The cost of child care in the U.S. is rising at nearly double the pace of overall inflation, according to a new report by tax firm KPMG.
Between 1990 and April 2024, the cost of day care and preschool rose 263%, according to KPMG. The consumer price index, the government’s key measure of inflation, has increased 133% in the same time frame.
“The child care crisis, which was simmering prior to the pandemic, has come to a boil,” the report’s researchers said.
Diane Swonk, KPMG’s chief economist, told ABC News the high cost of child care is a key reason why Americans are downbeat about the economy, despite strength in other indicators like unemployment.
And while many companies have returned to pre-pandemic work patterns, Swonk said women are still disproportionately staying on the sidelines of the workforce because of child care responsibilities.
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The labor force participation rate of women with kids under the age of 6 was 69% in 2023. The rate of men in the same group was 95%.
“This is an untenable choice — a catch-22 — choosing between caring for and providing for your family,” Swonk said.
A separate report by the Federal Reserve found parents in the U.S. paid a median of $800 per month for child care.
A recent report has shed light on the alarming trend of child care costs rising at a faster rate than inflation in the United States. The report, conducted by the Economic Policy Institute (EPI), found that child care costs have increased by 41% over the past decade, while overall inflation has only risen by 17% during the same time period.
The rising cost of child care is putting a significant financial burden on families across the country. In fact, the report found that in 33 states and the District of Columbia, the average annual cost of child care for a toddler exceeds the cost of in-state tuition at a public college. This is particularly concerning for low and middle-income families who may struggle to afford quality child care for their children.
One of the main factors driving the increase in child care costs is the high demand for quality care providers. As more parents enter the workforce and seek reliable and safe child care options, the demand for child care services has surged. This has led to an increase in prices as providers seek to meet the growing demand.
Additionally, the report highlights the lack of government support for child care as a contributing factor to the rising costs. Unlike other developed countries, the United States does not have a universal child care system in place, leaving families to bear the brunt of the financial burden. This lack of support has forced many families to make difficult choices when it comes to child care, including opting for lower quality care or leaving the workforce altogether.
The EPI report also points out the impact of rising child care costs on women in particular. With women still shouldering a disproportionate amount of child care responsibilities, the high cost of child care can act as a barrier to women’s participation in the workforce. This can have long-term economic consequences, as women may be forced to forgo career opportunities or work fewer hours in order to care for their children.
In light of these findings, advocates are calling for increased government investment in child care to help alleviate the financial burden on families. This could include subsidies for low-income families, increased funding for child care providers, and policies that support working parents in balancing their work and family responsibilities.
Ultimately, the rising cost of child care is a pressing issue that requires attention and action from policymakers at all levels. By addressing this issue, we can ensure that all families have access to affordable and high-quality child care options, while also supporting women’s participation in the workforce and promoting economic stability for all.
