Child Care Costs Exceed Rent in Most American Cities, Study Finds

PHOTO: The Economic Policy Institute released a study in October 2015 called, "High Quality Child Care Is Out of Reach for Working Families."Getty Images
The Economic Policy Institute released a study in October 2015 called, "High Quality Child Care Is Out of Reach for Working Families."

While policymakers including President Obama have emphasized the importance of affordable child care, for many families, finding quality care can be more expensive than their rent.

The cost of child care for two children exceeded rent in 500 out of 618 family budget areas, according to a new paper by the Economic Policy Institute, a worker advocacy group. EPI determined that child care costs for families with two children range from about half as much as rent in San Francisco to nearly three times rent in Binghamton, N.Y.

"As policymakers look for ways to improve living standards for the vast majority of Americans who have endured decades of stagnant wages, increasing child care affordability is an excellent place to start," the report states.

The study's family budget areas cover all the regions of the U.S. The metropolitan area of Washington, D.C., for example, was divided into three family budget areas: D.C. proper (or within the limits of the U.S. capital), Maryland suburbs and the Virginia suburban area.

Elise Gould, senior economist at the Economic Policy Institute, said the study overall shows that affordable, quality childcare is out of reach for many families who earn a minimum wage.

"One of the things we're trying to point out is that the scale of the problem is enormous, and if I wanted policy makers to be thinking about how to address the child care process, they should be coming up with solutions at the scale of the problem," Gould said.

In San Francisco the average monthly rent is $1,956 for two adults and two children, according to the U.S. Department of Housing and Urban Development. The average monthly cost of child care for two children in the city is $901. In Binghamton, N.Y., average monthly rent for the same size family is $692 while the average child care cost is $2,011 a month.

"Quality [child care] should cost more money, but there is the issue of wages," Gould said.

The burden of child care costs can be particularly challenging for single-income households, or when there is pressure for a parent to drop out of the workforce.

Center-based child care for single-parent families with children (ages 4 and 8) as a percentage of family budgets range from 11.7 percent in New Orleans to 33.7 percent in Buffalo, N.Y.

Nearly 11 million children younger than five are in some type of child care arrangement each week, according to the study. These children spend an average of 36 hours a week in child care, which can cost $500 a month for an infant.

"Obviously if you have an infant, child care costs will be different for that of a five year old, which is mostly after-school care," Gould said. "When you have an infant earlier in your career, it can be even harder. That's why you can see women dropping out of the labor force."

The Bureau of Labor Statistics says that the cost of both child care and nursery school have risen 168 percent over the past quarter century.

President Obama spoke about the high costs of child care at the State of the Union address in January.

"In today’s economy, when having both parents in the workforce is an economic necessity for many families, we need affordable, high-quality childcare more than eve," he said. "It’s not a nice-to-have -- it’s a must-have. So it’s time we stop treating childcare as a side issue, or as a women’s issue, and treat it like the national economic priority that it is for all of us."

In New York City, Mayor Bill de Blasio instituted a universal pre-K program for families as a way "to fight inequality and give every family opportunity."