But child-care spending is unlike other spending. By some measures, it’s getting more expensive faster than almost every other consumer good or service that the government tracks. 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.
Pick whatever source and statistic you like, because they all point to the same conclusion: Child care in America has become ludicrously expensive. The average cost of a full-time child-care program in the U.S. is now $16,000 a year—and more, in some states, than tuition at a flagship university.
What the hell is going on? And what should we do about it?
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There are three broad reasons American child care now costs the same as buying a brand new Hyundai Elantra every year.
First, 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. Unlike, say, car companies, they can’t cut spending by moving labor to poorer countries or by replacing human workers with machines. Like health care and education, child care requires lots of domestic salaries, which means that its costs will continuously rise faster than overall inflation.
The industry is highly regulated, perhaps reasonably so, given the vulnerability of the clientele—which is the second key driver of child-care costs. As Jordan Weissmann has reported in The Atlantic, states with strict labor laws tend to have the most expensive facilities. 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.
Finally, there’s the real estate. 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 state of American child care might be defensible if it were expensive and high-quality—or if it were crummy but cheap.
Instead, the U.S. has the worst of both worlds: Cadillac prices for an Edsel product. 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.