Fact of the Week: Child Care Cost is Nearly Half of Income for a Family at the Poverty level


January 7, 2015

With the start of the new year, many of us returned to work or school after some time off over the holidays. While parents are hard at work at jobs or bettering their education to provide for their children, roughly 11 million children younger than age five are in some form of child care in the U.S. And that child care is getting more expensive, and harder for parents – particularly low-income parents – to afford.
Cost of Child Care

The average annual cost of center-based child care for an infant is nearly half of the income of a family of three living at the poverty level, according to a
recent report from Child Care Aware of America. Parents and the High Cost of Child Care found that child care is one of the most significant expenses in a family budget and often exceeds the cost of housing, food, transportation, and college tuition.

While regional differences exist, the average costs for an infant in a child care center were higher than median rent payments in 22 states and DC, higher than a year’s in-state college tuition and fees in 30 states and DC, and more than double the average amount that families spent on food in every region in the country.  Because 60 percent of costs for child care and early education in the U.S. are paid for directly by parents – unlike all other areas of education, including higher education – the burden is especially hard on low-income families.

Back in October, we posted a blog about the fact that the number of children receiving child care funded by the Child Care and Development Block Grant (CCDBG) had fallen  to a 15-year low, according to CLASP analysis of data from the Department of Health and Human Services. The CCDBG is the primary source of federal funding for helping low-income families pay for child care, with half of the families who receive benefits living below the poverty level. Thankfully, the CCDBG was reauthorized by Congress with bipartisan support in November for the first time since 1996. Additionally, the recently enacted federal spending bill for FY15 gave the CCDBG a $75 million increase compared to FY14 funding for state efforts to help low-income families pay for child care. In a spending bill with many human needs programs flat-funded or worse, the small increase is good news. But it’s not enough. Too many families – including families who earn too much to receive child care subsidies – still have a hard time paying for quality care.

National Women's Law Center child care assistance policies reportThe National Women’s Law Center also has an annual report and state fact sheets on state child care assistance policies, including funding for programs, income eligibility limits for parents, length of waiting lists, reimbursement rates, and eligibility for families with parents looking for a job. On the “good news” side, it shows that families in two-thirds of the states were better off in February 2014 than they were a year prior under one or more of the child care assistance policies covered in the report. But families in more than a quarter of the states were worse off, and the Law Center’s findings also show there are still far too many children whose families aren’t receiving the help they need. Too many states have long waiting lists for assistance, income eligibility rules that shut out low-income parents, and low child care reimbursement rates that make quality, accessible child care too hard to come by.

The Child Care Aware of America report explores recommendations for addressing the high cost of child care, including policy options like raising dependent care limits for deductions and providing additional tax credits for families and providers, more effective sliding fee assistance phase-out plans so parents who receive a modest raise don’t lose all of their child care assistance, and pilot programs in high poverty rural communities.

During the holidays, many of us took a break from our daily work to spend some time with the children in our lives. As we jump back into our routines and schedules, we should think about the ways we can work together to ensure that all families have the ability to give their children the highest quality care throughout the coming year.

child care
Early Childhood Education
Fact of the Week