According to a recent report, the cost of full-time child care has become so high that it surpasses rent prices in 16 of the country’s largest 100 cities.

LendingTree, a personal finance website, compared the monthly expenses associated with infant care against average rent for two-bedroom apartments in major urban areas.

The study revealed that, in several locations, child care has become the greater financial burden.

• Syracuse, New York, sees average child care costs at $1,417, while the average two-bedroom rent is $1,126.
• In Spokane, Washington, child care averages $1,588 per month, with rent at approximately $1,304.
• Minneapolis’s child care costs average $1,767, compared to rent costs of $1,622.

Published on September 16, the LendingTree report utilized child care data from the nonprofit organization, Child Care Aware of America, alongside federal rent statistics.

This report is among various studies and surveys that have raised alarms about the continual rise in child care expenses.

Child care costs have surged by 220% since 1990

According to the Annie E. Casey Foundation, child care costs have skyrocketed by 220% since 1990, vastly outpacing the inflation rate.

Families with child care expenses typically spend around $325 each week, representing 18.6% of their weekly income, based on a recent analysis by LendingTree. Another study from Care.com indicates that families allocate about 24% of their household earnings for child care.

These figures exceed federal recommendations on what parents should be paying for such services.

“When child care ranks as the top household cost, surpassing even rent and college tuition, it highlights the seriousness of this issue,” said Sean Lacey, the general manager of child care at Care.com.

The escalating expenses associated with raising children are a focal point in a recent surgeon general report, stressing that parental stress is becoming “an urgent public health concern.”

Economic factors are straining the child care sector

Various economic factors have contributed to rising costs and a strained supply in the child care industry. These include inflation, the COVID-19 pandemic, which led to the closure of many child care facilities, and the ending of federal pandemic assistance to child care centers that took place last fall.

The LendingTree report emphasizes the growing costs of child care by contrasting them with rising rent prices, which are now roughly one-third higher than they were prior to the pandemic, based on Zillow’s data.

Some of the key findings from LendingTree include:

• The typical cost of full-time infant care in the 100 largest cities is $1,218 per month. For a family with one infant and a 4-year-old, the monthly expense jumps to $2,182.
• The average monthly rent for a two-bedroom apartment in these cities is $1,566: cheaper than the cost of child care for a single child but less than the expense for two.
• In 16 cities, the cost for one child’s care exceeds the rent, whereas for two children, it is higher in 91 cities.

“The increases in child care costs have been astronomical,” commented Matt Schulz, chief credit analyst at LendingTree.

Parents face tough choices: A second income vs. full-time child care

Social media is filled with discussions where parents evaluate whether a second income is worth the high costs of child care.

One Reddit user shared, “My spouse and I allocate 50% of our net income towards our mortgage and day care for one child. We cannot afford another child in daycare.”

Another parent mentioned, “My wife and I have opted to work opposite hours for this reason, so we can avoid daycare altogether.”

“The stress of juggling everything else during the week is incredibly draining.”

According to a child care provider, “The hardest part is that teachers are only earning around $15 an hour at most.”

It might seem surprising, especially with the high expenses associated with child care, but industry experts claim that the child care sector is facing significant challenges.

Leslie Boissiere, vice president for external affairs at the Annie E. Casey Foundation, noted that “typically, a standard child care center only has about a 1.5% profit margin.” The Bureau of Labor Statistics states that the average hourly wage for child care workers is approximately $14.60.

Low Child Care Wages and Narrow Profit Margins

According to experts like Boissiere, low wages and narrow profit margins in child care stem partly from state regulations that enforce high worker-to-child ratios.

A further challenge is the cost of real estate; a daycare facility in a wealthy suburb might incur steep rent or mortgage payments similar to those faced by its affluent residents.

Sandra Bishop, senior director of research at Child Care Aware of America, pointed out that “Even though parents are paying high fees, child care providers are earning very little.”

High child care costs push many parents, especially mothers, out of the workforce. Studies indicate that these costs are a significant factor in the stagnation of women’s workforce participation in the U.S., while other wealthy countries continue to see growth in this area.

Furthermore, federal labor data reveals that tens of thousands of Americans each month have to stay home from work due to child care issues.

The nation’s ongoing “child care crisis” results in an annual loss of $122 billion in earnings, productivity, and revenue, according to a 2023 report by the bipartisan Council for a Strong America.

“The System is Not Functioning”

Bishop stated, “The system is proving to be ineffective for everyone involved. Families struggle to locate child care; when they do, it’s often unaffordable. This negatively impacts parents, communities, and businesses alike.”

Experts suggest that policymakers could enhance the system by increasing funding for initiatives like Head Start, which supports parents with early education needs.

Expanding investment in the Child Care and Development Block Grants—federal assistance for low-income families—is another potential solution, observed Bishop, highlighting that only a minor portion of eligible families actually receive these grants.

States might be able to boost the number of child care workers by simplifying licensing requirements for home-based care providers, suggested Boissiere, noting that home-based care can be “significantly more affordable” than traditional child care centers.

A 2021 analysis by The New York Times found that the United States invests about $500 per child per year in child care, whereas the average investment among wealthy countries is around $14,000.

Boissiere stated that child care impacts “three key areas: children thrive, parents can work to support their families, and the economy flourishes.”