Before I became a parent, I planned on staying home for a while. But nearly a year into motherhood, I found myself itching to go back to work. I thought finding a daycare and managing the related childcare expenses would be easy. I was wrong.
Once I made the decision to rejoin the workforce, I called around to daycare providers only to be told time after time that there was no availability and that I’d be added to their waitlist. How long were these waitlists? I asked around to friends with little ones, who said sometimes, they can be years long… and that typically, couples put their names on them even before they get pregnant (yikes). Before having my daughter and thinking about going back to work, I was in the dark not only about how hard it was to find care, but also how expensive it was.
According to a new study from Care.com, an online marketplace for families to find care and caregivers to find jobs, childcare expenses have skyrocketed in recent years. For daycare centers, the average cost per week for one child is $321 – that’s up 13% from 2022’s $284 average. Of course in some cities, it can be much, much more — In New York City, families spend as much as 47% of their income on childcare, which is completely unsustainable. And, as Care.com’s 2024 Cost of Care Report shows, families are having to make some major life changes to cover the cost.
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The Climbing Cost Of Care
According to Care.com, on average, families spend roughly 24% of their household income on childcare, but income isn’t the sole source of money families are using to cover their childcare bill. “Not only are families depleting their household income to cover childcare, but they’re also now dipping into savings to help cover the cost of childcare as well,” says Sean Lacey, Care.com’s General Manager of Child Care. In fact, those surveyed say they’ve used up nearly half of their nest egg on childcare expenses.
Other families say they’re making major life changes to cover costs, including taking on a second job or reducing their hours because they can’t find or afford care. “Families are having to make sacrifices like going into debt or mom having to leave the workforce entirely,” adds Lacey. “That’s not great for those families. That’s also not great if you zoom out and look at the macroeconomic effects that it has on our GDP and a healthy economy.”
We’ve Fallen Off The Childcare Cliff
You’ve probably heard about the “childcare cliff” (yes, it’s as scary as it sounds). If you aren’t familiar, here’s the short version: In 2021, as part of the American Rescue Plan Act, the federal government allocated $24 billion to the “Child Care Stabilization Act.” This funding was a lifeline to child care providers, allowing them to pay employees more, improve quality of care and ultimately, keep their doors open. At the end of September 2023, those funds expired. Fast forward to 2024, and millions of families are feeling the pain from their absence.
In the wake of the childcare cliff, childcare costs are anticipated to increase by an average of $600 per month for families. In 2024, according to the Care.com study, nearly 40% of parents are now paying more because their provider was impacted by the loss of federal funding. What’s more, cost isn’t the only challenge parents are up against. The childcare cliff has also resulted in providers slashing spots, making it harder for parents to find care in the first place.
Parents To Presidential Candidates: Let’s Talk Childcare
What election issues matter to parents the most? You guessed it — childcare tops the list. In the Care.com study, when parents tune into Presidential debates this fall, they want to hear what candidates have to say about childcare access and affordability. In fact, childcare ranked second in the list of topics parents wanted addressed during debates, behind the economy and ahead of other major issues like healthcare, immigration and climate change. “The fact that this jumped up to number two ahead of them was really something that stood out to us,” says Lacey. “Because I think the reality is, for a lot of parents, it’s just not doable to have both partners have a career or work just because the childcare isn’t there or isn’t affordable.”
How To Address The Childcare Crisis
So, what can actually be done to address the childcare crisis? Experts say it’s going to take a multitude of things coming together, but the root of it starts with changes in Washington. Right now, an effort is underway to raise the Child Tax Credit incrementally through 2025. The Child Tax Credit helps qualifying families get a tax break, putting more money in their pockets to cover things like childcare expenses. But experts say boosting the Child Tax Credit isn’t the magic pill that solves America’s childcare crisis. We’re overdue for an overhaul of the entire system; we need something that’s sustainable and provides parents with care that is first, available and second, affordable. That’s the message HerMoney CEO Jean Chatzky delivered when she clapped back at Dave Ramsey for shaming a dad who said he’s struggling to afford childcare:
@jeanchatzky #stitch with @Dave Ramsey Childcare in the U.S. is way too expensive for most families — but blaming parents who are stuck paying $25k a year isn’t the solution. #childcare #economy #personalfinance ♬ original sound – Jean Chatzky
In the meantime, there are things parents can do to find childcare that doesn’t eat up too much of the family budget. Oftentimes, what it takes is getting creative. Founder and CEO of The Fiscal Femme, Ashley Feinstein Gerstley, who’s also a mom, did just that with her first son. She saved by using what’s commonly referred to as a “nanny share” with a friend who lived nearby and had a child of similar age. “The nanny took care of both kids, and would spend a week in each person’s house…we would alternate homes,” says Feinstein Gerstley. “At the time, it was only a couple of dollars, maybe $1 more an hour to add the extra child, and then we’d have to split the costs.”
If there’s one skill that new parents quickly develop, it’s simultaneously being really productive and really efficient with their time. Feinstein Gerstley says they can use that to their advantage, to potentially reduce hours in-office to make finding childcare a little easier and less costly. If your job is such that an arrangement with fewer in-office hours would work, she has some advice for approaching the conversation with your boss. “Something that helps me in these types of conversations is to imagine that I’m doing this on behalf of parents everywhere, and especially within the organization,” Feinstein Gersley says. “Because if this flexibility is not yet part of the benefits, they’re paving the way and are making it easier for the next parent who is seeking that flexibility. It will make the workplace better.”
The Bottom Line
While many people may not realize it, childcare is ultimately at the root of our country’s economic success. If affordable care isn’t available, parents can’t work, and the ripple effect just continues from there. A reset is desperately needed to change America’s childcare system. “We know that parents can’t save and spend like this for the ongoing future. It’s going to continue to impact them, it’s going to continue to impact the economy,” says Lacey. “And so we really have to stop thinking about childcare as a family problem, and kind of look at it as the national economic crisis that it is.”
More On HerMoney:
- The Childcare Cliff: What Women Need To Know
- Childcare Swap: How To Save Big Money On Childcare
- 5 Easy Ways To Teach Children About Money
FIXX YOUR FINANCES: Need help budgeting for childcare or another big expense? Sign up to FinanceFixx, HerMoney CEO Jean Chatzky’s proven money makeover program.
