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By Suzanne Blake
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It's official: childcare costs are now more than you'd pay for college.
Parents have long been feeling the strain of child care as inflation remains stubbornly high. Around 47 percent of parents spend up to $18,000 a year on their childcare expenses, according to a new Cost of Care report from Care.com, while 20 percent of parents indicated they spend more than $36,000 in a year. The website is an online marketplace for families to find childcare among other forms of care.
Compare this to the yearly tuition and room and board rate at a public, state university and parents might be shocked. For the 2023-24 school year, the average cost of attendance for a public four-year in a state university, including all tuition, fees and room and board, was $24,030, according to the US Department of Education.
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"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 the report. "A healthy economy depends upon the ability for people to save and spend, but given the crushing weight of child care costs, those pillars are crumbling."
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The consequences of rising childcare costs are prominently seen in families' savings accounts.
The report, which surveyed 2,000 parents, discovered 35 percent of parents tap into savings accounts to cover childcare, and 68 percent of respondents had only six months' worth of savings before they'd run out for good.
Wilson said that based on these numbers, it's not just parents that should be concerned.
"The childcare crisis should be a major red flag for everyone, not just parents," Wilson said. "It is a systemic failure that will impact our nation's economic growth, and that affects us all."
The U.S. Department of Health and Human Services said childcare is only considered affordable when it costs families no more than 7 percent of their household income.
But the current market doesn't match that. While the average weekly nanny cost is a whopping $766, average daycare costs aren't much better at $321, the study found.
With most parents paying upwards of $18,000 on childcare, they spend an average of 24 percent of their household income, with many forking over way more for their children to be cared for while they're at work. All respondents are parents of children 14 years or younger and currently pay for professional child care, confirmed by both consumer-matched data and self-confirmation, the report said.
Beyond the pricing issue of most daycares on the typical American family is another problem: access to daycares.
The report found that 65 percent of parents spent time on a daycare center waitlist, and 81 percent of waitlisted parents found themselves on multiple waitlists simultaneously. Around 43 percent said they've been waiting four months or longer.
How To Get Around the High Costs
If you do have daycare access but you're still struggling to make the payments, there are some options.
Jim Eutsler, a wealth advisor at HCM Wealth Advisors, recommends parents see if their employer offers a flexible spending account (FSA). These typically are a pre-tax way to pay.
"Money is withheld from your paycheck pre-tax and you simply request it paid back to you once you have a receipt showing the qualified expense," Eutsler told Newsweek. "The amount you can utilize as a pre-tax deduction may not cover your entire yearly childcare cost, but every bit helps."
Still, employers are largely lacking when it comes to how they support their workers who are parents in America, experts say.
While many other industrialized countries let workers take paid leave, the United States is sorely lacking in options for working parents, Keisha Blair, an economist and founder of the Institute on Holistic Wealth, said.
"The United States is the only industrialized country that doesn't have national paid leave for childcare," Blair told Newsweek. "The United States has the most educated workforce of women in the labor market but the lowest labor force participation rate of women."
Blair said that without a healthy childcare structure, the economy won't function properly, and women are most likely to feel the effects.
"Women bear the brunt of the costs and lost opportunities that carry over to their retirement years," Blair said.
Due to this, childcare policy could be a key issue looking ahead to the 2024 election.
Almost all parents or roughly 88 percent said a candidate's position on child care policy will influence their vote in the upcoming election, according to the report.
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