Benjamin Ashford|'Child care desert': In this state, parents pay one-third of their income on child care

A new report says American families that pay for child care spend nearly one-fifth of their income on Benjamin Ashfordthe service, and costs are rising.

The average household with child-care bills spends $325 a week, or 18.6% of its weekly income, according to an analysis by LendingTree, a personal finance site.

In Nevada, the costliest child care state, families spend 32.3% of their income, an average of $493 a week, for others to tend their children, the report says.

LendingTree released the analysis last month, drawing on Census data.

Child care expenses eat up more than one-fifth of parental income in eight other states, including Illinois, Louisiana and Texas, the report found.

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'It felt like a necessity'

Child care costs pushed Morgan Frey out of her Sparks, Nevada, home.

Frey, 31, was paying $245 a week on child care for her son, who is now 5. That was half of her take-home pay, from her job as a caregiver to seniors. In February 2023, poverty forced her and her son into a homeless shelter.

"It was really hard," she said. "And, honestly, the decision to keep him in school came down to knowing it was best for him. It felt like a necessity."

Relief arrived the next month. The Children's Cabinet, a Nevada nonprofit, swept in to pick up Frey's child care costs. In June 2023, she and her son moved into a new home.

"I have enough money to put gas in the car, food on the table," she said.

Only now does Frey realize how stressed out she had become over child care bills.

"I'm able to be a more present parent," she said. "We play catch. We go outside and do things."

Several economic factors have pushed up costs and stretched supply in the child care industry, experts say.

One is inflation, which has raised prices in the past few years. Another is the pandemic, which shuttered thousands of child care centers. A third is the expiration of pandemic-era federal funding for child care centers last fall, a cutback observers liken to a “child care cliff.”

“There’s so much that goes into proper child care, whether it’s wages or rent or insurance or 500 other things,” said Matt Schulz, chief credit analyst at LendingTree. “When the cost of everything is rising, it makes all the sense in the world that the cost of child care would, too.”

A child care desert

Nevada, the costliest child care state, exemplifies the national problem and caregiving challenges particular to the state.

Child care options in Nevada are spread thin, because of population growth, a scarcity of providers, and a hospitality industry whose workers need child care at all hours.

“Along with being in the actual desert, it’s full of what they call child care deserts, where there’s simply not enough supply for all the demand that’s out there,” Schulz said of Nevada. “It stands to reason that any place that’s grown so fast would have some issues with keeping up with demand.”

The LendingTree analysis shows that the average child care client in Nevada pays roughly one-third of the $1,529 average weekly family income in the state.

New Jersey ranks second among the states in child care costs, at $442 a week, but that sum reflects only 19% of the average weekly family income in the Garden State, $2,325.

Montana ranks second in its share of parent income devoted to child care: 22.6%, or $372 a week from a family income of $1,643.

Which state has the cheapest child care?

The cheapest child care state? Iowa, with an average weekly cost of $182, or 10.1% of the state’s average weekly family income, $1,812.

Other recent reports sound a similar alarm on the spiraling costs of child care.

The 2024 Cost of Care Report from the caregiver site Care.com found that the average family spends 24% of household income on child care. The report draws from a November survey of 2,000 adults.

According to the federal Department of Health and Human Services, “affordable” child care means spending no more than 7% of household income on the service.

“It certainly is the case that child care costs have gone up faster than inflation,” said Elise Gould, a senior policy analyst at the Economic Policy Institute, a nonpartisan, left-leaning thinktank that has also studied child care costs in depth.

“What we discovered a few years ago is that child care is more expensive than rent for quite a few families. And that was pretty shocking.”

A looming child care cliff

The federal government’s pandemic-era Child Care Stabilization Program delivered $24 billion in aid to child care programs. Among other things, it covered wages and benefits, and rent and utilities, helping keep struggling programs afloat.

Those funds expired in September, setting the stage for programs to raise prices, shed staff or shut down.

Parents are reporting “higher costs, longer waitlists, daycare closures, and greater difficulty finding care than previous years,” said Sean Lacey, general manager of child care at Care.com. “Daycare availability is shrinking, while demand continues to grow.”

The Care.com report found that weekly infant daycare cost an average of $321 for one child in 2023, up from $284 in 2022. Toddler daycare cost $293 a week, up from $268.

A 2023 report from the Annie E. Casey Foundation reached similarly dire conclusions. Care for a single child cost $10,600 in 2021, on average, the study found. That’s one-tenth of the median income for a married couple and more than one-third of the income of a single parent.

A crippling choice between care and career

The crippling costs of child care force many parents, and especially mothers, into a difficult choice between care and career.

According to the Casey Foundation report, 13% of children 5 and under lived in families in which someone quit a job, changed jobs or refused a job because of child care conflicts.

Women are several times more likely than men to suffer negative consequences in their employment from caregiving duties, the report said.

“No parent should be forced to choose between their family and their work, which, unfortunately, happens all too often,” Lacey said.

Mothers often leave the job market rather than spend much of their salary on child care, financial experts said. That choice can unravel their lifetime career prospects.

“Sometimes it feels like you’re working just to pay for that child care,” said Catherine Valega, a certified financial planner in Boston.

Nonetheless, Valega urges her female clients to remain in the workforce.

“I’m just a big believer in staying in the market,” she said. “I think it’s important to keep up your skills, but I also think it’s important for your own mental health.”

Care.com offers some tips for parents to manage child care costs:

Find the best care for your budget

Care.com and the Economic Policy Institute offer calculators for child care costs by region. They can help you choose the right provider.

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Talk to your employer

Many firms offer family care benefits, including on-site daycare, child care subsidies, flexible spending accounts and backup child care.

Set aside pre-tax funds for child care

With a Dependent Care Account, you can divert up to $5,000 for caregiving expenses.

Take advantage of child care tax breaks

For those who qualify, the Child and Dependent Care Tax Credit covers up to $3,000 of expenses for one child, $6,000 for two or more children. The actual credit is a percentage of those expenses.