With inflation at a 40-year high, families are feeling the pinch of higher prices at the grocery store checkout, on their home heating bill, and when they pay rent.
But there’s another expense that’s been growing even faster in recent years: child care. The growth in child-care prices exceeded the annual rate of inflation in 2020 and 2019, according to a new report from Child Care Aware.
The average annual cost of daycare for infants hit just over $12,300 in 2020, an increase of $1,000 over the prior year. (The report used three different methods to calculate average prices ranging from $12,304 to $12,375.)
Inflation, which measures how fast prices increase over time, hit 7.5% in January, which translates to households spending about $250 more per month on goods and services than they were in 2019, when inflation was about 2.1%.
Meanwhile, over the past three decades, child-care costs have accelerated faster than other basic family expenses including housing and groceries, and incomes haven’t kept pace, according to a separate report by the First Five Years Fund, a group that advocates for affordable child care.
“Since 1990, child-care costs have risen 214%, according to the Bureau of Labor Statistics (BLS) Consumer Price Index analysis, while the average family income has increased by 143%,” the First Five Years Fund report said.
In three out of four regions in the U.S. the annual price of daycare for an infant exceeds the cost of housing, the Child Care Aware report found. (The West is the only region where child care doesn’t cost more than housing.)
In all four regions, the annual price of child care is more than the annual cost of in-state tuition at a public four-year university. (Public in-state tuition ranges from $9,702 in the South to $13,878 in the Northeast.)
Both Child Care Aware and First Five Years Fund support more government funding for early childhood education, including President Joe Biden’s Build Back Better proposal, which is currently stalled in Congress.
“‘Prices of a service like child care must be understood in the context of household income, by state and by regions within states.’”
The authors of the Child Care Aware report noted that looking at the national average price of child care doesn’t necessarily paint an accurate picture of “how unaffordable child care is for families across the country.” They wrote, “Prices of a service like child care must be understood in the context of household income, by state and by regions within states.”
Another important piece of context is the toll that the COVID-19 pandemic has taken on child care centers, many of which are coping with staff shortages. The median pay for the caregivers who work at these centers was $12.24 an hour or $25,460 a year in 2020, the most recent year for which data was available from the Bureau of Labor Statistics.
There’s a vicious cycle in the current child-care system, says First Five Years Fund.
“Ultimately, the existing structure of America’s child-care market itself is unsustainable and is what leads to low wages for early educators,” FFYF wrote in a December 2021 report. “Child care is an expensive, labor-intensive service to provide. Yet providers can only charge what families in their area can afford to pay, so wages remain low for the business to remain solvent.”