In 2015, the average cost of childcare in America is more than $143 a week. The cost of childcare has nearly doubled in the last 30 years in the U.S. Parents today will pay about twice what parents in the mid 1980’s paid for childcare.
Childcare costs are even worse for families with younger children. The average weekly childcare payment for a preschool age child is $179 a week, vs $143 a week for the national average payment for all families with childcare costs.
The U.S. Census found that in 2011 over 32 million children were in childcare while their parents were at work. 61% of the parents of preschoolers paid at least some childcare cost, while 50% of grade schoolers were in child care at some point during the week.
As Childcare Costs Rise, Parents Use Childcare Less
The percentage of parents paying for childcare has dropped since the late 1990s. Looking at the infographic above, it’s clear that as childcare costs go up, childcare participation goes down. 42% of parents in 1997 paid for childcare costs. By 2011, only 32% of parents paid for childcare. The 25% drop in parents who put their children in childcare corresponds to a 25% increase in childcare costs during the same period.
Also see: Money Tips: 4 Ways to Save Money on Child Care Costs
Where Do Kids Go When Childcare Costs Skyrocket?
There’s some evidence that rising childcare costs have forced parents to seek alternative childcare situations. More working mothers mean childcare can’t just be swept under the rug. To make up the time deficit, parents have turned increasingly to relatives and preschool arrangements.
Fully 49% of all childcare is now provided by a stay-at-home parent or a relative like a grandparent. This isn’t to say that childcare costs vanish when a parent, grandparent or aunt takes care of kids during the day. There are still costs of lost wages, food, utilities and other materials and services, but these costs get folded into the parents’ regular cost of living, making them more difficult to track.
Who Pays the Most for Childcare Costs?
Looked at as a percentage of income, poor families bear the brunt of the financial pain of childcare costs. Families living above the poverty line spend as much as 8% of their annual income on childcare. Meanwhile, poor families spend nearly a third of their income on childcare costs.
Also see: 19 Unexpected Money Tips from Moms
Obama’s Plan to Help With Childcare Costs
In January of 2015, President Obama introduced a plan to nearly triple the annual childcare tax credit. The plan would boost the credit to $3,000 per child per year, effectively knocking weekly childcare cost payouts by families well below 1984 levels.
Obama also proposed other measures to ease the childcare cost of working families. One such measure would make cost-free preschool available to more families. Another would expand the reach of the Head Start preschool program for impoverished families. Under the plan, Head Start would be extended to last the full school day and the entire school year.
The Argument Against Increased Government Help With Childcare Costs
Some have criticized Obama’s plans to increase government tax credits and government spending on childcare costs. The most pointed criticism of any plan by government to intervene with childcare cost assistance is the rampant growth of government spending as a whole. According to the Congressional Budget Office (CBO), in 2012 for the first time, the United States borrowed more money than it produced in Gross Domestic Product. In a 2010 publication, the CBO warned that the upside-down debt situation could lead to lower output, lower incomes for Americans, rising interest rates and unavoidable cuts in government programs.
Some have used America’s debt problem as a reason for opposing increased childcare cost assistance by the government.
The Argument for Increased Childcare Cost Assistance
Proponents of Obama’s plan to boost U.S. aid for childcare costs point out that if anything is responsible for the ballooning U.S. debt and budget, it’s not childcare cost assistance. Military spending makes up 55% of the entire U.S. budget for 2015, dwarfing all other programs. By contrast, education forms just 6% of the budget, with U.S. government assistance for families struggling with childcare costs just a tiny fraction of that number.
Further, looking at the CBO’s report in 2015, it’s evident that Obama’s administration has actually shrunk the national budget deficit. Seen in that light, a case might be made that there may be some wiggle room to lend a hand to parents needing help with childcare costs.
Some still point out that any increase in costs at all should be avoided, whether it’s to help with childcare costs or fund the military. Either way the question remains open to debate.
U.S. Census Childcare Costs Infographic – U.S. Census Bureau