Study shows two child household must earn $400k/year to afford childcare

https://www.lendingtree.com/debt-consolidation/child-care-affordability-study/

by toomuchtodo • 5 months ago

69 125 5 months ago

toomuchtodo3• 5 months ago

https://www.lendingtree.com/debt-consolidation/child-care-af...

cafard• 5 months ago

I am not in that market, but this seems implausible. My neighborhood is pretty prosperous, but I doubt that $400k/year is the standard. Yet kids do go off to daycare.

altairprime2• 5 months ago

400K gross before taxes is qty2. of $200k/yr which is IC4 or so, right? Seems plausible enough.

ALittleLight2• 5 months ago

Median family income in the US is a little over 100k. 400k to afford childcare is a ridiculous lie/error.

toomuchtodo3• 5 months ago

https://www.visualcapitalist.com/mapped-daycare-costs-by-sta...

Seattle3503• 5 months ago

They might be spending more than the recommended 7% of their income on childcare. That's where the 400k number came from.

AngryData• 5 months ago

I believe it can be pretty high, but $400,000 seems utterly ridiculous to me. You spend $100K per year per kid just for child care? You can hire a live-in nanny for that amount of money.

casey2• 5 months ago

Most families are in poverty with regards to childcare, they just don't realize it.

Sure you could keep a child alive on less, but to "raise" one involves a host of social social capital, enrichment, and cultural integration. Child care is ridiculously expensive because most attention is captured by frivolities (and companies abusing child labor).

Say you spend 10K a year on food, school supplies and some sport, unless your child becomes a scholar or athlete you have failed to raise them. You might have prevented obesity and built some amount of discipline, but you've prevented them from making connections outside school/sports. Do you think hiring a nanny would, over time, go most of the way towards raising your children? If so then $400,000 isn't ridiculous, if not then shouldn't it be higher?

Unfortunately more than 99% of children in America are chronically undervalued, parents have overly cynical beliefs about their children starting from ages even earlier than 4. By the time a child sees any real investment they are likely to just give it straight to the mag7

mbreese2• 5 months ago

The devil is in the details. The crux of the article is in these two lines:

Across the U.S., the average annual cost of care for an infant and a 4-year-old is $28,190, according to Child Care Aware of America. The U.S. Department of Health and Human Services (HHS) considers child care affordable when it accounts for no more than 7% of a household’s income.

It’s been awhile, but the $28k number seems reasonable. It’s more expensive in different areas and the article goes into the numbers by state. But the part where it gets difficult to see is the 7% number. You only require $400k/year if you cap child care costs at 7%. When my kids were in daycare, it cost significantly more than 7% of our income.

ggggffggggg• 5 months ago

If you pick 3% you need 800k/yr! Oh no!

Sadly most of us pay far more than 7%. Fortunately mostly that’s ok and it all works out.

(Except we will work until we die, but hey! Capitalism!)

freefaler3• 5 months ago

In every system from hunter-gather society, feudalism, socialism and capitalism you need to exchange your work for the products of the work of other people. No system will give you the ability to not work and get what you want.

The capitalism is the least bad one where there the correlation between "making something that people want" to the value you can keep to feed yourself.

silisili5• 5 months ago

With all due respect, why in the world does 28k sound like a reasonable number for care of a single child? That's more than many people make at a full time job.

tayo422• 5 months ago

Day care and pre schools charge like 2k/mo for full time care and 5 days a week.

redbluered2• 5 months ago

Cost of living for staff and lawful child to caregiver ratios. If you assume 1:4 or 1:5, that's around 100-125k per caregiver in tuition.

With reasonable overhead numbers (space, management, compliance, licensing, taxes, etc.), that's a poverty-level income for preschool teachers.

There is a strong argument for subsidies, at least in countries which have low birth rates and care about longterm social outcomes.

mbreese2• 5 months ago

I didn’t mean that it was a reasonable cost, only a reasonable estimate of the cost.

Childcare in the US is way more expensive than it should be. The costs are also highly location dependent with the coasts being much more expensive than the Midwest etc…

senordevnyc• 5 months ago

Isn't that the cost for two kids?

dagmx2• 5 months ago

Title should really clarify: “In the US”.

Childcare is much cheaper in other countries, even relative to the lower earning potentials.

Canada for example is working towards $10/child/day childcare https://www.canada.ca/en/employment-social-development/campa...

ETH_start6• 5 months ago

The cost is distributed across the people through taxation.

dagmx2• 5 months ago

Okay, and? Being cheaper in total, cheaper to the individual and generally amortized aren’t mutually exclusive.

timcambrant5• 5 months ago

Yes, which is great. Everybody pays so no one pays much. No one is poor from paying for other people's daycare.

theshrike792• 5 months ago

That's how a welfare state operates.

It's long term second-order thinking that people on the right side of the political spectrum tend to lack in my experience.

I pay taxes so other people can afford to have kids, they can stay home and give the kids a stable childhood. Then the kids will go to subsidised childcare (0-250€/month depending on income) and later to school where they have free school lunches and well-paid teachers.

Why? Because I'm getting old and when I retire we need people working and paying taxes so there's money to pay for MY healthcare and pension.

toomuchtodo3• 5 months ago

The society you exist in, and are enabled to generate income from, is paid for via taxation.

palmotea• 5 months ago

Childcare is much cheaper in other countries, even relative to the lower earning potentials.

Cheaper, or more heavily subsidized? It's an important difference.

For the record: I'm not opposed to subsidies, and think the US need them in a lot more areas (and a lot more government involvement in the economy, in general).

lawn• 5 months ago

With respect to healthcare it's both cheaper and subsidized.

timcambrant5• 5 months ago

It is both subsidized and cheaper but that word sort of implies parents (and especially non-parents) may be worse off in the end, which I think is an unfortunate way of thinking about these subsidies.

Given the cost of health and life insurance, unemployment insurance, paid vacation (4-6 weeks generally), healthcare (I once paid $32 for 5 weeks hospital care), paid parental leave, childcare, school and university, I am confident this more than makes up for the higher taxes. I believe people are calmer when the risk of living is low. No broken leg or depression will set us back financially, and if we have a few too many kids they can all go to college even if we don't earn much. And both parents can work (70% at least) while their kids go to daycare. This is at least an extra 5 years of salary compared to supporting a stay-at-home parent.

It might not be charming to brag about all our advantages, but as a European I really want e.g. Americans to know that there is another way. Life doesn't have to be about chasing money until you can afford to live.

bdangubic• 5 months ago

US collects your taxes and then spends it for Dept of War, Corporate Subsidies, Farming Subsidies etc etc....

The rest of the world collects taxes and spends it on their future, education, health, child care...

bot403• 5 months ago

In the Czech Republic women get a legally protected 3 year maternity leave. Enough time to get a child into preschool.

And you get a small monthly stipend per child during this time. It's small but it's something.

apparent16• 5 months ago

What does "legally protected maternity leave" mean? From your stipend comment it sounds like it's not fully-paid. Does it just mean your company has to offer you your job back when you want to return? What happens if the company has eliminated the roll/laid people off in the meantime? Can they not get rid of your position if you are on maternity at the time?

goalieca• 5 months ago

The 10$ a day program is double to triple that price and childcare spaces have become even more rare since that program launched and it’s because capacity has reduced and not usage. One of the issues with that is the increased control and administration to the point of local governments approving line items for these businesses.

tmaly• 5 months ago

If you cleaned up all the wasteful spending in the US, the government could make childcare affordable.

apparent16• 5 months ago

The chart claims that you need to make over half a million dollars a year ($516k) to comfortably afford child care in Minnesota. I'm sorry, that is absolutely ridiculous.

Dylan168073• 5 months ago

So where did this 7% number come from?

Another way to look at that is one parent brings in 100% of their income, and when the second parent wants to get a job they have to sacrifice 14% of their pay to get childcare while they're away. That seems low to me.

Another way to analyze this is to look at how many children a single worker has to take care of to hit the same pay. If childcare for 2 kids is 14% of a salary, and salary is half the cost of running a daycare, then you need 29 kids per childcare employee?? How is that supposed to work?

Edit: And yes I'm aware subsidies can exist but this hits an area where the subsidies are so high that the 7% number still needs explanation.

semi-extrinsic• 5 months ago

For comparison, I live in a Scandinavian country where childcare is subsidised, and here a family with two kids living at the poverty limit spends 8% of their income on childcare.

ETH_start6• 5 months ago

Baumol's Law suggests the money spent on less automatable industries increases as the economy becomes more automated, so I question if the 7 percent figure is either realistic or achievable, given childcare is highly resistant to productivity gains through automation.

jballanc• 5 months ago

When I was a young kid, my mother was a “stay at home mom”, which meant that she babysat the kids of 5 or 6 of the other families in our neighborhood where both parents worked. For me, it was a wonderful experience growing up having a ready-made group of close friends and my mother close at hand. It did mean that my mother effectively sacrificed her career (though she eventually went to work for my father as his office manager and was instrumental to his success), but I’m certain she was not charging $20k/yr/kid (or whatever the equivalent in 1980s dollars would be).

What Americans seem to only just now be waking up to is that lack of work/life balance, lack of family leave accommodations, and loss of community has a very real, very tangible dollar amount cost. I’m very, very tired of the knee-jerk response to every “socialist” proposal being, “yeah, that’s great, but how are you going to pay for it?”

How are you going to pay for not having family leave? How are you going to pay for not having universal healthcare? How are you going to pay for not having tuition-free college for all? These choices have a cost, and Americans are paying that cost every day!

gustavus• 5 months ago

I have 4 kids (all under 12) and make quite a bit less than $200k with me being the only provider in the home and although I wouldn't say we're exactly where I want to be financially I don't think that were completely bankrupt.

feverzsj• 5 months ago

Maybe buy less organic food, go to a public school and take public transit.

dangcensors4• 5 months ago

God forbid people have a traditional nuclear family where the mother raises and nurtures the children into competent adults.

catlikesshrimp• 5 months ago

God forbid men abandoned their families (children, wives) for selfish reasons. But they still do. It is not cool to be a single mother without a career, because you wanted women to be housewives by profession.

Take a tour in Afganistan. I heard they just enacted a law for beating housewives. https://htnworld.com/taliban-afghanistan-domestic-violence-l...

dangcensors4• 5 months ago

Those are mental gymnastics to justify extinction. There is nothing mysoginistic about the human reproductive and child rearing process that every generation of humans has followed from the dawn of our species up until about 20 years ago.

PostOnce2• 5 months ago

And then who pays the mortgage that now requires 2 incomes?

We are not building a society, we're building some kind of mass labor camp.

Which means eventually we're going to get a prison riot because people are tired of the conditions.

dangcensors4• 5 months ago

You're moving the goalposts. A child's own mother will always provide cheaper and higher quality childcare than a disinterested third party, regardless of the sorry state of our economy.

black63• 5 months ago

Not all mortgages require two incomes. Ones that do are evidence of the mortgagees getting out over their skis.

charcircuit2• 5 months ago

It's more affordable for a mother to care for her own children than paying someone else to do it for her.

timcambrant5• 5 months ago

Why not the dad? Only infants specifically needs their mother.

apparent16• 5 months ago

A couple reasons:

Moms often nurse past infancy, and once she's taken 18-24 months off work, it makes more sense for her to continue the pause.

On average, moms seem to derive more enjoyment from spending time with babies. I have some male friends who had almost zero desire to spend time with their babies/toddlers. I don't know many women who feel similarly (I'm sure there are some, just many fewer).

charcircuit2• 5 months ago

The dad is devoting his time to providing for the family.

loco5niner• 5 months ago

My wife is MUCH more nurturing, than I am. I'm glad she is taking on the role of caring for our children full-time. She is also homeschooling 2 of our kids at 3 and 4, and "has her finger on the pulse of our children's lives" as I like to say. I don't think she'd be able to do that with a full-time job, and I definitely wouldn't do as good a job as her. Also, if she had a full time job, she would still feel the drive to take on household and family tasks that would fall to the wayside if I were in charge of them, and frankly find herself overloaded. It's working well for us to fall into traditional roles.

silisili5• 5 months ago

I have so many thoughts on this from my own life experience. Latchkey kid, YMMV.

When I was a child, it was normal for neighborhood moms who didn't work to just watch kids for favors or a nominal fee. My memories are fuzzy, but I seem to mostly remember watching daytime TV soaps and eating PBJs probably more often than a child should.

Now that I'm older, I'm flabbergasted by regulations and costs for simple daycare. I've met numerous people who spend more on childcare than they make in a month. Not to sound trad anything, but that just doesn't make any financial sense to me.

I've no idea what the solution is. NM recently announced free child care, interested to see how that plays out. For everyone else... there's gotta be a saner solution.

samrus• 5 months ago

Out of curiosity, whay are the regulations? If you leave your kid with a friendly neighbor, what laws are you breaking? How would you get in trouble?

silisili5• 5 months ago

That I don't know exactly if it's just one on one, as I've not read up on it when it's a more personal relationship.

I do know that my own wife, who was home all day watching just one child, was open to taking on more for free, but regulations around it made it way more of a headache than it was worth. There are laws about how many kids you can watch, how long you can watch them, licensing, child to adult ratios, state visits, etc.

Basically, if you wanted to be open to watching 5 kids for a working day, doing so would be illegal in every state I've lived in.

Every state has regulations and laws that at face value most people would agree with, but together end up in a system where you have to pay thousands per month for a facility to watch a child.

apparent16• 5 months ago

Probably only kicks in for paid providers. There would be all sorts of laws around safety (making sure the areas are child-proofed, no dangerous items (knives, guns, medicine), background checks, temperature maintenance, emergency plans, etc.).

steve_adams_862• 5 months ago

If you leave your kid with a friendly neighbor

That's perfectly legal where I live, but... There are no friendly neighbours with that kind of time on their hands. My entire townhome complex of 34 units (ranging from 2–4 bedrooms each) has only one single elderly woman who's retired. Everyone else is young people in their 20s (working), or families with their own kids and—in all families but one—two working parents.

steve_adams_862• 5 months ago

In my kids' lives, I've spent about $160k on childcare. So crazy to think of how hard we've worked to not be with our kids. I'm going to guess my parents spent under $10k in all of my childhood, inflation adjusted.

This model doesn't really make good sense. On one hand, I'm glad my wife and I can have careers. On the other, I doubt I would care much if we lived in a society where we didn't need to so badly. $160k of childcare doesn't pay for itself.

wjekkekene• 5 months ago

Is this some American bullshit thing? There is no way that’s true in normal countries… here in a different part of northern hemisphere, we pay $100 usd per month 11 months a year…

em-bee14• 5 months ago

in this german article there is a table with numbers: https://moms-favorites-and-more.de/kosten-kindergarten/ (disclaimer: i wonder if that site content is AI generated. some details/inconsistencies don't add up)

first column is public or private, second is age, then lowest cost vs highest cost, and finally average.

highest overall is 18000€ per year for private childcare institutions for 1-2 year olds. thats more than 21000USD.

and that may still be subsidized and not include meals. it is also usually income dependent. so it's not american bullshit. what it is however is american lack for child support. the joke in germany on the other hand is that you need to apply for a space years in advance. possibly even before you are pregnant.

sceptic123• 5 months ago

Why is a loan comparison site doing this kind of research? Why would you trust this kind of research from a loan comparison site?

RickJWagner• 5 months ago

Wow. My wife and I have 3 kids, all went to college.

At the time the first was born, we decided she’d stay home and be a full time mother. She coached them through school and ACT prep, which brought academic scholarships for all 3.

We have friends where the couple both stayed at work. Maybe they take nicer vacations than we do, some sent their kids to more expensive colleges. Oddly, I retired before anyone from that group. Some say they can’t afford to retire.

Trad wife worked out for us. My daughter has a career and is entering marriage age, I’m conflicted about that. I hate for her to leave her career behind, but that’s the path that worked for my wife and me.

Study shows two child household must earn $400k/year to afford childcare

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