Business problem that needs a solution: Child Care Is Biggest Expense For A Growing Number of Families

More working families than ever are spending more of their income on child care than any other household expense.

For many parents the cost is greater than housing, transportation or utilities.  In some places its even more expensive than college. And with rising child care costs the number of parents paying more for care than anything else is going up, according to the newly released Child Care in America: 2015 State Fact Sheets from Child Care Aware of America.

“We are in a child care crisis,” says Michelle  McCready, deputy director of policy Child Care Aware of America. “Child care costs are on the rise for American families and parents are spending the majority of their family budget on it.”

Every week in the United States, child care providers care for nearly 11 million children younger than 5 whose parents are working. As defined by the report, child care is any licensed child care-program. That can include anything from a traditional day care center to small in-home care as well as some child-care centers that have Head Start or are combined with Pre-K.

Married couples who both work will spend up to 15 percent of their income on child care, nationally. But finding and paying for affordable and quality care is particularly hard on single women. For single mothers, because of pay disparities between men and women and their sole breadwinner status, the portion of their budget that goes to child care can climb as high as 65%  nationally.

McCready says child care takes such a large chunk of family’s budgets because parents are paying as they go. While child care costs as much as public college in 31 states families have not saved up for child care like they may for college.

“One challenge is that there are a lot of systems in place for saving for college and parents have an 18-year runway to save up,” she said highlighting 529 savings plans, college funds and other savings vehicles. “But early child care is such sticker shock right away when you have a baby and you’re trying to go back to work and make it work. There are so many options and and it is so expensive.”

The importance of quality safe child care is well documented. The report says, “the science is clear: there are long-term positive outcomes for children who begin learning from birth … the child care setting is an opportunity to learn and set healthy habits for life.”

Decades of research that demonstrates how quality child care has a lasting positive impact on children and shows that child care is a wise investment. According to the President’s Council of Economic Advisors’ 2015 report, the Economics of Early Childhood Investments, investments in high-quality early education generate economic returns of over $8 for every $1 spent.

Sadly, the opposite is true as well. Poor-quality care has negative impacts on development — especially for low income and minority children. According to a March 2014 U.S. Department of Education report, boys and African American children are disproportionately expelled or suspended from early care and education programs. For preschool programs outside state prekindergarten systems, the rates were far higher. Thirty-nine percent of child care providers reported at least one expulsion in the past year, an expulsion rate more than 13 times higher than in K through 12 schools.

There have been some recent improvements in the quality of care, says McCready.

With the reauthorization of the Child Care and Development Block Grant in November, 2014, “we’ve seen drastic improvements on health safety and quality measures for child care,” she said. 

More training is now required for safe sleep practices and CPR, comprehensive background checks are bolstered and inspections are more often.

But how can families get the quality care they deserve at a price they can afford?

Every state and every community is going to face their own solutions,” says McCready. “Some are work-based, some a stipend for care. Some states take on a quality ratings system so lower income children are only eligible for quality care. The military has a strong model that offers assistance to their families and ensures the care is of high quality.”

“What we do know is that parents really care about the cost of care and they have a huge need to know their kids are in a safe nurturing enviornment while they are working to give them their piece of mind.” If those needs aren’t met, she said, there is a possibility parents will leave the work force, which can hurt the family and the economy. “It is a smart business investment for our families, employers and our economy to invest in our littlest learners and invest in their brains. It leads to better outcomes over all.”