Cost of Childcare in the U.S. Is Rising at an Alarming Rate; What Does It Imply?
Welcoming a child into the family is one of the greatest and most joyous events for a couple. However, this may not be the case for couples who like to meticulously plan their costs. This is because a 2023 study by LendingTree found that the nationwide average cost of raising a child is $21,681 per year. This excludes college fees (one of the largest costs) and takes into account only costs like rent, food, clothing, childcare, transportation, health insurance, and state tax exemptions or credits.
Cost of raising a child in the U.S.
LendingTree estimates that the total cost of raising a child over 18 years is $237,482. This accounts only for the necessities, and it doesn’t include the cost of luxuries, nice-to-haves like vacations, or enrichment classes, which usually cost a lot for an average family. While the cost is staggering, LendingTree also estimates that it is growing at an alarming rate. As per the study, there was a 19.3 % jump in the cost of raising a child between 2016 and 2021. The cost of everything associated with a child like the cost of fancy strollers and formula has hiked for the current generation of parents.
The cost of raising children went up 20% over five years! According to a new Lending Tree study, rising prices for child care, transportation, food and rent contributed to the massive hike in costs. How are working families supposed to weather this storm? #stormingcaesarspalace pic.twitter.com/LjQyVD9EVx
— @StormingCaesarsPalace (@StormingCaesars) March 4, 2024
Apart from LendingTree, the USDA also tabulates its estimate of the cost of raising a child till the age of 17. While it uses many of the same parameters as LendingTree, it also includes room for miscellaneous expenses, like toothpaste, haircuts, and entertainment, as per a Good Housekeeping report. For 2015, which is the most recent year available, the total estimate for the cost of raising a child was $233,610, which experts believe comes out to be nearly $310,605, taking inflation into account, the report said.
What do parents think?
According to a separate LendingTree survey of 2000 consumers, about 75% of parents think that having and raising children has been far more expensive than they expected. Over half of the respondents, 55% admitted to going into debt to pay for child-related expenses. Furthermore, families with young children felt that the biggest financial burdens of childrearing are food, childcare, and clothing and clothing, which are all expected to get even more expensive in the future.
Childcare is expected to get more expensive
As per a Fox Business report, childcare is expected to get more expensive for Americans as an important pandemic-era relief program has expired. As per the report, Congress allocated $24 billion in emergency funding to help keep childcare providers afloat under the American Rescue Plan in 2021. However, that program officially expired last year, leaving childcare providers in a lurch.
Child care funds provided through the American Rescue Plan expired on Sep 30. 3M+ children & their families could lose access if Congress doesn't act now. We must listen to families & providers, lower the cost of child care, & pass $16B in funding. Together, we can #SaveChildCare pic.twitter.com/8Y0HvFgZ38
— Congresswoman Delia Ramirez (@repdeliaramirez) October 31, 2023
The Century Foundation estimated that 70,000 childcare programs could potentially close because of the funding expiration, resulting in 3.2 million children losing access to care. Furthermore, a study from the Bank of America Institute found that families with childcare payments have been dipping into their savings at a faster rate. The study indicated that the average childcare payment per household jumped over 30% since 2019 for middle- and upper-income families with income between $100,000 and $250,000 witnessing the biggest increase. This may even drive some parents out of the workforce to look after their children.