How the Cost of Childcare Has Become a Workforce Issue
Episode 489 | Author: Emilie Aries
Here’s why the outrageous impact of daycare costs reverberates way beyond mothers and families.
If you aren’t in the know, you might not be aware of how the outrageous cost of childcare in this country affects anyone but parents of young kids. Here’s the truth: this crisis has wide-reaching ramifications for the entire economy. It’s a national (if not global) workforce issue.
In this episode, I explore statistics and lived experiences that highlight how bad the situation is. But the reality isn’t all doom and gloom: there is a lot that organizations, regular people, and the government could do to turn this around, so let’s dig into this.
Childcare is more expensive than renting an apartment
The standup comedian Steven Haas explains the exorbitant cost of childcare in such a perfectly relatable way that I’m just going to paraphrase him: renting an apartment for your toddler would be cheaper than sending them to daycare.
The Economic Policy Institute ranked the 10 states with the most expensive childcare. Washington, D.C. tops the list with an average annual price tag of $24,243 for full-time care for one child. That’s more than $2,000 a month. Massachusetts and California follow close behind, and even my own state of Colorado makes the list at number 8 and $15,325 per year. Keep in mind that this is the average, so 50% of parents are paying even more.
I pay around $1,700 a month for my son’s daycare. Once we add care for our new baby, we’re looking at more than $4,000 a month for one household expense, and let me assure you—we are the norm.
Childcare costs have risen far beyond other expenses
Here are more numbers: 51% of parents surveyed in a 2022 cost of care survey reported spending more than 20% of their household income on childcare. Only just over a quarter of people reported paying what the Department of Health and Human Services considers affordable (a maximum of 7%).
A recent Illumine article makes it even clearer: on average, people in the U.S. who make the median income cannot afford to send their infants or toddlers to daycare. The actual availability and quality of that childcare, affordable or otherwise, is yet another stressor.
And I want to be clear: this isn’t a case of standard inflation. As this Bureau of Labor Statistics chart shows, since 1990, childcare costs have grown 214%, significantly outpacing all other family expenses:
Black and multiracial families are hit especially hard
As a result of these mind-boggling costs, many of the moms and dads who “choose” to leave the paid workforce to become stay-at-home parents are in fact being forced into the role, either because their salaries would amount to less than the childcare costs or because wait lists for this overpriced necessity are years long.
On top of quitting outright, Forbes reported that childcare issues force two million parents to reduce their time in the paid workforce every year. These numbers are disproportionately divided along racial lines: almost twice as many Black and multiracial parents have to make this “choice” compared to White parents.
The enormous impact on workplaces
This brings us to the widespread workforce impact of our country’s lousy childcare system.
In addition to those two million workers who became stay-at-home parents, the U.S. Bureau of Labor Statistics reports that as many as 100,000 more are forced to miss work each month due to unexpected childcare issues like daycare closures or illness. That’s $122 billion annually in lost earnings, productivity, and revenue. With numbers like that, it’s pretty hard to deny that this is much more than an individual family issue.
The pressure from parents who want to do paid work but can’t is one more pressure on employers, who feel the present labor shortages and disruptions in employee productivity and engagement for various reasons. Federal and state governments need to start stepping up here. There are dozens of examples of the public sector injecting funds into emerging private sectors to prop them up and create millions of new jobs—why not childcare? We need more facilities, more training and better pay for the grossly undervalued workers who care for our children when we’re away, and subsidies for those sky-high costs.
What can companies do?
Some organizations are starting to tackle this. In Episode 434, The Economic Imperative of Affordable Childcare, I talked to Nicole Riehl of the Executives Partnering to Invest in Children in Colorado (EPIC), who are winning state funding for companies building on-site childcare facilities. It’s an amazing initiative that needs to happen on a larger scale.
Here’s an example of how impactful this can be. UPS launched an emergency daycare pilot program for their night shift workers, and it was so popular that they expanded it to other shifts and facilities. A total of 80% of eligible employees took them up on this benefit, and as a result, their turnover rate dropped from 31% to 4%. If that’s not a sign that this is an essential service, I don’t know what is.
Be sure to check out the full episode—it’s less than 20 minutes long despite all the ground we cover—to hear about even more numbers and impacts surrounding this country’s childcare crisis.
If you’re a parent, I want to know about your childcare experience. What are costs and availability like in your area? Do you know of government or company initiatives working to improve the situation? Weigh in on the Courage Community on Facebook or our group on LinkedIn.
Related Links From Today’s Episode:
Episode 424, The Jobs of America’s Next Silicon Valley
Episode 434, The Economic Imperative of Affordable Childcare
EPIC- Executives Partnering To Invest In Children
Episode 463, a Different Approach to My Second Maternity Leave
Episode 479, America’s Parents Are Not Okay
Child Care and Development Fund (CCDF) Program
How Much Childcare Costs by State in the USA in 2024
Over Half of Families are Spending More Than 20% of Income on Child Care
How Child Care Disruptions Hurt Parents of Color Most
U.S. Child Care Crisis Is Holding Back The Workforce
$122 Billion: The Growing, Annual Cost of the Infant-Toddler Child Care Crisis
UPS Expands Emergency Day Care After Pilot Program Cuts Turnover
Atlanta Mayor Andre Dickens Joins UPS CEO Carol B. Tomé at the 2023 UPS Impact Summit
TAKE ACTION and advocate for affordable childcare
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[INTRO MUSIC IN]
EMILIE: Hey, and welcome to the Bossed Up podcast, episode 489. I'm your host, Emilie Aries, the Founder and CEO of Bossed Up. And today I want to talk a little bit about our nation's childcare crisis.
[INTRO MUSIC ENDS]
I know I've sprinkled this in throughout a few different episodes over the past year, notably last December, a Christmas day episode in 2023 called the Economic Imperative of Affordable Childcare with Nicole Riehl all about some of the actions that private sector businesses are taking to solve for this crisis, especially here in Colorado. And I also mentioned childcare costs being a huge consideration for my maternity leave and how I'm approaching preparing for baby number two.
But today I really want to dig into reframing this issue as something that just impacts women and families into what is actually a huge workforce crisis, which is impacting negatively private businesses and all kinds of employers who are looking to retain and develop talent.
So first of all, does everyone really understand what parents are actually paying for childcare these days? Because I know parents certainly feel it, but I don't even know if like there's widespread awareness of how outrageous the cost of childcare is. I think the person who sums it up best is comedian Steven Haas, who has this little bit of standup that's gone viral on TikTok and elsewhere. And he makes a really good point. Take a listen.
[STEVEN HAAS AUDIO BEGINS] I also just, I can't afford kids. Do you guys know about the price of daycare? Do you guys know what's going on, how expensive this is? I think to put it into perspective, if I had never heard of the storming the capitol and you showed me that footage, I'd be like, oh, this is about the daycare thing, right? [LAUGHTER] These are the parents about the daycare thing. It's so expensive. It's actually cheaper to just buy your child his own apartments and take him there every day. [AUDIO CLIP ENDS]
EMILIE: He's not wrong. It is actually cheaper to buy an apartment and rent an apartment than it is for daycare on a monthly basis in a lot of these places, a lot of cities in particular, the Economic Policy Institute ranks the top 10 states and districts with the highest childcare expenses for preschool, infant care and daycare. And these are averages. So keep in mind, like 50% of people are paying more than this. So these are averages. My former city, Washington D.C. ranks number one, coming in at $24,243 a year. Again, this is for one child in full time child care. That comes out to about $2,020 bucks a month. Massachusetts is not far behind at $20,913 a year or $1,743 a month. California, $16,945 a year or $1,412 a month. And the list goes on. Minnesota, Connecticut, New York, Maryland, Colorado is right there at 15 grand a year per kid.
And I'll tell you, I'm paying a lot more than that just for Max's full time care. And frankly, yeah, could you afford an apartment? You can get like a one bedroom or a studio at least in a lot of these places for those prices. Truly my son Max is in full time ECE or early childhood education, which has been wonderful for him and he's really thrived in. We pay about $1,700 a month for him, and then we're looking at another two grand, $2,500 maybe a month for full time care for our infant, in the year ahead, which if you add that all up, that's over four grand a month in childcare expenses alone, or just under $50,000 a year.
And I share this, not to like, grotesquely brag at how disgustingly expensive that is, but I share that because we are not exceptional. Like, this is the norm for families like ours in Denver with two kids in full time care. And as Neil Labtja Duculo wrote in a recent article for the Illumine app, all about childcare costs broken down state by state, quote, “childcare costs in the United States are not affordable for families anymore. Most U.S. families who make the median income cannot send their infant or toddler to daycare. It's not because they don't want to. It's because the childcare costs by state have risen so substantially.” And so if you're making 50 grand a year, you got two kids under five, it's like in one hand out the other to keep working.
And I totally respect people's choice to go home and stay home and exit the paid workforce, whether you're a man or a woman, to provide full time care to your own children, if that's for you. To be clear, that is one of the most stressful jobs out there. It is definitely more stressful than a lot of paid workforce positions. And some would argue that it's an extremely isolating experience for stay-at-home parents as well. It's certainly not for me, but I respect people who want to make that choice so long as it's a free choice. And my big beef with this situation is that economically it's not really a free choice.
Parents are not making that choice because they want to stay home necessarily, it's because there's no affordable alternative. Of parents surveyed in the 2022 Cost of Care Survey, 72% say that center-based care for their infant costs 10% of their family's income. 72%. 51% of respondents spend more than 20% of their income. So the Department of Health and Human Services considers affordability when it comes to daycare, considers it affordable when you are spending no more than 7% of your household income. So that's like less than 20, or just over 25% of people with kids in daycare are experiencing an affordable option.
Since 1990, and I referenced this chart in my maternity leave podcast back in the summer and I'll definitely include it in this blog post as well, because you have to look at this chart to believe it. Just so we're putting this in perspective, this is not how it always has been, right? Since 1990, the cost of daycare has risen 214% faster than any other other household expenses. Faster than the cost of housing that we agree is astronomically growing. Faster than the cost of groceries, which is also impacting families bottom lines, the line that demonstrates how fast childcare expenses has grown is so much steeper than housing and groceries and all of the consumer price index.
So there is this article in the New York Times I was reading last night. Now, to be clear, I am 37 weeks pregnant right now. I'm recording this back in September right before baby number two hopefully arrives, any day now. And I was up from 2 to 4 last night just awake and reading the New York Times on my phone. There was this op-ed that is just so offensive to me. It's an opinion piece by Jessica Gross called Parenting Has Always Been Hard and honest to god, she never even really touches upon the cost of childcare. The entire piece is talking about how the 1950s were hard too. And I'm like, yeah, we agree with that. But it's not the same kind of hard.
Like the experience of parents today is not similar to the experience of parents 20 years ago or certainly not 50 years ago. Were there different stressors and constraints, particularly on women, and particularly on women's economic freedom? Sure, women are definitely earning more than they were before. But the cost of childcare to me is just such a glaring exceptional stressor that explains why American parents are not okay. As I podcasted about recently. So the cost of daycare, especially for children under five, has the potential to really disrupt family finances, family well being, and careers, disproportionately impacting women's careers in particular.
So what is the impact on the paid workforce of all of these macro trends is that parents and women in particular, mothers in particular, are being forced to drop out. According to an interesting article in Forbes, 2 million parents every year were left with little choice but to reduce their role in the labor force even before the COVID-19 pandemic. And those challenges are exacerbated for black and multi-racial parents who experience job disruptions related to childcare problems at nearly double the rate of white parents. So childcare instability, a lack of access, like the wait lists in Denver are a year long, like a lack of affordability, childcare in and of itself as just a huge stressor, is responsible for workplace disruptions, career disruptions, job disruptions for all kinds of parents, but disproportionately so for parents of color. And According to the U.S. Bureau of Labor Statistics, as many as 100,000 Americans have been forced to stay home from work each month because of childcare problems. That economic toll amounts to $122 billion dollars each year in lost earnings, productivity and revenue.
So this is impacting our workforce in a very big way. And when you think about labor shortages that are still impacting certain industries or just disruptions in terms of employee engagement and employee productivity, this is a big underlying systemic stressor. So what are employers doing about this? What can employers be doing about this?
One is providing affordable, accessible, on site childcare for their employees. This is the argument that EPIC Executives Partnering To Invest In Children is making here in Denver. That's Nicole Riehl's organization, who I interviewed back on episode 434, which is definitely worth a listen. And here's a great example that was profiled in this Forbes article as well. UPS, the shipping company UPS announced that it would expire expand its on site childcare initiative to many more of its workers. First having provided emergency daycare services during a pilot program last year when they offered the benefit to employees who were working a night shift at a facility in Northern California. The need is so evident now that UPS is offering this initiative to even more workers at the California site, as well as workers in Pennsylvania, and have plans to expand the service to additional facilities next year.
During their pilot program of the new daycare service offered by UPS, 80% of eligible frontline workers took advantage of the benefit, which goes to show you how needed it is. And as a result, the company avoided more than 120 unplanned absences and saw a remarkable drop in employee turnover from 31% to 4%. So when we talk about making the case for investing in affordable, accessible childcare, there is a very strong business case here when it comes to reducing the cost of attrition for your workplace.
I want to see a lot more businesses take the lead on this and I want to see a lot more state governments and, hello, the federal government maybe one day, someday, please and thank you invest in incentivizing these programs. Colorado, as Nicole talks about in our episode 434, Colorado as a state is offering financial incentives for private employers to establish on-site child care centers so that the state is basically helping infuse some finances into that endeavor and then also creating, you know, market incentives for that to happen, but letting the private sector run the process.
Similarly, another benefit that companies can provide and are increasingly doing so when it comes to attracting and retaining top talent is providing a benefit to their employees in the form of childcare stipends. This is simply money that they give as part of their benefits package to parents of all kinds to help cover the cost of child care. So that can be really helpful as well, but, it's not very useful if you're living in a childcare desert, which so many people are.
I'd like to see more systemic solutions on this. I'm optimistic and hopeful that we can talk more about national funding for childcare. We know the government invests billions of dollars in all kinds of emerging sectors like clean energy. And in the semiconductor industry, we saw the Chips and Science Act get passed by the Biden administration in fusing a ton of money into becoming a semiconductor nation, a chip building nation, for the sake of our financial security, but also for national security initiatives. So we're less reliant on Taiwan if in case things go down with China and in the form of like a World War 3, which you can learn a lot more about in an episode that I did over a year ago now called The Jobs of America's Next Silicon Valley 424, episode 424, all about the Chips and Science Act.
So look, this is a thing the government does. It's common for the US Government to financially invest in emerging sectors to create millions of new quality jobs along the way. Why not the childcare sector? The childcare sector is a part of our private economy. It's a business sector. It has wacky incentives right now in that parents are paying through the nose if we're lucky at all to have access to childcare. But because the ratios of providers to 2 year olds is so high and the labor costs are so high. The result is that people aren't on the childcare business side of things. They're not really raking in the cash either. Even though parents are paying through the nose, childcare workers are not making good money. They're not making living wages. That's why their rates of turnover and attrition are horrible, too. So that screams to me that this is a private sector that is fundamentally broken and would deeply benefit from financial investment from the public sector.
So that's my rant of the day. I'm not trying to, like, paint a bleak picture because I think having kids is awesome. I'm really enjoying being a mom, and I wish it was more affordable. I wish it felt like you didn't have to be independently wealthy to have children in America these days. But that's how it feels. It feels like a privilege, and it feels like an economically risky move for people to take to have children, to procreate, to continue the human species. And so, is it any wonder that we have a plummeting birth rate not only in America, but globally right now? I just, I wish that the joys of parenting weren't tarnished by the financial cliff that comes with parenting that makes the rest of life feel so impossible.
And when I say the financial cliff of parenting, I'm really talking about childcare. Nothing else about raising kids is nearly as stressful as the cost of childcare. And I think people really need to understand that and know that, otherwise it just sounds like, oh, yeah, you know, when I was raising kids in the 80s, it was hard too. No, things are fundamentally different right now, and we need systemic solutions. So if employers care about retaining and developing moms and all kinds of parents in the workforce, this is an issue employers and workplaces need to get on board with.
So if you want to take action, head to bossedup.org/takeaction. You'll see some of our policy priorities that we're advocating for here at Bossed Up, including access to affordable care and national paid family and medical leave, which I didn't get into today, but I hope you can see is very related to this. Thank you for listening.
Share this episode with the people in your life who might not know what's going on with parents these days, especially with parents of young children, children under five, where you're kind of in this chasm before you have access to public school or public preschool options, if you're lucky. Because I just want to raise awareness of how much of a workforce development issue the cost of childcare is.
Thank you as always for listening, sharing, rating and reviewing. And tell me how this lands with you.
[OUTRO MUSIC IN]
If you're navigating this too, share what your experience has been like when it comes to navigating career and childcare. As always, let's keep the conversation going in the Bossed Up Courage Community on Facebook or in the Bossed Up LinkedIn Group. And until next time, let's keep bossin’ in pursuit of our purpose and together let's lift as we climb.
[OUTRO MUSIC ENDS]
