Soaring Child Care Costs Are Burdening Working Parents

Child care costs in the U.S. are rising to unprecedented levels—and working parents are struggling to keep up financially.

Families spent 24 percent of their household income on child care in 2023, according to a new survey of 2,000 parents by Care.com. For perspective, the U.S. Department of Health and Human Services considers 7 percent of household income to be an affordable price for child care.

About 35 percent of parents relied on their savings account to cover the child care costs, and 68 percent of those parents said that they have six months or less until this money is depleted, the survey found.

“Within the first five years of their child’s life, parents are being forced into a financial hole that is nearly impossible to climb out of,” Brad Wilson, CEO of Care.com, said in a statement.

Nearly half of the parents who responded (47 percent) spent more than $1,500 per month on child care expenses in 2023, which amounts to at least $18,000 per year. Twenty percent of respondents reported spending more than $36,000 on child care in 2023.

The report broke down the average weekly cost of child care per child in the U.S. in 2023:

For parents seeking an after-school babysitter, the weekly cost for one child is $292, up from $275 in 2022. For two children, parents would need to pay $305 a week on average, compared with $289 per week the previous year.

California, Massachusetts and Washington state were among the most expensive states for child care, according to the report. The least expensive states for child care included Arkansas, Oklahoma and West Virginia.

Rising child care costs have economic implications because the ability for individuals to save and spend are key pillars of a healthy economy, Wilson said.

“The child care crisis should be a major red flag for everyone, not just parents,” he said. “It is a systemic failure that will impact our nation’s economic growth, and that affects us all.”

Costly Child Care Causing Women to Leave Workforce

The skyrocketing cost of child care amid rising inflation is also driving women out of the workforce around the world, according to a recent report by Bloomberg.

Average day care fees worldwide rose 6 percent in 2023, while costs in the U.S. jumped by 9 percent. The U.S. economy loses an estimated $237 billion a year due to women reducing their hours to look after children.

Katharine Panessidi, associate vice president of Advancing Women Leaders at Linkage, a SHRM company, said that most families’ child care responsibilities still fall to women, so the cost of child care disproportionately impacts working women, many of whom are company leaders who leave the workplace to care for children.

“Losing women leaders has huge effects on the workplace, both financially and culturally,” she said.

Several studies, including BlackRock’s recent white paper on lifting financial performance by investing in women, have shown that diverse workforces financially outperform others. And senior-level women are more likely to spearhead programs that impact culture, including mentorship initiatives, the sponsorship of historically underrepresented groups and employee-friendly policies.

Isha Vij, vice president of employer growth at health care company Maven Clinic in New York City, said the ever-increasing cost of child care is also preventing many working mothers from fulfilling their professional ambitions.

“We know incredible women are making those tough decisions to leave the workforce due to rising child care costs,” she said. “Moms have carried the burden of this child care crisis—not just during the pandemic but historically. That is exacerbated as child care costs rise.”

What Can HR Do to Help?

The “child care cliff” is the term Care.com researchers used to describe the abrupt end to the pandemic-era safety net of federal funds that kept thousands of child care programs afloat nationwide. This caused some day cares to close and others to reduce the number of children for which they can provide care. According to the Care.com report:

• 62 percent of respondents on waitlists said centers have closed while they waited.
• 59 percent of waitlisted parents are shelling out an additional $200 or more a week on care.
• 54 percent have experienced waitlist extensions due to the child care cliff.
• 43 percent of survey respondents said that it was harder to find child care providers compared with previous years.

More than one-third of parents who responded (34 percent) said they’ve turned to family and friends to help manage the cost of child care. Moreover, 91 percent of respondents—or their partner or spouse—had to make at least one major change to their work, life or finances to afford child care in 2023, such as working multiple jobs or reducing hours at work.

“With the majority of families in America being dual income, there is widespread demand for child care and not enough supply to meet it,” Bryan Jamele, head of government affairs and public policy for Care.com, said in the report.

Failing to cater to the needs of working parents can result in employee attrition and “a tremendous amount of stress,” Vij explained. She said working parents should be able to stay home with a sick child or address any other family emergency without losing pay.

“Leaders should be creating a culture at the organizational level that makes it possible for working parents to participate and bring their full and most productive selves to work,” Vij said.

Care.com respondents said companies can help reduce their child care burden by offering:

• Onsite day care (30 percent).
• Child care subsidies (28 percent).
• Flexible spending accounts (22 percent).
• Backup child care (21 percent).

Vij also recommended that employers provide resources to help working parents deal with the stress of child care, such as a list of nearby mental health professionals, pediatricians and day care options that includes prices and contact information.

“These resources will help [working parents] make more informed decisions,” she said.

Another way to support working parents is to include them when discussing or considering benefits plans. As Vij said, employees are “looking to be seen, understood and considered when making benefits decisions for the total employee population.”