Why Is Daycare So Scarce and Unaffordable?

Source: Thinkstock

Source: Thinkstock

Despite a majority of households with both parents employed full time and the call for higher-quality early education, the availability of day care for working families is still incredibly scarce. And even though there is high demand for quality programs, regulations and other factors make the pool of day care options incredibly small — and expensive.

About 11 million children ages 5 and younger are in some sort of child care program, according to the 2014 annual report from Child Care Aware. That accounts for about 35% of all children in child care programs across the country, including pre-kindergarten and Head Start. Of the 34.4 million families with children in the country, 59.1% are in situations where both parents work outside the home, according to the Bureau of Labor Statistics’ April 2014 report. In households with children 6 years and younger, mothers worked outside of the home about 64% of the time.

The cost of child care varies greatly by state and by the age of the children. For infants, Child Care Aware reported that costs soared to an average cost of $16,549 per year in Massachusetts day care centers in 2013. For preschool children, the range was between $12,320 in Massachusetts and $4,515 in Tennessee. Nationwide, only 12 states had childcare that cost less than 10% of the state’s median income for married couples. The report points out that picture becomes even more bleak for single-parent households.

Source: Thinkstock

Source: Thinkstock

One of the reasons for the costs, proponents will argue, is that research has begun to show the importance of quality education before a child reaches kindergarten. An emphasis on teaching children basic skills early can overcome the poverty gap, as one study from Harvard’s Graduate School of Education notes. In the study, children in high-poverty areas could overcome some of the known achievement gaps on fifth-grade math and reading tests by participating high-quality early education programs. With higher-quality programming often comes the need for higher-paid providers, despite the fact that the average full-time child care worker earned $21,490 in 2013.

The federal government does offer tax breaks for families who pay for child care services. For incomes of $15,000 or less, the credit is 35% of child care expenses, for a maximum of $1,050 for one child or $2,100 for two or more children under age 13. The percentage decreases for every additional $2,000 earned, for a minimum credit of 20% for those who earn $43,000 or more. President Barack Obama recently proposed tripling those credits, for a maximum credit of $3,000 per single child and up to $6,000 for multiple children.

But under current law, the credit can only offset taxes that families owe. Many families who qualify for the credits don’t end up owing many taxes, meaning they don’t always receive any benefit from the credit.

Aside from the complications of tax issues, some organizations point to the vast array of child care regulations as the reason for unwieldy preschool bills. The Foundation for Economic Education, for example, writes that deregulating the industry would help increase the supply of child care options, thus driving down costs. Regulatory procedures first began in 1962, when child care centers had to be state-licensed in order to receive federal funding. Some regulations have undoubtedly become expected, including background checks for adults working with children. But Pennsylvania, for example, has more than 130 chapters in its state code regarding the rules for operating a day care center.

Source: Thinkstock

Source: Thinkstock

Jordan Weissmann, senior writer for The Atlantic, lays out some of the complications facing day care centers and how they affect day-to-day operations. “If a center is required by law to have 25 square feet of space for every kid in a program, it can’t ever downsize its building when rents rise,” he writes. “If it has to hire a care giver for every two children, it can’t really achieve any economies of scale on labor to save money when other expenses go up.”

The ongoing costs of child care could be one of the reasons that the Pew Research Center reported in 2014 that the number of stay-at-home mothers had increased in 2012 after three decades of decline. Pew found that 71% of mothers worked outside the home in 2012, compared to the modern-era high of 79% in 1999. Some people, including sociologist Joya Misra, argue that high child care costs have contributed to “the motherhood penalty,” in which mothers drop out of the workforce because they can’t be guaranteed a living wage after taxes and child care costs.

No matter your thoughts on regulations and the need for high-quality child care, there are numerous stories all over the web that tell the tales of families from all walks of life struggling to pay for child care. Perhaps it’s also why a quick search reveals posts from workingmother.com and others that suggest creative solutions to child care. But the dilemma is this: In many of those situations, the solutions end up being more complicated, with babysitter costs and partial day care still requiring a hefty check.

More from Business Cheat Sheet:

More Articles About:   , , , ,