Childcare costs have surged 30% in four years
Affluent families have seen costs rise the mostNovember 3, 2023
The cost of everything has gone up, but families with young children know the cost of childcare has far outpaced the rate of inflation.
A study by the Bank of America Institute shows that spending on childcare has risen by 30% since 2019, the year before the pandemic. Upper-income families, those earning $100,000 to $250,000 annually, have experienced the biggest increase. Families in large cities like San Francisco and Seattle pay the most.
According to Bank of America internal data, average monthly childcare payments per household have increased steadily over the past three years. As recently as September, an average family was spending about $700 per month on childcare, 32% higher than the 2019 average.
Its possible those payments could rise even more. The Child Care Stabilization program, which partially paid for childcare as part of pandemic-era support efforts, expired at the end of September.
12% of households pay for childcare
This could have a meaningful impact on consumers because over 12% of U.S. households pay for childcare on a regular basis, according to the Department of Health & Human Services, the studys authors write. Any further increase in prices would disproportionally weigh on families with young children.
A survey by Care.com found that of parents who pay for regular childcare, 67% are already spending 20% or more of their annual household income on childcare services.
Its not clear how families are handling the rising cost of childcare, but it stands to reason that they are spending less on other things. Bank of America data appearto suggest that. Since May 2023, Bank of America reports that credit card spending by families with children has declined slightly while it has risen for the rest of the population.