Childcare in the United States is widely known for its exorbitant costs. A January 2023 report from the U.S. Department of Labor revealed that new childcare data indicated prices simply weren’t manageable for families. The average monthly expense for childcare in America hovers around $1,300, constituting a staggering one-fourth of the income for numerous Americans. Consequently, over 60% of impoverished families find themselves compelled to forgo work to care for their children at home, creating a ripple effect of financial challenges. The U.S. Department of Health and Human Services deems childcare to be “affordable” if it costs less than 7% of a family’s income, a standard met in just 2% of counties across the entire nation, leaving almost two-thirds of parents facing higher expenses.
Remarkably, childcare remains unaffordable in 98% of counties nationwide. From the research team at AAA State of Play comes this new infographic analyzes childcare cost data, revealing the 25 places in the United States where childcare is the most and least expensive. In 34 states, the cost of center-based childcare exceeds the annual tuition of a public university, making the first four years of a child’s life potentially more costly than saving for college.
Economists attribute the exorbitant childcare costs to a classic market failure, wherein the price point of the service becomes too steep for both consumers and providers to manage. This predicament proves difficult to address within a private market setting. Despite extensive regulations, the U.S. childcare market remains predominantly private, setting it apart from many other countries that provide subsidies. An insightful report from the U.S. Treasury indicates that, even before the pandemic’s impact, the typical childcare business operated on a slim 1% profit margin.
The question arises whether childcare should be regarded as an essential service akin to fire departments, police, libraries, and public schools, funded by taxes, a subject that is bound to spark fervent debate.