Child Care Costs Consume Family Budgets

Oct 11, 2007

Every working family with young children knows that child care is expensive. A report released yesterday by the National Association of Child Care Resource & Referral Agencies confirms just how high the costs of child care are in every state. The report, based on a 2006 nationwide survey of State Child Care Resource & Referral Networks and local Child Care Resource & Referral Agencies finds that the average annual price of full-time, center-based child care for an infant ranges from $4,388 to $14,647 and the average annual price of center-based child care for a 4-year old ranges from $3,794 to $10,920. The report ranks the states on affordability for infant and 4-year old care. Throughout the country, the price that families pay for child care can exceed other household expenses, including rent or mortgage payments. In 43 states, child care costs for infant care commonly exceeds the costs of public college tuition.

That's not all. Still too few families are receiving assistance to pay for the child care they need. According to new analysis by the Center for Economic Policy Research (CEPR) and the Center for Social Policy (CSP), only 25 percent of those eligible for child care subsidies in 10 study states were actually receiving any assistance.  The U.S. Department of Health and Human Services reported in 2003 that only 28 percent of children eligible for assistance under state CCDBG eligibility rules (which are more restrictive than those permitted by federal law) received subsidies.  Earlier analysis from CLASP, based on 2000 data, found that only 14 percent of children federally eligible for child care assistance receive any help.

It's also the case that many families with incomes just above state income eligibility levels face a tremendous burden meeting the high costs of child care. The CEPR/CSP report finds that 69 percent of low-income, working families in the study states had incomes that did not qualify for child care assistance; yet, their family income was not high enough to meet the costs of a basic family budget.

It s clear that families need more help. The Center for American Progress found that expanding access to child care subsidies could help raise nearly 3 million children and parents out of poverty and recommends guaranteeing child care assistance to all families earning below $40,000 annually, in addition to expanding the Child and Dependent Care Tax Credit. To help a greater number of families afford the care they need to go work, more funding for the federal child care subsidy program is needed. As a first step to achieving this broad vision of more support for hard-working, low-income families, Congress has an opportunity in coming days to make new investments to support that goal.