State and Federal Response to Extreme Child Care Costs

The annual cost of child care is exorbitant. It can often be compared to in-state college tuition, as both cost thousands to tens of thousands annually. Imagine paying a quarter of your salary just to go to your job. For many parents, that is their reality regarding child care. 

Nationwide, child care services account for 17% of the median household income, and fees are higher in certain areas. Parents with two or more kids can pay twice or three times as much when agencies do not offer sibling discounts. Families with multiple children might save money by having one parent stay at home. 

The average weekly cost for care in the United States is $216 per infant or $175 per child. Even the most affordable states for child care services can cost more than 10% of the median household income. 

These are the five most expensive areas for child care and its child care costs compared to the average household income (in percentage):

  • District of Columbia 26.3
  • Massachusetts 24.4
  • Indiana 21.9
  • Minnesota 21.6
  • New York 21.3

These are the five least expensive areas for child care and its child care costs compared to the average household income (in percentage):

  • Kentucky 12.3
  • Idaho 12.3
  • Mississippi 11.9
  • Alabama 11.6
  • South Dakota 10.9

COVID-19, social distancing, and remote work gave some parents a financial break. But in many cases, the pandemic made it more difficult for parents to afford child care. Scarcer availability and increased risk drove already high costs higher. 

Likewise, some parents had to leave the workforce due to a lack of child care options. Households suddenly had a costly new expense when children did remote learning from home while parents still had to work, like essential workers. 

Government Child Care Subsidies

The federal and state governments try to help parents by creating child care financial assistance programs and government-sponsored daycare. For instance, New York currently has a program to subsidize child care expenses for parents earning less than 200% of the federal poverty level (FPL) for their household size. 

New York may increase the program’s funds so families can qualify if they make less than three to five times the FPL. The program would cover 80% of the costs, leaving 20% for the parents to pay.

In many states, parents can apply for child care payment assistance if they meet the qualifications. The specific criteria depend on the area, but some general guidelines include the following:

  • Your household earns less than your state’s threshold
  • You need to leave your children to go to work, an approved educational or training program, or search for work
  • Your children are younger than the maximum age. Some states set the maximum age at 13, while others have younger limits
  • Your school-aged children are enrolled in school
  • You complete any required courses. Some states have parenting class requirements, such as Tennessee’s Teen Parent program for young mothers 

The federal government gives states money through the Child Care and Development Block Grant (CCDBG). The CCDBG administration experienced heavy layoffs after 2020, and the government redirected funding. But lawmakers reauthorized the grant in March 2022. The CCDBG will have a bigger budget than ever in 2022, and the annual total is $9.715 billion. 

How each state will handle the additional child care funds remains to be seen. Most governments use the Child Care Assistance Program (CCAP) name or Child Care Subsidy Program, but there are alternative programs titles. Likewise, each state will have different requirements.

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