FINANCE
Why is childcare so expensive in the United States? What’s the national average price?
New families will be surprised by the cost of raising children, compounded by not being to to afford only one person to work.
The US has a growing demographic timebomb. At the 2020 census the population stood at 331 million people, growing 7.4 percent since 2010. This was the slowest increase since the great depression and will be compounded by the aging population. You would think that efforts would be made to address this issue, either with increased immigration or by making it cheaper for new parents to raise children.
On the contrary, the US has eye-wateringly expensive childcare. On average, it costs $10,600 on average, 10 percent of a married-couple’s average annual income and 35 percent of a single parent’s income.
“Child care is slipping farther and farther out of reach for parents who can’t find or afford the care they need,” said Democrat Senator Patty Murray. “The child care crisis is holding families and our entire economy back, and we can’t stop working to fix it.
This is a problem that needs sorting quickly, and won’t be. Come 30 September, child care support that was expanded during the covid-19 pandemic will end. An assessment by The Century Foundation, a non-partisan thinktank, states that 3.2 million children are set to lose child care with 70,000 programs ending.
This money has been a lifeline.
The cutting to funding will mean higher costs for parents as well as a widening staff shortage. The industry is 40,000 workers short of its pandemic number as it is. The states which will be worst hit are Texas, New York, and Florida.
What less childcare options means for the wider US economy
Greater childcare costs means poorer parents, either through havign to pay more for their children to be looked after or by people working less. A report from the bipartisan Council for a Strong America revealed that the economic cost of rising childcare rates equates to $122 billion annually in lost earnings, productivity and revenue, up $70 billion in just four years.
In the long term this leads to children missing out on education at a crucial stage of their development. This disproportionally affects non-white families, which are already those more likely to have a lower income compared to their white neighbours.
A 2021 study found that 40 percent of coloured families experienced a child care centre closure during the pandemic, comapred to 27 percent of white families.
Closing the childcare gap would not only stimulate the economy, but provide routes for non-white American families to close the wealth gap that has been perpetuated for centuries.