Affordable Childcare: The States, Cities, and Counties That Have It

One year of childcare costs as much as one year of public college tuition. Or a Hyundai Elantra (not including car insurance). Or two-thirds of a minimum-wage worker's yearly earnings.

No working parent wants to cut back on hours or call timeout on their career because childcare is too expensive.

And the costs aren't limited to current wages lost. The long-term cost of each year a working parent spends out of the workforce to care for a child can be as much as four times a parent's annual salary.

If you make $75,000 and take a year off, you could be losing up to $300,000.

Even a modest earner can sacrifice half a million dollars in current wages, potential future wages, and retirement savings before their child gets to kindergarten. That's a huge dent in long-term financial health.

Which is why affordable childcare is so crucial.

Childcare during the coronavirus pandemic

The worldwide coronavirus pandemic has affected every industry -- but childcare has been hit especially hard. Many parents don't want to expose their kids to dozens of potential carriers. Others are working from home and are trying to save some money by taking a break from their regular childcare.

But not everyone is closing down their childcare centers. There are still plenty of center- and home-based childcare facilities that are open. Many stay open because they can't afford to miss even a week of work. Others stay open because healthcare workers, other essential employees, and some parents who really need to get work done are still using childcare.

Even so, Congress has included a great deal of support for childcare providers in the CARES Act. The Act also includes support for parents -- you no longer need to make less than 85% of a state's median wage to qualify for childcare assistance.

In short, childcare is still an extremely important industry, even as many parents keep their kids home. With the burden placed on frontline healthcare and other essential workers, it might be more important than ever.

(If you need financial help during the pandemic or you want to know how to best manage your money during a crisis, check out our coronavirus resource hub.)

What does it mean for childcare to be affordable?

Whether childcare is affordable is a function of the cost of care and the median income for a family with children.

In September 2016, the Department of Health and Human Services set the benchmark for affordable childcare costs at 7% of family income.

This benchmark was created under changes to the federal Child Care and Development Fund Program, which is focused on providing high-quality childcare for children in low-income households that bring in less than 85% of the state median income.

Some low-income families may be able to put more or less than 7% of their income toward childcare, and 7% isn't necessarily an affordability benchmark for middle- or upper-income families.

How we calculated childcare affordability

Using data provided by Child Care Aware, an organization that advocates for high-quality and affordable childcare; the U.S. Census Bureau's American Community Survey; and an Economic Policy Institute analysis, we've looked at every state and metropolitan area in the United States to determine where childcare is the most affordable.

All amounts are for a two-parent, two-child family. The average American family with children has about two kids, so these figures speak to a common situation. It also lets us combine measures of infant, toddler, and school-aged childcare, which vary in price.

Keep in mind that this analysis doesn't measure the quality or value of childcare. Quality of care is an important factor that any parent will want to consider before choosing a childcare provider.

A note on center-based and home-based childcare

There are two types of childcare in these figures: center-based and home-based.

Center-based childcare is provided in a commercial setting -- Kindercare and Bright Horizons are two popular examples.

Home-based care involves bringing your kids to someone's home where they provide childcare services.

In general, center-based childcare is more expensive. So the type of care you're looking for can make a big difference.

The most affordable states for childcare

The table below shows the percentage of annual income a two-parent family can expect to spend on care for two children (an infant and a four-year-old).

Here's what those numbers look like laid out on a map:

The most affordable cities for childcare

We looked at childcare affordability in metropolitan statistical areas (MSAs) around the country. These population-based census areas may encompass a single city, multiple cities, or a whole county. Broadly speaking, three factors influence the affordability of childcare:

• Affordable real estate. Commercial childcare facilities have to pay rent. They're often in more expensive areas of town near job centers. Home-based childcare providers incur real estate costs, too. When real estate costs less, childcare can go down in price as well.
• Affordable labor. Some sources say that early childcare providers are seriously underpaid. We're not weighing in on whether childcare pays a living wage in these areas. We're just saying that lower labor costs help keep childcare costs down.
• Lower staffing requirements. State regulations, children's ages, and the type of care center determine how many young children a licensed provider can be responsible for. In Louisiana, which takes 14 of the top 100 spots, the ratios range from one staff member per five infants under one year and increase up to one staff member per 15 children for five-year-olds. In pricier California, the state requires one staff member per four infants under one year up to one teacher per 12 preschoolers.

The table below is based on annual costs for a family with two adults and two children. The EPI calculated the cost of childcare differently at the city and state levels, however. The numbers below numbers are based on the cost of care for four-year-olds and school-age children.

If the city or MSA is in an urban area, childcare costs reflect the cost of center-based care. If the MSA is in a rural area, childcare costs reflect the cost of family-based care.

How to save money on childcare

In California, center-based care for an infant and a four-year-old ($27,654) is much more expensive than home-based childcare ($20,593). One way parents may be able to save money in expensive areas is by using home-based care.

This cost savings is one reason why moms Erica Mackey and Elizabeth Szymanski cofounded MyVillage, a home-based childcare franchise in Montana and Colorado. Colorado is one of the least-affordable states for childcare at No. 45, while Montana is smack in the middle at No. 25.

When both women faced long waitlists for quality childcare programs near them, they were inspired to work toward a solution. Mackey said some problems that make childcare unaffordable are restrictive zoning laws, homeowners association rules, and lack of childcare providers.

To meet her own family's childcare needs, she said, "my husband had to cut back to half-time, and we had to put together a patchwork of providers to meet our scheduling needs because no providers could accommodate the full-time infant care we needed. It was hugely expensive."

Another option many people may not be aware of is hosting an au pair. Graciela Tiscareño-Sato, president of an educational publishing company called Gracefully Global Group, told The Ascent that she and her husband hosted au pairs from Peru, Panama, and Germany for eight years until the youngest of their three children started first grade.

"Hosting an au pair means never worrying about getting into a crowded daycare facility or a nanny not arriving in morning because the car broke down," she said. "And because the au pair program is regulated by the State Department, rules are clear for all parties, conflict resolution is built into the process, and the cost does not go up when you have second and third babies."

Affordable childcare is an issue for everyone

The often burdensome cost of professional childcare from birth to school age and beyond is an important issue in the United States, even for adults who don't have children or whose children are past the age of needing care.

Children who are well cared for and well educated tend to have better life outcomes, including higher educational attainment, less criminal activity, better earning power, lower drug use, and lower blood pressure, according to James J. Heckman, a Nobel Laureate in economics and a professor at the University of Chicago.

Affordable, high-quality childcare benefits us all.

Sources

1. Baldwin, Dave (2018). Fatherly. "Why Does Daycare Cost So Much?"
2. Business Broker Network (2018). "A Map of the Average Child Care Costs By State."
3. California Department of Social Services (2019). "Child Care Center Capacity Requirements."
4. Department of Health and Human Services, Administration for Children and Families (2016). Federal Register/Vol. 81, No. 190. 45 CFR Part 98, Child Care and Development Fund (CCDF) Program.
5. Economic Policy Institute (2019). "Child care costs in the United States."
6. Heckman, James J. (2017). "There’s more to gain by taking a comprehensive approach to early childhood development."
7. Louisiana Administrative Code (2017). Title 28, Part CLXI. Bulletin 137. "Louisiana Early Learning Center Licensing Regulations", p. 22.
8. Madowitz, Michael, Alex Rowell, and Katie Hamm (2016). Center for American Progress. "Calculating the Hidden Cost of Interrupting a Career for Child Care."
9. Slovic, Beth (2017). PDX Parent. "PDX Parent Investigates: Why is child care so expensive?"
10. Thompson, Derek (2019). The Atlantic. "Why Child Care Is So Expensive."
11. U.S. Census Bureau (2019). "America's Families and Living Arrangements: 2019." Table AVG3. Average Number of People per Family Household With Own Children Under 18, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2019.