Essential but Challenging: Child Care Access and Affordability

Excerpt from On the Economy Blog of the Federal Reserve Bank of St. Louis

Child Care: Critical to the Economy but Difficult to Access and Afford

April 13, 2023
By  Ana Hernández Kent ,  Xiaohan Zhang

In the U.S., the average annual cost of child care was an estimated $10,900 per child per year in 2021. This is 15% of median household income—more than double the 7% the U.S. Department of Health and Human Services considers affordable. Starting in 2022, inflation has further strained the sector and parents’ ability to pay. 

For example, much of the increased operational costs (e.g., food, rent, utilities) for providers have been passed on to parents in the form of tuition increases, making it more difficult for them to afford care. At the same time, providers need to improve and maintain quality, and attract and retain credentialed workers by offering competitive wages and benefits, which is not always possible. These burdens contribute to a vicious cycle of unaffordability, which in turn affects access.

In addition to affordability, availability is also quite problematic. About half of Americans live in child care deserts, which are areas with too few licensed slots relative to the number of children. These low-access areas are more likely to be rural and low-income neighborhoods. 

In addition, there are “time deserts”; licensed child care is relatively nonexistent during nontraditional hours (PDF), such as evenings and weekends. In these areas, parents working nontraditional or unstable work hours are likely to lack access to child care regardless of geography, affordability or quality. Thus, nonstandard work schedules further complicate child care access.

Source: Child Care: Critical to the Economy but Difficult to Access and Afford. (n.d.). Www.stlouisfed.org. https://www.stlouisfed.org/on-the-economy/2023/apr/child-care-critical-economy-difficult-access-afford

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