ISSUE BRIEF

OCTOBER 6, 2015ECONOMIC POLICY INSTITUTE | ISSUE BRIEF #404

HIGH QUALITY CHILD CARE IS

OUT OF REACH FOR

WORKING FAMILIES

BY ELISE GOULD AND TANYELL COOKE

Introduction and key findings

I

n recent decades most Americans have endured stagnant hourly pay, despite significant economy-wide income

Union address, President Obama cited child care affordability as a key to helping middle-class families feel more secure

in a world of constant change (White House 2015). New York City Mayor Bill de Blasio recognized similar concerns

and released an interagency implementation plan for free, high-quality, full-day universal prekindergarten (NYC 2014).

High quality, dependable, and affordable child care for children of all ages is more important than ever, especially since

having both parents in the workforce is an economic necessity for many families.

This paper uses a number of benchmarks to gauge the affordability of child care across the country. It begins by explain-

ing how child care costs fit into EPI’s basic family budget thresholds, which measure the income families need in order

to attain a modest yet adequate standard of living in 618 communities. The report then compares child care costs to

state minimum wages and public college tuition. Finally, to determine how child care costs differ by location and family

composition, the paper reconstructs budgets for two-parent, two-child families in 10 locations to include the higher

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cost of infant care, compares these families’ child care costs to those of families without infants, and compares costs for

both family types with metro area median incomes.

Key findings include:

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015

Child care costs and EPI’s basic family budgets

Perhaps the best way to evaluate the affordability of child care is to determine the share of a family’s budget accounted

for by child care costs. Toward this end, this paper relies upon EPI’s Family Budget Calculator (Gould, Cooke, and

state, or local variations in prices (depending on item). Basic family budget measurements are also adjustable by family

type because expenses vary considerably depending on the number of children in a family (if any), and whether a family

is headed by a single parent or two parents. The 10 family types include one or two adults with zero to four children.

To estimate family costs, we assume one-child families have a 4-year-old, and that a second child is 8 years old, a third

12 years old, and a fourth 16 years old. (For more on the methodology used to construct the budgets, see Gould et al.

2015.)

The shares of expenses going to various categories vary substantially across areas and family types. Unsurprisingly, the

lowest family budgets are for a single person. Except for child care (in which case families composed of two adults

with no children also spend nothing), one-person families have the lowest expenses in every category. For example, they

require only efficiency housing and only need to purchase other items, such as food and health care, for one. Budgets

Child care costs are one of the most significant expenses in a family’s budget, largely because child care and early edu-

cation is a labor-intensive industry, requiring a low student-to-teacher ratio (CCAA 2014). Across regions and family

types, child care costs account for the greatest variability in family budgets. Monthly child care costs for a household

with one child (a 4-year-old) range from $344 in rural South Carolina to $1,472 in Washington, D.C.

In EPI’s family budgets, child care costs in metropolitan areas—which constitute over 90 percent of our family budget

areas—are statewide averages of the cost of center-based care. (For rural areas, which may not have easy access to center-

based care, the budgets assume family-based care.) Although center-based care varies in quality, it serves as the standard

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015

care costs range from $468 a month in Mississippi to $1,868 a month in the District of Columbia. Child care costs are

even higher for families with multiple children; in the District of Columbia, monthly child care costs for a three-child

household (with a 4-year-old, an 8-year-old, and a 12-year-old) are $2,784—nearly 90 percent higher than for a house-

hold with one child (a 4-year-old).

As a share of total family budgets, center-based child care for single-parent families with two children (ages 4 and 8)

ranges from 11.7 percent in New Orleans to 33.7 percent in Buffalo, New York. When comparing child care costs with

other budget components, the high expense of child care becomes even more evident. In fact, among one-child families

with a 4-year-old, child care expenses exceed housing expenses in 90 of 618 family budget areas. Among two-child fam-

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015

ilies with a 4-year-old and an 8-year-old, child care costs exceed rent in 500 of 618 family budget areas. For two-child

families, child care costs range from about half as much as housing costs in San Francisco to nearly three times housing

costs in Binghamton, New York.

Affording child care on the minimum wage

Affording child care is particularly difficult for families living off a minimum-wage income. By a wide range of measures,

ure B; Figure C depicts these shares for infant care costs.

In Hawaii, the state with the median state minimum wage ($7.75), annual costs for 4-year-old care are equal to 55.8

percent of minimum-wage earnings. This means a minimum-wage worker would have to work 1,162 hours—or full

time (40 hours a week) from January until July—to cover annual child care costs for a 4-year-old. In comparison, annual

infant care costs in Hawaii are equal to 74.4 percent of minimum-wage earnings. In other words, to pay for infant care

for a year, a minimum-wage worker in the state would have to work 1,548 hours, or from January until September.

Of course, in families with more than one child, these expenses are even higher. In two-child families, with an infant

and a 4-year-old, child care expenditures as a share of full-time, full-year minimum-wage earnings range from 62.9 per-

cent in South Dakota to 183.5 percent in Washington, D.C. (not shown).

Child care costs exceed college tuition in many states

average cost of in-state college tuition at public 4-year institutions in 24 states and the District of Columbia (as shown

in Figure D). Similarly, infant care costs exceed tuition in 33 states and the District of Columbia (as shown in Figure

E). Even when looking at out-of-state tuition at public 4-year institutions, which is significantly more expensive than

in-state tuition, college costs still do not dwarf child care costs.

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015

from $13,245 in Atlanta to $29,478 in Boston. As a share of total family budgets, these child care costs range from 19.3

percent in San Francisco to 28.7 percent in Boston. This compares with a range of 11.8 percent in San Francisco to

21.6 percent in Chicago for families with a 4-year-old and an 8-year-old.

We next measure these child care costs against what families actually earn. Specifically, as shown in Figure G, we com-

pare median incomes in these 10 areas to child care costs both for two-child families with an infant and a 4-year-old,

and for families with a 4-year-old and an 8-year-old. Even in Atlanta—the area in our case study with the lowest child

care costs—child care costs for an infant and a 4-year-old equal nearly 20 percent of median family income, almost

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015

care than the data imply.

EPI ISSUE BRIEF #404 | OCTOBER 6, 2015