The Escalating Crisis: Child Care Costs vs. College Tuition Statistics

The financial strain of child care in America has reached a critical point, with costs now surpassing what families allocate to housing and even college tuition. This escalating crisis disproportionately affects the nearly 14 million American parents who depend on paid caregivers, creating a significant barrier to economic stability and exacerbating existing inequalities.

The Crushing Weight of Child Care Expenses

Recent data paints a stark picture of the financial burden that child care places on families. In many states, child care expenses consume over a quarter of an average household's total income. Bank of America found in a 2023 report that a typical family spends $700 a month on child care. Some families are spending as much as almost 30% of their annual earnings on child care, the agency noted. This financial pressure can push families into poverty, as noted by Elliot Haspel, author of "Crawling Behind, America's Childcare Crisis and How to Fix It."

The Labor Department found that families with infants typically pay more for child care, as well as those living in more populous counties or using center-based, instead of home-based, care. Wendy Chun-Hoon, director of the Department of Labor's Women's Bureau, emphasized the urgency of the situation, stating, "The fact that the median cost of center-based infant care is more than the median cost of rent should be of urgent concern."

Surpassing Major Household Expenses

In 2022, the cost of child care for two children in a center exceeded the typical annual mortgage payment in 41 states and the District of Columbia, according to First Focus. Infant care costs at a center surpassed in-state tuition at a public university in 32 states and D.C. Child Care Aware of America (CCAoA) found that the average price of care for two children exceeded average housing costs in three of the four regions - Midwest, Northeast and South. These statistics underscore the alarming reality that child care is not just a significant expense but often the most substantial one for many families.

The Plight of Child Care Workers

The economic strain is further compounded by the low wages paid to child care workers. As of May 2023, wages averaged $15.42 an hour, or just over $32,000 a year, according to federal data. Haspel noted that the nation's child care workforce is among the lowest 5% paid of all occupations. This creates a challenging dynamic where families struggle to afford care, while those providing it struggle to make a living wage.

Read also: Child Care vs. College Tuition

The Pandemic's Impact on Child Care Accessibility

The COVID-19 pandemic intensified the existing challenges in the child care sector. Thousands of child care workers left the industry for higher-paying jobs, exacerbating a pre-existing shortage. Shanda Sumpter, an early childhood education project director at NC Child, explained, "The problems that we have always had in child care have just blown up during the pandemic…North Carolina parents do not have enough choices for affordable child care."

Limited Options and Skyrocketing Costs in North Carolina

Before the pandemic, the Centers for American Progress estimated that 42% of children in North Carolina younger than 5 didn't live in an area with enough child-care options. A quarter of parents surveyed in December 2020 reported difficulty finding affordable child care, according to the North Carolina Early Childhood Foundation. Sumpter noted that around 80% of programs in the state are reporting staffing shortages.

The scarcity of providers has led to limited options and increased costs. A study by the Economic Policy Institute (EPI) estimated that child care for infants averages $9,480 a year, or nearly $800 a month, in North Carolina. The cost is slightly less for older children, with average costs for toddlers around $8,000 a year.

Child Care Costs vs. University Tuition in North Carolina

The ABC11 I-Team compared these prices to tuition at top state universities and found that child care costs are higher than many institutes' predicted annual tuition. North Carolina State University estimates tuition for the year to be around $9,130. In-state tuition for students at UNC Chapel Hill costs around $8,992 a year, according to US News. North Carolina Central University's annual tuition is around $6,584. At East Carolina University, in-state students pay around $7,317 a year for tuition.

A National Trend

North Carolina isn't the only state seeing this trend. The Economic Policy Institute found child care is more expensive than tuition in 33 states. Katherine deCourcy, EPI research assistant, said, “This isn’t inevitable - it is a policy choice."

The Need for Systemic Solutions

The current state of child care in America demands comprehensive solutions. The existing market is failing children, families, child care workers, and communities. Without intervention, the situation will continue to worsen. CCAoA emphasizes the urgent need to intervene, especially with the average price of care continuing to exceed housing, college tuition, transportation, food, and health care costs in the majority of the United States.

The Role of Subsidies and Public Investment

North Carolina does have a child care subsidy program that helps parents cover the cost of care, currently serving around 58,000 children. However, state and federal funding is unable to meet the needs of all families in the state, with around 11,600 families on waitlists for child care subsidies across the state.

Lawmakers did allocate more than a billion dollars of COVID-19 relief money to child care centers across North Carolina. However, Sumpter said, "Those were one-time dollars and now those funds are gone. So we need sustainable ongoing investments from our elected officials to bring down the cost of child care so that families can work and kids can get the high quality, early care, and education that they deserve."

Addressing the Root Causes

The challenges in the child care system stem from a combination of factors, including inadequate public funding, low wages for child care workers, and the high cost of providing quality care. The Department of Health and Human Services recommends that child care should not cost families more than 7% of their annual income. However, for many families, the reality is far different.

The Child Care and Development Fund (CCDF)

The primary public funding source for child care is the federal Child Care and Development Fund (CCDF). However, the value of the subsidy is often insufficient to cover the true cost of operating a high-quality child care program. This leaves the burden of paying for child care primarily on families who struggle to afford the true cost of care in most communities.

Read also: Education for Child Psychology

The Impact on the Early Childhood Workforce

The broken market also heavily impacts the early childhood workforce. Early childhood teachers provide critical care and education, but this is not reflected in their compensation.

Strategic Government Support

With strategic government support, states can address the deficiencies and unintended consequences of the current market and ensure equitable access to child care. All states should use additional public investment to set subsidy rates based on the true cost of care, rather than current market price. This increased investment will create better wages, a more stable educator workforce, and sustainable systems for children, families, and communities.

Innovative Policies and State Initiatives

Many states have implemented innovative policies, especially with the availability of federal pandemic relief funding. Now it is paramount for both federal and state governments to build on this momentum and prioritize investments in child care moving forward. Advocates often call for universal preschool programs as a way to provide quality, free child care. EPI noted a 2022 constitutional amendment approved by New Mexico voters guaranteeing a right to early childhood education.

The Path Forward

Addressing the child care crisis requires a multi-faceted approach that includes increased public investment, improved compensation for child care workers, and policies that support families. By prioritizing child care, policymakers can create a system that supports children's development, enables parents to work, and strengthens communities.

Without additional public investment and policy intervention, the current market is unable to meet the urgent needs of families and communities around child care supply and affordability. Congress must prioritize child care and early learning in its tax policies and federal funding decisions this year. Expanding funding makes it possible for states to provide more families with subsidies, lower the price of child care, support and retain the child care workforce, and increase access and supply. In addition, decisionmakers across the country should act to build the supply of high-quality, affordable child care. For too long, child care providers have barely been getting by, providing an essential service to children, families, and employers while simultaneously undervalued by a society that has not adequately invested in a critical piece of infrastructure for working families.

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