“Childcare costs changed everything,” Lacy Stroessner, mom of three, tells HealthyWay. Before having children, Stroessner was a teacher. After the birth of her first child, she continued working. It was the arrival of her second child that made it clear her family’s lifestyle wasn’t sustainable. She realized it no longer made sense for her to continue to work. “Even with a few years of experience and a master’s degree, you can’t exactly afford to live on a teacher’s salary,” she says. Adding the expense of childcare for two children pushed their budget beyond its limit. Money wasn’t just tight anymore—they literally would not be able to pay their bills. Her salary was less than what her family would be spending on childcare. Stroessner left her job, started freelancing, and stayed home with her two young daughters. She assumed she’d return to work once they were in school, but now she is learning that, with the cost of after-school care, it still makes the most sense for her to stay home. If Stroessner’s story sounds familiar, that’s because it is incredibly common. Bring up childcare costs in a room full of parents and you’re sure to be met with groans (and maybe even a few tears). My own childcare story is one of working weekends and overnights to circumvent childcare expenses before eventually transitioning to working from home full-time. Childcare is expensive—at least, that’s the general consensus. When you look at it objectively, gathering the cold, hard numbers and stripping them down to the nuts and bolts of expenses, are the costs unreasonable? What other costs are associated with the economics of childcare? Here’s what we found out.
How much does childcare cost?
The cost of childcare varies greatly depending on where the care is being provided, the age of the child, and who is providing the care. For instance, the average cost of infant care is much higher than care for a toddler or school-age child, according to the Parents and the High Cost of Child Care Report by Child Care Aware. Care in a daycare center has a higher price tag than an in-home daycare center. The average annual cost of care is $8,634, with infant care costing closer to five figures. This is a number that only takes into consideration care provided by daycare centers or in-home daycare providers. It doesn’t account for private nannies, who come at a much higher cost. The annual average cost of a nanny is $28,905, according to a Cost of Care survey by Care.com. There is much variation in the cost of childcare, though, depending on where you live. For instance, in 2016, the average annual cost of care for an infant was $20,125 in a daycare center in Massachusetts. On the opposite end of the spectrum is North Dakota, one of the most affordable places to pay for care, where the average cost of daycare falls between $6,000 and $8,000 each year.
What factors impact childcare?
Because of the high cost of daycare, it might be easy to assume that the daycare industry is a profitable one or that the costs are unreasonable. That actually isn’t the case. Providing daycare is a costly endeavor. Due to the various legal regulations for the size of the building and labor, daycare centers spend a lot of money simply doing the bare minimum needed to provide good care and keep their business running. First, daycare centers have to deal with rent. From state to state, there are regulations that dictate how much square footage each center has to obtain per child they plan to enroll. And, depending on where the daycare center is located, the cost of rent is higher. It follows a logical trend—in regions with a higher cost of living, rent is higher for daycare centers. “Rent is a huge cost in areas such as Hoboken, New York City, or the Washington D.C. area,” explains Holly Flanders, founder and CEO of Choice Parenting, an organization that assists parents in the New York area with finding care. Flanders also points out that although rent is expensive, it is not the biggest cost of running a daycare center. The reality is that it is payroll that accounts for the vast majority of day care expenses. It makes sense when you take into consideration that, in order to be licensed in your state, there are specific teacher-to-child ratios that have to be upheld. Although there is some variation from state to state, most states require a 1:3 teacher-to-child ratio for very young infants. As the age of the children in care increases, the ratios become less constraining. This explains why infant care costs parents so much more. For this reason, labor expense accounts for as much as 80 percent of most daycare budgets, according to a report by Child Care, Inc. And, as reported by The Atlantic, these caretakers still aren’t walking away with a large check. In fact, many daycare workers are struggling to live on the salary provided by their jobs. At most daycare centers, tuition cost is in line with their expenses. It may be expensive, but it isn’t unreasonable. However, that doesn’t mean it’s affordable for the families in need of care. The U.S. Department of Health and Human Services has determined that affordable childcare is qualified as any care that makes up 7 percent or less of the family’s total income. For families like Stroessner’s, the actual cost of care would have eaten up the entire income of one of the working parents. It may have been what the care provider needed to charge to make ends meet, but it wasn’t affordable for her family.
Parents and the Cost of Care
There is another cost associated with unaffordable daycare expense—childcare often costs mothers the most. As The Atlantic reports, highly educated moms are jumping from being career women to staying at home for a variety of reasons. One of the most evident is that the cost of childcare is extremely high, meaning it can be unreasonable to pay for it, even on a two-income budget.
“As we are calculating expenses, our childcare cost has careened past our mortgage payment.” —Danielle Butler, mom of two
Creatively Approaching the Cost of Care
If we’re being perfectly honest, there is no easy solution to childcare cost. Daycare centers need to cover their expenses, and many parents want or need to work. Mothers want to continue to pursue their careers. Household expenses dictate that both parents work, even if it means spending a huge percentage of their income on childcare. Flanders suggests that parents concerned with the cost of care might find more affordable options outside of the city. “There are other daycares that are a little further out of the way,” she says. “They may not come with all of the bells and the whistles, but they are still required to follow state guidelines. They have the same kind of teacher ratios, the same kind of standards and requirements.” Flanders is quick to point out that it is the teachers, not the “bells and whistles” like organic foods and webcam monitoring, that make a difference to the children. Attentive and caring daycare employees are most beneficial to kids. In her experience, the standard of care is very similar between high-cost and more affordable daycare options. Our family chose unconventional schedules, with me often working nights and weekends to keep childcare expenses minimal. A friend of mine negotiated an arrangement that allows her to work one to two days from home, spending the other three days in the office. Small families can use nanny sharing, splitting the cost of one nanny across two families. A friend of mine who works from home has used childcare swaps to keep care affordable, helping a friend with her kids occasionally and then that friend returns the favor. It is possible to creatively approach the cost of childcare, although we admit that there is no perfect solution.
