Child Care Costs on the Rise

Childcare costs in the United States have been rising at nearly double the rate of overall inflation, placing a significant financial burden on families. Between 1991 and 2024, daycare and preschool expenses increased by 263%, compared to a 135% rise in the Consumer Price Index (CPI) during the same period, according to KPMG.

KPMG’s report, which was published Tuesday, showed that child care costs increased by 263 percent between 1990 and April of this year. During the same time period, the consumer price index, a parameter utilized for measuring inflation, rose by 133 percent.

This surge in childcare expenses has led to a substantial portion of family income being allocated to these costs. While a baseline estimate considers childcare affordable when it comprises up to 7% of household income, current expenses often range from 10% to 20%.

The impact of rising childcare costs extends beyond financial strain; it also affects workforce participation. A KPMG report introduced the Parental Work Disruption Index, quantifying how inadequate childcare options lead to missed work hours and reduced productivity. In 2023, an average of 1.2 to 1.5 million workers, predominantly women, were affected each month, resulting in between 9 and 26 million hours of potential work lost weekly.

The shortage of affordable childcare options has led many parents, especially women, to adjust their work schedules or leave the workforce entirely. This situation not only affects family income but also has broader economic implications, including reduced productivity and potential long-term economic growth, according to Barron.

Addressing the childcare crisis requires comprehensive solutions, such as increased government support, subsidies for childcare services, and investments in the childcare workforce. According to MarketWatch, these measures aim to alleviate the financial burden on families and support economic growth by enabling more parents to participate in the workforce.