Labor Shortages in Child Care and Work Disruptions

Excerpt from: 
Slowing job growth, price increases and more work disruptions due to care crisis

By Matthew Nestler, PhD
Senior Economist at KPMG
Published July 15, 2025

Labor shortages in both childcare and eldercare
The child care services industry added fewer than 3,000 jobs in June. The data for April and May were revised up. Employment growth remains weak. The sector has gained 14,000 new jobs so far this year. That is not keeping up with elevated demand. The sector is still short more than 100,000 jobs compared to trends (see Chart 1 below). Employment has nearly flatlined after pandemic-era relief funding ran out in late 2023. That is clear evidence of a sector in crisis.

Daycare and eldercare prices rising faster than overall inflation
Caregivers faced higher prices in June. As employment growth slows in both childcare and eldercare, supply side shortages are clashing with elevated demand; the result is large price increases. Prices for daycare and preschool were flat in June after rising 0.6% in May, according to data from today’s Consumer Price Index (CPI) release. That translates to a 5.5% increase compared to a year ago, down from 5.6% last month. That is more than two times the pace of overall inflation at 2.7%.

Parental Work Disruption Index continues to tick up
The Parental Work Disruption Index, which shows the effects of the childcare crisis on American workers, edged up to 122.3 in June from 122.2 in May. That means there are 22% more workers impacted by inadequate childcare options compared to the pre-pandemic baseline. The index has steadily increased this year.

You can read Dr. Nestler’s full article, posted on LinkedIn, here.

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