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One of the main reasons people invest in a home is to accommodate their growing family. But for some, their new children are the reason they cannot afford one. From the 1990s to 2018, only the cost of education rose faster than that of child care—even medical care increased at a slower rate, which could come as a surprise to anyone who has had to pay a medical bill recently. Though American families are making more on average, the increasing cost of child care is holding many families back: The average cost of child care per month is roughly half of a monthly mortgage payment and 80 percent of the average national rent, according to Freddie Mac. And this burden falls mostly on low-income families and single parents. Although they spend less than high-earning families per month, those making less than $1,500 a month use an average of 40 percent of their paycheck just to make sure their child has adequate care while they make a living.
There's something else keeping Susan and Peter up at night besides their newborn and 2-year-old: wondering how to pay the bills. Child care, in particular, is eating into their budget. It’s far more than the cost of repaying their student loans, and approaching the cost of their rent. They’ve deferred trying to save for a down payment for a home. Susan is even thinking about quitting her part-time job for a few years and staying home with kids.
As Susan and Peter, and millions of parents with very young children can attest, the list of expenses for a family unit can be never-ending. From housing and medical bills to child care and food, a paycheck, or even two paychecks, can only go so far. The good news is that family income at the national level has grown somewhat: For a family of four (two adults, two children), real median family income rose by 18.7% from 1990 to 2018. However, is this enough to help families meet their obligations—especially families with young children?
This Insight focuses on one particular cost, child care, and how it compares to other family budget burdens, especially housing. Child care is an unavoidable expense for working parents, especially single parents and parents with younger children. In many states, child care can cost as much as or more than housing, and this cost has skyrocketed over the last few decades
