The Childcare Crisis No One Prepared You For
Why Daycare Is So Expensive - and What It Means for Working Parents
Hey y’all, happy Monday - before jumping into today’s post, I want to give a quick shoutout to Gareth at
for the chance to be a part of his ongoing series of dads writing letters to their past selves. It was a real pleasure working with him, and I’m grateful for the opportunity to share my creative side in a new space. If you haven’t had a chance to read it yet, I’d love for you to check it out — you can find it here:
Thanks again to Gareth for having me. Now, onto this week’s post!
As a new parent, you’ve got a lot on your plate. Adding a small human to your life brings more than joy and late-night cuddles - it brings bills. Hospital fees, higher insurance premiums, and an endless supply of diapers and formula. Then there's the time and energy - kids need constant attention, and it's more draining than you expected.
But you figure there’s relief ahead. There's a daycare down the street. In a few months - or maybe a year - your kid will head there. Life will get back on track. Just some paperwork, a waitlist, and monthly payments to set up.
Wait, how much is that fee?
It’s HOW much?
You expected childcare to be pricey. But this? This feels impossible.
Welcome to the reality of childcare in America.
Understanding the Costs: Childcare's Hefty Price Tag
For most parents, childcare costs in the U.S. are shockingly high. In 2018, the median yearly cost for childcare ranged from $5,357 to $17,171 per child, and costs have only gone up since then. Families typically spend anywhere from 8.9% to 16% of their income on childcare alone; and that's just for one child. This burden is so significant that in 16 of America’s largest cities, the average daycare cost actually surpasses rent payments.
These high costs affect families unequally. Lower-income families often spend a far larger share of their income on childcare than wealthier ones. For some families, the cost becomes so overwhelming that a parent might have to leave the workforce altogether, greatly impacting the family’s finances and career opportunities. In some cases, it’s stopping people from having kids at all. Childcare isn't just expensive - it's creating serious impacts for families and the economy overall.
So where does all that money go? With these high costs, you might think childcare centers are profitable businesses offering premium services. Surely ten grand a year is paying for top-class lessons, silk diapers and caviar at snack time.
Turns out, not so much. In fact, many childcares are barely scraping by. This begs the question: if families are paying so much, shouldn’t providers be thriving?
A Perfect Storm: Why Childcare Costs Have Skyrocketed
A combination of factors has driven childcare costs sky-high. First, the COVID-19 pandemic severely impacted the childcare industry, causing around 16,000 childcare centers to close between December 2019 and March 2021. Even before the pandemic, there weren’t enough childcare spots to meet demand, but these closures dramatically worsened the shortage.
Second, childcare providers often face a complex web of regulations, usually set at the state level. These regulations exist for important reasons: ensuring safety through background checks, proper staff-to-child ratios, and strict health standards. However, variations from state to state and rigorous enforcement can mean substantial added costs for providers. For example, different requirements around teacher qualifications and facility standards mean childcare centers must spend extra time and money just to stay compliant.
Insurance costs are another major factor. Premiums for childcare providers have increased significantly due to the risks associated with caring for young children and the potential for legal claims. Turns out young children are not what the insurance industry calls 'risk averse.' This adds yet another financial strain on childcare centers already operating on thin margins.
Those thin margins are driven by the final (but arguably most important) factor: labor costs. Like other industries, inflation and rising wages in competitive businesses have forced childcare centers to increase wages. Unlike other industries, however, childcare can't use technology or automation to significantly increase productivity to offset those costs. You simply can’t automate caring for children, and even if you could, most parents would understandably resist the idea of robots watching over their kids.
As a result, childcare providers must choose between larger costs from paying higher wages or risking turnover and burnout among staff, who have more options for higher paying work. All of this serves to further drive up operational costs and impact the quality and stability of care.
In short, there’s no one direct cause for the childcare cost crisis, it’s a bunch of different quirks of the childcare business model coming together at just the wrong time. This combination of factors creates ongoing stress for providers, caregivers, and families alike, making it clear we need practical and thoughtful solutions.
Exploring Solutions: How Can We Make Childcare Affordable?
Like any problem with multiple causes, finding solutions to childcare affordability isn’t straightforward. But several promising approaches could help ease the financial strain. Some improvements will naturally happen as we get further and further from the final echoes of the pandemic, but deeper structural issues will likely require intentional action.
One effective step could be offering and expanding tax incentives and direct subsidies to childcare providers to help manage operational costs like payroll, rent, and insurance. Additionally, governments might consider grants or low-interest loans specifically targeted to childcare businesses, particularly those serving disadvantaged communities.
Regulatory reform is another important option. By simplifying and standardizing state-level regulations, childcare providers could save time and reduce unnecessary costs. That said, this approach has its limits: parents are understandably cautious about cutting back on rules that are tied to their kids’ safety. Still, identifying and removing redundant or outdated regulations could free up resources that providers could then invest in hiring and retaining quality staff, which ultimately benefits families too.
Reimbursing or subsidizing the costs associated with licensing and training could also encourage new providers and staff to enter the market. Lowering these initial barriers would support both new and existing childcare businesses, enabling them to provide consistently high-quality care.
For families, expanding and simplifying existing tax benefits, such as dependent care credits and deductions and Flexible Spending Accounts, could provide much-needed relief. Introducing tiered subsidies based on income could also ensure that not only low-income but even some middle-income families receive meaningful support, making childcare more accessible for everyone.
Implementing these solutions would require coordinated efforts across various levels of government, as well as cooperation from private sector and community groups. While these suggestions aren't exhaustive, they represent important steps toward a healthier, more accessible childcare system.
Working Toward Affordable, Accessible Childcare
Addressing childcare costs isn't simple, and there’s no single fix for a challenge this big. But at its core, this isn’t just about economics or logistics - it’s about our kids. When we talk about fixing childcare, we’re really talking about investing in the next generation.
Affordable, high-quality childcare doesn’t just help families in the short term, and it doesn’t just help boost the economy by getting parents back to work. It lays the foundation for children to grow, learn, and thrive in safe and supportive environments. It gives parents peace of mind and helps communities grow stronger. If we want a better future, we need to start by making sure the youngest among us have what they need to succeed. That begins with treating childcare not as a luxury, but as a building block of that future.
"If we want a better future, we need to start by making sure the youngest among us have what they need to succeed." -- applicable not only for Daycare but also for Lifecare!
I have a question, Dylan -- What's the history of Daycare in your culture? In urban India, Daycare is a relatively recent phenomenon that has primarily emerged from the dissolution of the tradional 'joint family' system (something that we have discussed previously). For instance, amongst my peers, Daycare is the last option. But from what I know about your culture, it's not like that for you guys. That's why I ask about the origin.
Absolutely my pleasure Dylan. 🙏