Alessandra Hartkopf for Strategies for Children

How bad are high child care costs?

Even though the U.S. Department of Health and Human Services says families should only spend 7 percent of their income on child care, it turns out that working families with children younger than age 5 are spending on average nearly 10 percent of their income.

That’s one of the troubling findings in a new issue brief – “Working Families Are Spending Big Money on Child Care” — from the Center for American Progress.

Without affordable child care, it’s harder for parents to go to work and harder in turn for them to earn the middle-class salaries that can provide families with long-term stability. This is a particularly tough challenge in Massachusetts where the Coalition for Social Justice – which Strategies for Children is a member of — is campaigning for affordable child care.

“Absent large-scale policy action on this issue,” the brief says, “young adults have reported child care expenses as the top reason they are having fewer children than they would like. In fact, in 2018, the U.S. fertility rate fell to a record low for the third straight year, falling below the replacement rate needed to keep the population constant from one generation to the next.”

Parents who do have children and face high child care costs are often left to make do however they can.

“Under the current policies, most parents must cover the full cost of child care on their own, an expense that few can afford. Even low-income families—whose children likely qualify for child care assistance—are often forced to pay for child care, since fewer than 1 in 6 subsidy-eligible children receives assistance. Meanwhile, to the extent that child care is affordable for parents at all, this is only because the child care workforce effectively subsidizes child care costs with low worker wages. The typical U.S. child care worker earns just $11 per hour.”

Given this environment, it’s no surprise that low-income families are hit particularly hard. Among the brief’s other findings:

• low-income families who pay for child care spend an average of 35 percent of their income to do so, far more than middle-class families who only spend an average of 14 percent

• high-income families (those earning more than $150,000 for a family of four) spend an average of 7 percent of their income on child care, making them the only group to meet the federal benchmark for affordability, and

• high-income families are twice as likely to use licensed child care as low-income families. Licensed programs have to met important state quality standards such as fireproofing.

To make its assessment, the brief draws on the “findings from a new analysis of child care spending data from the most recent wave of the Survey of Income and Program Participation (SIPP), released in May 2019.”

The brief goes on to point out that the benefits of child care aren’t just for children.

“Better work-family policies are likely to pay for themselves in the long run, while acting as an economic catalyst for labor supply in the short run. An equitably designed policy approach can also direct many of the benefits to women, middle-class working families, and families of color, who have shouldered the cost of policy inaction for decades.”

A bill in Congress – the Child Care for Working Families Act – would help by “ensuring that no family under 150 percent of state median income pays more than seven percent of their income on child care.” In addition: “Families under 75 percent of the state median income will not have to pay anything at all.”

The bill also supports “universal access to high-quality preschool programs for all 3- and 4-year-olds.” And it would “significantly improve compensation and training for the child care workforce to ensure that our nation’s teachers and caregivers have the support they need… to thrive.”

As the brief concludes, public officials could take action:

“Child care affordability should be a central goal for policymakers pursuing an inclusive growth strategy for the American economy—one that generates short-term as well as long-term economic benefits. Lawmakers must act to invest in solutions that increase child care supply, support child care workers, and make quality child care affordable for working families.”