Why Costs for Parents Just Got Higher

Libby Kane

cost of child careAny parent who has had to fork over money for an American Girl doll or tickets to Disney World knows that having kids is an expensive proposition.

But it’s not just the costs of designer toys or amusement parks that are alarming. One of the more crucial costs, child care, is on the rise, with little relief in sight.

MarketWatch reports that last year, the average cost of group daycare rose 2.6%, while the average cost of home-based care, such as nannying, rose 4.8%. That might not sound like much, until you take into account that the average after-tax household income increased only .6%—which means that the cost of at-home child care increased at eight times the rate of what families are bringing home.

This data comes from a new study conducted by Child Care Aware of America, an organization that works to increase access to high-quality, affordable child care in the United States. The study found that on top of higher child care costs, the child and dependent care tax credits that could make quality care more affordable haven’t changed in 10 years. Taking inflation into account, this means that the effectiveness of these tax breaks has actually decreased. In 2002, the average weekly payment for child care was $95 per week; in 2011, it was $143 a week—a jump of more than 50%.

RELATED: 8 Reasons Parenting Has Gotten More Expensive

Currently families with middle or high incomes can usually get a credit of 20% (up to $3,000 for one child and $6,000 for two or more) for child care expenses. Low-income families should be able to claim a 35% credit, but the reality is that they often don’t owe enough in taxes to benefit from it. While these tax breaks have the potential to impact many families across the country (particularly single parents, who put more than a quarter of their median income toward child care), they aren’t considered large enough to garner enough Congressional attention for a revamp.

This latest study adds to other research that reveals just how lacking the United States is with regard to child and maternity benefits. Among developed countries, it is one of the least friendly towards working parents, which is surprising when you consider that 80% of mothers are working momsMaternity and paternity leave policies also lag behind peer countries. And, at least for now, Americans shouldn’t expect much in the way of tax relief for raising kids.

  • Jen

    $143…? I wish! Full-time care for one pre-school aged child in the Boston area is more like $200 p/wk at an unlicensed, in-home daycare, $300 p/wk if you luck out with and get a spot in a high-quality, affordable center, or easily $500 p/wk at a well-known daycare.

  • Andrea

    I have two little ones and it is over $500 per week. And it has gone up 2.5% per year all of the last 3 years I have been with this center. Sadly, this is the “market rate” for the area I live in.