Sydney Lewis Sydney Lewis
Associate Manager, Communications


October 27, 2023


From state economies to family economies, the cost of childcare has a significant impact on billions of budgets nationwide. Whether you’re a monthly, quarterly, or yearly planner, all parents and caregivers are tasked with the financial pressure points of how to raise and support their children. 

With talks of inflation cooling, the question arises of what is the true cost of childcare amid stagnant wages, rising costs of living and weaning pandemic era assistance. Childcare can contribute to a diverse range of expenses from provider and school enrollment fees, necessary supplies like food, shelter and clothing, healthcare, transportation, extracurricular activities, and financial planning for the future, to name a few. For parents in particular, expenses like application fees, enrollment deposits and extra-curricular activity fees add up in addition to monthly tuition. For providers, overhead for food and physical space are on the rise in addition to staff wages, healthcare, background checks and continued education. Raising a child for many young parents especially, can be significantly taxing financially with incurred expenses stacking up.

Setting the Scene

Pitfalls in childcare quality and access are two of the most pressing issues facing families in the U.S. on both an economic and social level. The pandemic flipped what we considered traditional “work” on its head with the emergence and normalization of remote work. While these changes have benefited many working parents, the pandemic still caused approximately 2 million women to leave the workforce for varying reasons, but notably in search of flexible hours and schedules to manage the household.

Childcare to us is a two-generation issue: supporting the needs of working parents and setting the foundation for the next generation of the American workforce. Childcare solutions are both a means for economic opportunity for parents and employers, as well as ensuring future workers are more economically mobile and secure than the previous generation.

Since 2019, the U.S. Chamber of Commerce Foundation has partnered with local chambers in twelve states to calculate the true impact of economic loss due to childcare in a series of reports entitled Untapped Potential. We’ve estimated nearly $29 billion lost across twelve states due to childcare breakdowns. Pre-pandemic figures also show an average of eight percent of parents were already leaving the workforce voluntarily due to childcare issues signaling structural childcare failures as a looming economic issue exacerbated by the pandemic.

How Far Does the Dollar Go?

The cost of childcare is on the rise in the U.S. up more than 14 percent over the last five years with the average cost per child reaching $11,000 per year. But how does this compare to the economic state of the working American? Most Americans live paycheck to paycheck with only enough for crucial expenses and limited funds for investment into high-quality childcare.

The average annual salary for an American is approximately $52,000, meaning if a single parent has only one child more than 20 percent of their annual income will go directly to childcare expenses. In comparison, the average household income in the U.S. is around $75,000. According to a recent article from the New York Times, a family in New York City would have to make more than $300,000 to reach federal standards for affordability, which recommends that childcare take up no more than seven percent of total household income. Findings from the Department of Labor show, however, that a typical family in the city spends more than a quarter of income to fund childcare. Even further, a recent report from finds nearly three out of four parents spend more than 10 percent of their annual income on childcare.

Additional costs like healthcare also earmark funds away from personal childcare investments. For a middle-age married couple with two children, the cost of healthcare can run between $1200 and $1800 depending on coverage and employer benefits. To widen the lens, market rent prices are at record highs with the average rent in American cities and towns running more than $2,000 and interest rates for mortgages continue to climb in some cases nearly doubling monthly payments in comparison to the last few years. The average monthly grocery budget for a family of five rests between about $922 to $1500.

So, how does this add up? If we take the average salary of $52,000 and divide it within the childcare, healthcare, rent/mortgage, and grocery budgets, the average parent takes home about $4,300 a month depending on state, city, and local taxes as well as pay schedules and pre-tax deductions. Using the $11,000 annual figure, to care solely for one child will reduce the available disposable income down to about $3,400. Now, if a parent lives in an area like Washington, D.C. where rent can regularly exceed $2,000, there’s now only $1400 left from that monthly income. Add in additional aforementioned expenses like healthcare and additional expenses like car insurance, emergency funds and unexpected costs, and the reality of living check to check becomes more and more real. The $4300 a month can quickly turn to negatives positioning working parents to be more susceptible to debt, causing financial strain on families.

  • $4,300
    Average monthly income
  • $900+
    Average cost per month to care for one child
  • $2,000+
    Median price of monthly rent in the U.S.

Finding Solutions

Identifying pitfalls and innovating solutions to childcare issues opens the door of opportunity for parents, employers, and children. To circumvent further mass exodus from the workforce and therefore exacerbate economic disparities, we must work with all necessary stakeholders to find solutions from childcare providers, to business and government leaders, parents, employers, and beyond.

Progress can be achieved through maximizing public-private partnerships to drive awareness and effect change. We together can reshape the cost of childcare through solutions like:

Identifying and championing employer-led solutions. Working with employers to raise awareness for childcare related issues has a direct correlation to economic opportunity. When employers invest in their working parents by offering childcare-related benefits, employees are motivated, productive, and it contributes to the improvement in financial and mental wellness.

Our Employer Roadmap paints the big picture, data storytelling tailored towards senior leaders and business to understand what options are available to address childcare needs for working parents and how they can turn strategy into action. 

Leveraging public-private partnerships through engaging the business community. Working with local, state, and community partners to identify pitfalls and draw upon actionable data allows us to see the bigger impact by the numbers.

Our Untapped Potential Reports calculate the state economic loss brought on by childcare issues. Working with state and regional business, government and community organizations, the reports paint comprehensive pictures of the cost of childcare nationwide and ignite conversations as to how we can work together to fix it.

Promote financial literacy and economic mobility through education. While employers play a large role in both providing and informing employees on how to maximize their benefits, it’s equally important to have a financially healthy workforce, meaning centering financial literacy in education early on to build and reinforce healthy habits.

Every employee should strive to have a comprehensive understanding of the benefits their employer provides. Employers and employees must work together to ensure business and personal needs are aligned.

What’s Next?

There is no denying the cost of childcare represents a significant financial challenge for families across the country. However, there is hope on the horizon as employers and community stakeholders step forward as key partners in addressing this issue. By offering supportive benefits, flexible work arrangements, and advocating for affordable childcare options, employers can play a vital role in easing the financial burden on working parents. Simultaneously, community engagement, through public-private partnerships and educational initiatives, we can foster an environment where high-quality, accessible childcare is the norm rather than the exception. By coming together, we can create a more equitable and sustainable future for working parents and ensure that the rising generation receives the care and support they deserve.

Click below to learn more about our early childhood education programs and initiatives.

About the authors

Sydney Lewis

Sydney Lewis

Sydney Lewis is associate communications manager for education, workforce and corporate citizenship at the U.S. Chamber of Commerce Foundation.

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