The parent trap: childcare costs are soaring in America
Image: MarketWatch
American families are increasingly facing a childcare conundrum: either pay a massive daycare bill, or stay home with the kids and sacrifice the paycheck that covers it.
- Prices have ballooned in recent years, pushing many parents to the brink and threatening both household budgets and workforce participation.
By the numbers: Sending a single child to daycare for five years carries a median cost of ~$44,000 across the US, which accounts for ~22% of parents’ annual household income on average, according to recent Wall Street Journal and Care.com reports.
These figures are much higher compared to just a few years ago. Families also spend $20,745 on essentials in a baby’s first year, up from $15,775 in 2022, per parenting website BabyCenter.
Driving the trend
Analysts point to several interconnected reasons to explain rising childcare costs:
- Many daycare centers are required by law to meet strict child-to-teacher ratios, meaning they have to hire lots of staff.
- Rent, utilities, liability insurance, and educational supplies make running a center expensive and push tuition costs higher.
- The American Rescue Plan—a massive 2021 federal stimulus package—included $24 billion in childcare subsidies, along with $15 billion to help expand access to childcare. Most of this funding expired in 2024, leading to dozens of daycare closures and higher costs across the board.
Solutions are up for debate
Some analysts and policymakers argue that childcare should be treated as an essential infrastructure, similar to education or transportation, where the government is heavily involved in its funding due to the widespread public benefits it provides.
- Other experts counter that broad government subsidies could raise taxes and lead to even higher childcare prices—instead arguing for market-driven solutions like reducing or eliminating child-to-teacher ratios, encouraging employer-led daycare programs, and expanding child tax credits, moves that are framed as preserving parental choice and limiting government overreach.
Big picture: Rising costs associated with childcare may be contributing to the falling US birth rate, which currently sits at an all-time low, according to a March brief from the US Department of Health and Human Services.
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See a 360° view of what pundits are saying →
Sprinkles from the Left
- Some commentators argue that to make child care more abundant and cheaper, two key strategies are to accept more foreign workers as au pairs to add to the potential child care labor pool, and to reject child care credentialism that leads to higher prices.
- Others contend that the financial strain of raising children is a contributing factor to lower birthrates around the world, but solutions do exist to solve the problem, like establishing affordable or subsidized child care.
- “Why child care costs so much — and how to fix it” –Jordan McGillis, WaPo
- “‘Motherhood Should Come With a Warning Label’” –Emily Holzknecht, Adam Westbrook, and Jessica Grose, NY Times
- “Child care costs widened the pay gap. Women in their 30s are taking the hit.” –Reshma Saujani, USA Today
Sprinkles from the Right
- Some commentators argue that debates about child care policy frequently feature two sides talking past each other—and what both sides commonly miss is that a strong child care system doesn’t stand opposed to the family, but in fact cultivates healthy soil in which family values can grow and thrive.
- Others contend that progressives were wrong to panic about expiring Covid-era federal funds for child care providers, and argue that policymakers looking to decrease child care costs should focus on enhancing the child tax credit.
- “Good child care doesn’t undermine family values. It supports them” –Elliot Haspel, Deseret
- “The child care crisis that never happened” –Peter Morici, Washington Times
- “A Guaranteed Annual Income Flop” –WSJ Editorial Board
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