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Why child care is so expensive and how states are working to stop the bleeding

child care
Posted at 2:45 PM, Mar 21, 2022

If you have a child, you likely know how much it can cost to send them to child care. Some groups estimate the yearly investment can cost more than in-state college tuition, and for some families, it can surpass a family’s mortgage or rent payment.

That was the case with Alisha Anyan, who moved her two five-year-old boys and husband from rural Colorado to Utah because child care was more affordable there.

“Not only is it horribly expensive, but there was no availability at all, so we had to figure out a different route because we wanted our kids to have another year of preschool somewhere,” she said.

“A lot of local families for many years now have been pushed out of the community. They come here to work, and they haven’t been able to find child care,” added Liz Costaldo, executive director of Early Childhood Partners, a nonprofit that has been working to solve health care issues in Eagle County Colorado since 1995.

For years, childcare has gotten more expensive, and it is not because providers are doing particularly well themselves. According to the Urban Institute, the median wage for childcare workers in 2019 was $24,230, which is less than half of $56,850 it was for kindergarten teachers. As a result, 40% of early childhood providers find themselves on some sort of public assistance.

You would think with wages that low, daycare owners would be doing quite well, but with the rising price of rent, electricity, supplies and other costs, the average daycare turns a profit of $37,000 per year, according to the International Centre for Settlement of Investment Disputes.

“We can’t pay teachers enough because families can’t pay any more to make that happen,” said Costaldo. “And so, to retain people in the field, we need to be competitive with a livable wage and we’re not even close to that. Where does that go? That goes onto tuition which is really the only source of income.”

Last month, Costaldo worked with local officials to expand a program that would knock down some of those costs as they helped pay for rent any other expenses. It is one of the more recent programs in a long list of local initiatives to make child care more affordable over the past decade.

In 2013, New York Mayor Bill de Blasio helped implement free, universal pre-k for 4-year-olds across the city. Around the same time, Seattle passed Proposition 1B, which funded a citywide preschool pilot through a property-tax levy, and in Maryland, Montgomery County passed a law to expand child care and early education services.

The local measures have stopped the bleeding, according to Costaldo, but it has not fixed the issue, which she says will come from federal regulation.

Included in President Biden’s Build Back Better Act is legislation to cap child care costs at 7% of a household’s income for families that make up to 150% of their state’s median income. Families that make less than 75% of their state’s median income would pay nothing for child care.

The bill has passed a House vote, but not the Senate.