Spending

Child care isn't 'affordable' in any U.S. state, and the pandemic could make the crisis worse

Federal guidelines suggest that families spend no more that 7% of their income on child care. Over half spend double that, and the pandemic is likely to make things even worse.

Twenty/20

No more than 7% of household income should be spent on child care every year, according to affordability guidelines from the federal Department of Health and Human Services. That's a threshold that no state is able to clear, according to the COVID-19 Child Care Survey from Care.com, a child-care listings service. In 2019, half of all families spent more than 15% of their income on child care — more than double what's considered affordable. 

Pricing and affordability numbers for 2020, which will reflect the effects of pandemic, will be even worse, predicts Tim Allen, Care.com's CEO.

"On the national aggregate, parents are paying about 10% of their household income when the government recommends 7%," says Allen. "To be frank with you, there was a crisis pre-Covid and it's been exacerbated through Covid." 

Even though an average family can't get affordable child care in any state, families in some states have it worse than others. In North Dakota — the most affordable state for in-center care — sending one toddler to a day care ate up 10.7% of a family's household income. In California, that number is 19%, and in Washington, D.C., it's 27%.

Here's how experts say costs and care could continue changing as a result of the pandemic.

Center care likely to become less common, more expensive

The cost of every form of child care has increased substantially between 2013 and 2019. Child-care centers are, on average, 16% more expensive than they were seven years ago, and in-home family-care centers are 58% more expensive, although prices for both have remained fairly stable since 2016. The pandemic, however, has forced many child-care centers to close their doors temporarily, and the way in which they'll reopen is likely to affect what parents end up paying.

The ones that are have reopened already have had to reduce capacity to allow for social distancing between kids, which could increase demand for the remaining slots. Additionally, day cares are taking on additional costs to maintain a sanitary environment. All of this is likely to lead to higher prices.

"Centers are having to absorb the cost of a higher demand on cleaning, and also the facility in it of itself, so they're passing that cost down to customers," says Allen.

Centers are having to absorb the cost of a higher demand on cleaning, and also the facility in it of itself, so they're passing that cost down to customers.
Tim Allen
CEO, Care.com

Meanwhile, the cost of hiring in-home care, like a nanny, has remained much more stable during the pandemic and demand for such professionals has increased, according to Allen. That's partially because the risk of exposure with a nanny is substantially lower.

"Families are gravitating more towards in home care because they can control the exposure circle of their families, especially their children. You get to set the ground rules of what you have occur inside of your home: hand washing, masks, following CDC guidelines," says Allen.

Nannies are still far more expensive than day care, however. Hiring one full-time in New Jersey would take up nearly 34% of a typical family's income.

Public subsidies are overwhelmingly popular, helpful

There are near-universal levels of support for some kind of financial support for child care, the survey reports: Fully 96% of parents said it was important for the government or employers to help parents afford care during the pandemic.

Several states have used the pandemic as an opportunity to relieve parents' financial burden, according to a report from Child Care Aware, a nonprofit organization that provides child-care resources to military families.

That includes more affordable states like Maryland, which is covering the full cost of child care for essential workers, and New Jersey, which is covering up to $450/week, with parents of infants receiving the biggest subsidy.

Illinois reduced parent co-pays to just $1/month and Oregon has waived co-pays entirely. Both states have some of the least affordable day care options in the country, on average. Illinois is also reimbursing providers at a 30% higher rate for emergency care services in order to make up for the financial shortfall that inevitably comes with caring for fewer kids.

Whether those kinds of programs will have any long-term effect on care costs remains to be seen. Child Care Aware has said that direct financial support is needed both for the child-care industry to remain stable and for the economy to recover in any real way.

"Without meaningful federal investment in child care, there will be barriers for parents as they return to work," Anne Hedgepeth, Child Care Aware's senior director of federal and state government affairs, wrote last month. "As our country moves through the various phases of recovery and reopening the economy, no industry will be able to restart if the child-care industry collapses."

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