Child care costs are discouraging consumers from starting new families, study finds

The rising cost of child care is draining the bank accounts of parents and discouraging people from starting new families.

Parents paid an average of $320 a week or nearly $17,000 a year for preschool, day care, babysitting or other care, according to parenting website BabyCenter.

In some states, parents are suffering even more financial pain.

Child care costs more than public college tuition in 38 states, including California, Florida and Texas, according to an analysis by the Economic Policy Institute, a left-leaning research nonprofit.

Yearly costs for caring for an infant have soared to $28,356 a year on average in Massachussets, which ranked number one as the most expensive state for child care.

On the other hand, parents in Mississippi spent $6,868, the fewest dollars on average among U.S. states.

The share of a family's income that is spent on child care further underscores the struggle.

A family spends 21% of their income on child care in New Mexico, which beat out every other state. Families in South Dakota spend the smallest share: Around 9% of their income.

Pandemic funding evaporated

The findings come as government assistance for childcare has dwindled after pandemic funding evaporated, putting tens of thousands of childcare programs at risk of closing and leaving millions without care.

Approximately 70,000 childcare programs are in danger of closing and leaving 3 million children without care, according to nonprofit Century Foundation.

President Trump has proposed a $5,000 child tax credit that would have to pass Congress.

"Child care is one of the largest expenses in a family’s budget partly due to early care and education requiring long operating hours for better access and a low student-to-teacher ratio for better quality," said Elise Gould, senior economist at the Economic Policy Institute.

Gould said that government-funded programs are necessary because "care costs cannot be made less expensive without sacrificing quality."

What to do?

So what can bring the costs of child care down?

Some state and local governments are now delivering relief through subsidies, minimum paid family leave, universal pre-K for three- and four-year olds, Gould said.

Only 13 states, including California, New York and Colorado, have laws for minimum paid family leave, which typically requires companies to pay full-time, long-term employees wages when they take time off to care for their children.

"We've seen many states and localities step up and help on the supply and demand side, providing subsidies for families, providing minimum paid family leave, offering universal pre-K for three- and four-year olds, and working to set standards for provider pay and working conditions," Gould said.

The other solution to child care is a parent staying home and not working.

But the Economic Policy Institute said if child care costs were brought down, more than a hundred thousand people would be able to enter the workforce and create billions of dollars in economic productivity.

How to save money on childcare

Parenting website What To Expect has recommendations for saving money on childcare:

• Friends and family: Ask people close to you for help with watching your children.
• Babysitting co-op: Join or create a babysitting co-op, which is a group of parents coming together to rotate caregiving responsibilities.
• Split babysitter: Find another family to share babysitting services with.
• Ask HR for childcare benefits: Some companies offer reimbursements, on-site babysitting and flexible spending accounts that lets you save pre-tax dollars for from your paycheck for childcare.
• Tax breaks: Look into state and federal government tax writeoffs for childcare.
• Reach out to local college: Higher education may be able to connect you with students charging affordable prices for babysitting.
• Work from home: Ask your employer if they will let you work from home more because of childcare.