Child Care Eats Up 13% of Family Income, Treasury Says

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13 Percent

The Balance

That’s the share of income an average family devotes to child care if they have children under 5 and pay for child care, according to a new government report making the case for subsidies that would nearly halve that burden.

The 13%, based on a Census Bureau analysis of 2017 data, is too expensive for many families, according to a Wednesday Treasury Department report on the economics of child care. And as employers struggle to fill a record number of job openings, a lack of affordable child care coverage is a factor keeping workers, especially mothers, on the sidelines of the labor force, the Treasury said.

Democratic politicians are proposing an ambitious set of subsidies that would attack this problem on several fronts, including by capping child care costs for middle-income families at 7% of income, the threshold for “affordable,” the Treasury said, citing the Department of Health and Human Services. Costs averaged $10,000 for center-based care and $8,000 for home-based care in 2017, the Treasury said, citing the nonprofit Child Care Aware of America.

“The free market works well in many different sectors, but child care is not one of them,” Treasury Secretary Janet Yellen said in a statement. “It’s past time that we treat child care as what it is – an element whose contribution to economic growth is as essential as infrastructure or energy.”

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