhere. It's a crisis. It affects every income bracket."

Jess Carson discovered that many families use credit cards, go into debt, and send their kids to unlicensed daycare providers because they can't afford formal childcare. She learned this during her research for the 2022 Preschool Development Grant's New Hampshire Family Needs Assessment Survey.

"It's a series of trade-offs for families," says Carson, who is also the director of the Center for Social Policy in Practice at the University of New Hampshire's Carsey School of Public Policy.

States can sometimes help parents pay for childcare

Individual states determine much of the childcare assistance available. But each state's subsidies differ dramatically.

Child Care Aware of America offers parents a database to find local organizations offering childcare resources. These organizations can inform parents about subsidies and scholarships available in their area and for their income.

Carson's research illustrates how childcare differs from state to state by comparing subsidies available in Vermont and New Hampshire. Vermont offers higher income eligibility and larger amounts for childcare subsidies than New Hampshire. Because of this, Vermont families can save up to $20,000 more on childcare costs than New Hampshire families.

"These differences emerge in what a family could pay out of pocket, just living five miles apart on either side of the border," Carson says.

Though Carson and McCready are happy to see the states making childcare more affordable, they both mention the need for the federal government to make it a priority. During the pandemic, the Biden administration offered childcare assistance for both parents and childcare providers, but this money is set to run out in September. If this happens, McCready says it could lead to an even worse childcare crisis.

Our mindset around childcare needs to change

Carson, McCready, and Smith all say that a mindset shift is required in the country's attitude toward care. They all want to see citizens and politicians recognize that childcare is a public good.

"This is not a nice-to-have," McCready says. "It's essential for a strong, thriving workforce."

According to economist James Heckman, the US receives a 7% to 10% return on investment when it invests in early childhood education. When parents can't afford childcare, the country loses out on these huge gains.

Lack of childcare also leads to many women leaving the workforce. "Black single motherhood is the thing that politicized and radicalized me," says Smith, who writes about her experiences on her website. "My motherhood is deeply woven into how I think and how I work because it's all care work. There's no way that I can separate it."

Smith wants more people to be open about their struggles around parenthood, money, and work. She wants parents to feel comfortable openly saying that they're overwhelmed and can't afford childcare. She also wants friends, neighbors, and relatives to offer to help with kids when they can. She believes that this openness and cooperation could help offset some of the burden of paying for childcare.

"We think we have individual problems when actually there are societal problems," Smith says. She says it's important to identify others dealing with the same problems and ask how you can support each other. "What we start to do is crack at these systems a little bit."