Why Childcare is So Expesive

The Census Bureau has found that child-care expenditures rose more than 40 percent from 1990 to 2011, during a period when middle-class wages stagnated. Since the 1990s, child-care costs have grown twice as fast as overall inflation. In California, the cost of a typical day-care center is now equal to almost half of the median income of a single mother.

Although child-care workers aren’t expensive on an hourly basis—their median hourly wage is less than that of non-farm-animal caretakers and janitors—labor is the biggest line item for child-care facilities.

The industry is highly regulated... In Massachusetts, which requires one caregiver for every three infants, the average annual cost is more than $16,000. In Mississippi, which allows a one-to-five ratio, the cost is less than $5,000. Thanks to high turnover rates—a result of those low wages—companies have to constantly train new workers to meet regulatory standards. Other costs include insurance to cover damage to the property and worker injuries, as well as legal fees to deal with inevitable parent lawsuits.

The most expensive child-care facilities tend to be situated near high-income neighborhoods or in commercial districts, where the rents are high. And they can’t downsize in a pinch, because most states require them to have ample square footage for each kid.

The typical family paying for any child care spends about 10 percent of their income on it, far more than in most similarly rich countries. But American day care is a shambles. “The overall quality is wildly uneven and barely monitored, and at the lower end, it’s Dickensian,” the health-care writer Jonathan Cohn wrote in 2013. A 2007 review by the National Institute of Child Health and Human Development found that only one in 10 facilities offered “high-quality” care.