Annual Care.com Report Reveals Rising Childcare Costs Deplete the Incomes and Savings of American Families
Care.com's 2024 Cost of Care Report reveals that parents spend an average of 24% of their income on childcare, with nearly half spending over $18,000 in 2023. Despite a slight drop from the previous year, these costs are still more than three times the affordable limit. More than 35% of parents are dipping into their savings, exhausting 42% of their savings on childcare. The report also highlights the impact of the childcare cliff, with nearly 40% already paying more due to the loss of federal subsidies. Childcare costs are expected to increase in 2024, with 79% of parents anticipating an impact. The report also emphasizes the strain of waitlists and the demand for solutions from presidential candidates.
The findings of the Care.com 2024 Cost of Care Report have significant implications for the broader economy. The report indicates that childcare costs consume a substantial proportion of household income, with nearly half of the parents surveyed spending more than $18,000 annually on childcare. This financial burden is noteworthy as it exceeds the 7% affordability threshold recommended by the U.S. Department of Health and Human Services by a considerable margin. The economic concern here is twofold: firstly, high childcare costs can reduce the labor force participation rate, particularly among women, as the cost of returning to work may not justify the associated childcare expenses. Secondly, the depletion of savings to cover these costs suggests a reduced capacity for households to contribute to economic activities such as consumption and investment, which are critical drivers of economic growth.
Furthermore, the anticipation of increased childcare costs due to the expiration of federal subsidies—a phenomenon termed the 'childcare cliff'—could exacerbate these issues. With 79% of respondents bracing for impact, the potential escalation in childcare expenses may lead to further financial strain on families, thereby dampening consumer spending. The report's findings also underscore the importance of childcare policy in the upcoming Presidential Election, indicating that economic policies related to family welfare and childcare affordability will be scrutinized by voters. This focus on childcare policy reflects its perceived role in supporting economic stability and growth.
From a market research perspective, the Care.com report sheds light on the changing dynamics of consumer behavior and the potential for market shifts within the childcare industry. The increase in childcare costs, as evidenced by the 4% rise in weekly nanny costs and the 13% hike in weekly daycare costs, suggests a growing market for childcare services despite the financial challenges it imposes on consumers. The report also highlights a critical pain point for parents—the availability of childcare services—which has been further strained by the childcare cliff. The scarcity of affordable childcare options is likely to influence consumer demand for alternative solutions, such as in-home care or shared nanny arrangements.
The data on the financial strategies employed by parents, including the use of savings and the impact on financial flexibility, can inform businesses and service providers within the childcare sector. Understanding these financial pressures can lead to the development of innovative childcare solutions that address both cost and availability concerns. Additionally, the heightened importance of childcare in political discourse may signal a market anticipating regulatory changes, which could affect the childcare services industry and its investors.
Examining the report from a social policy standpoint reveals the critical intersection between childcare and social welfare. The fact that a significant number of parents are exhausting a large portion of their savings to afford childcare speaks to a systemic gap in social support for families. The concept of the 'childcare cliff' is particularly troubling, as it suggests that temporary relief measures provided during the pandemic were not sufficient to create long-term sustainability in childcare affordability. The report's findings may catalyze discussions around the need for comprehensive childcare policies that can prevent such financial precarity among working families.
The prioritization of childcare in the political arena, as indicated by the overwhelming 88% of respondents who consider a political candidate's stance on childcare policy influential to their vote, reflects a societal demand for structural reforms. This could lead to a shift in social policy that more effectively addresses the needs of working parents and promotes greater economic equity. The report's emphasis on the urgency of the issue could serve as a catalyst for policy innovation and reform, potentially reshaping the landscape of family support services in the United States.
01/17/2024 - 09:00 AM
AUSTIN, Texas --(BUSINESS WIRE)--
Care.com’s 2024 Cost of Care Report 24% of their household income on childcare with nearly half (47% ) spending more than $18,000 27% in last year’s report, it remains more than three times the 7% deemed affordableU.S. Department of Health and Human Services. Additionally, and meaningfully, household income is not the only source of funding parents are using to pay for childcare. More than one-third (35% ) of respondents are dipping into their savings, on average exhausting a staggering 42% of their savings in 2023, leaving them with little financial flexibility.
The 11th annual report, which comprises survey results of 2,000 parent respondents, also provides some of the first public data on the impact of the childcare cliff , which marked the expiration of pandemic-related federal subsidies for childcare in September 2023. The findings reveal that nearly 40% of respondents (39% ) are already paying more because their care provider has been impacted by the loss of funds. Additionally, nearly 80% of respondents (79% ) anticipate being impacted by the childcare cliff in 2024 with 54% of those concerned expecting their childcare expenses to increase by more than $7,000
With financial pressure continuing to mount on parents while the availability of childcare shrinks, it is not surprising that childcare is a top priority for parents in the upcoming Presidential Election, with an overwhelming 88% of respondents saying a political candidate’s position on childcare access and affordability will influence their vote.
“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,” said Brad Wilson, CEO of Care.com. “A healthy economy depends upon the ability for people to save and spend, but given the crushing weight of childcare costs, those pillars are crumbling. The childcare crisis should be a major red flag for everyone, not just parents. It is a systemic failure that will impact our nation’s economic growth, and that affects us all.”
Highlights from the 2024 Cost of Care Report:
Care.com National Average Weekly Rates in 2023*
Weekly nanny cost: $766 4% from $736
Weekly daycare cost: $321 13% from $284
Weekly family care center cost: $230 0.4% from $229
Weekly babysitter cost: $192 7% from $179
* Infant rates except for babysitter, which is not age limited. Rates for toddlers, after school sitters, as well as multiple children, can be found within the report .
Childcare Costs Are Depleting Household Finances:
On average, parents who responded spend 24% of their household income on childcare with nearly half of respondents (47% ) spending more than $18,000 24% represents a slight drop from the prior year’s 27% , income is not the only major source of money parents are using to pay for childcare. More than one-third of parents who responded (35% ) are also using hard-earned savings, on average spending up to nearly half of their savings (42% ) on childcare and 25% using more than two-thirds of their savings. Given the reliance on savings to pay for childcare, it is alarming that a staggering 68% of respondents have only six months or less until their savings run out. Not surprisingly 37% of parents who responded cite the cost of childcare among their top three financial stressors.
The Childcare Cliff Impact:
More than three-quarters of parents who responded (79% ) anticipate they’ll be impacted this year by fallout from the childcare cliff. For the majority (54% ) of those concerned, childcare costs are anticipated to increase by $600 $7,000 40% of respondents (39% ) are already paying more because their daycare was impacted at the end of 2023 by the loss of federal funding.
Cost is not the only issue with which parents are wrestling. The cliff has also impacted availability of childcare with 43% of respondents having a harder time finding a childcare provider versus prior years.
The Limbo of Waitlists:
Irrespective of the cliff, in general, 65% of respondents have spent time on a daycare center waitlist with 81% of them juggling multiple waitlists simultaneously and 43% waiting four months or longer. Since the cliff in September, 62% of waitlisted respondents say centers have closed while they sat on their waitlists and 54% have experienced waitlist extensions. The cost of waiting? More than half of waitlisted respondents (59% ) are dishing out an additional $200
Parents Demand Solutions From 2024 Presidential Candidates:
With rising costs and shrinking availability, it’s not surprising that childcare is top of mind for parents this election year. A majority of respondents (59% ) say childcare access and affordability policy is a top 3 priority issue that will impact their 2024 voting decision with 22% saying it is their #1 priority. A staggering 88% of respondents say a candidate’s position on childcare policy will influence their vote with 37% saying these policy positions are very influential.
And families want answers. A whopping 91% say it is important to them that childcare is discussed during the 2024 Presidential Debates. In fact, childcare ranked second as the topic respondents most wanted addressed during the debates, behind the economy and ahead of healthcare, climate change, racial and social justice, and immigration.
The full results of The 2024 Cost of Care Report , including a state-by-state ranking of the most and least expensive states for childcare, can be found here .
2024 Cost of Care Report Methodology
This sample of 2000 U.S. adults was surveyed between November 9, 2023 and November 12, 2023. 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. DKC Analytics conducted and analyzed this survey with a sample procured using the Pollfish survey delivery platform, which delivers online surveys globally through mobile apps and the mobile web along with the desktop web. Response completion rate was 75% , and only fully completed responses were considered valid. No post-stratification has been applied to the results.
Weekly rates for nanny, babysitter, after-school sitter, daycare center, and family care center are based on 2023 advertised rates by families posting jobs for caregivers on Care.com.
About Care.com
Available in more than 17 countries, Care.com is the largest online platform for finding and managing family care, spanning in-home and in-center care solutions. Since 2007, families have relied on Care.com for an array of care for children, seniors, pets, and the home. Designed to meet the evolving needs of today’s families and caregivers, the Company also offers customized corporate benefits packages to support working families at more than 700 global clients, household tax and payroll services, and innovations for caregivers to find and book jobs. Care.com is an IAC company (NASDAQ: IAC).
View source version on businesswire.com: https://www.businesswire.com/news/home/20240117644606/en/
Media:
Mackenzie Nintzel
mackenzie.nintzel@care.com
Jamie Gentges
jamie.gentges@care.com
Source: Care.com
What is the average percentage of household income spent on childcare by parents in 2023 according to the report?
Parents spend an average of 24% of their household income on childcare in 2023.
What percentage of parents spend more than $18,000 on childcare in 2023 according to the report?
Nearly half (47%) of parents spend more than $18,000 on childcare in 2023.
How much of their savings are parents using to pay for childcare according to the report?
More than 35% of parents are using their savings, exhausting an average of 42% of their savings on childcare.
What is the impact of the childcare cliff on parents according to the report?
Nearly 40% of parents are already paying more due to the loss of federal subsidies, and 79% anticipate an impact in 2024.
What are the findings regarding waitlists for childcare according to the report?
65% of parents have spent time on a daycare center waitlist, with 62% experiencing center closures while on the waitlist.
What is the demand for solutions from presidential candidates regarding childcare according to the report?
A majority of respondents say childcare access and affordability policy is a top 3 priority issue that will impact their 2024 voting decision, and 88% say a candidate’s position on childcare policy will influence their vote.
What is the methodology of the 2024 Cost of Care Report?
The report surveyed 2000 U.S. parents of children 14 years or younger and currently paying for professional child care. It was conducted by DKC Analytics and analyzed with a 75% completion rate.
