WASHINGTON: Most U.S. families do not earn enough to meet the federal definition of affordable child care, according to a recent LendingTree analysis that compares household income with typical costs for two young children. Using the U.S. Department of Health and Human Services benchmark that child care is affordable at 7% of household income, the analysis found families would need to earn about $402,708 a year to keep average costs for an infant and a 4-year-old within that threshold.
The LendingTree study, which draws on U.S. Census Bureau income data and pricing benchmarks from Child Care Aware of America, put the average annual cost for care for those two children at $28,190 nationwide. It estimated that typical households with two children earn about $145,656, far below the income level implied by the 7% affordability standard, leaving many families paying a much larger share of earnings for full-time care.
Federal data show the strain extends beyond families with two children. The U.S. Department of Labor’s National Database of Childcare Prices, which provides county-level estimates through 2022, indicates families often spend roughly 8.9% to 16% of median income for full-time care for one child, depending on the child’s age and care setting. Those figures exceed the federal affordability benchmark and help explain why child care competes with housing and other essentials in many household budgets.
Child Care Aware of America’s latest national snapshot of 2024 prices reported an average annual cost of $13,128 per child, and found that amount would take about 10% of a married couple with children’s median income to afford. For a single parent with children, the organization estimated the national average price would consume about 35% of median income, illustrating how costs can escalate into a major financial barrier for households with one earner.
Child care costs outpace household budgets
The LendingTree analysis also highlighted large state-by-state gaps between what families earn and what would be required to fit child care into the 7% standard. It reported that in 20 states, the income needed for “affordable” care, as defined by the federal benchmark, was at least triple the average income among households with two children. Hawaii posted among the highest average costs in the analysis, while South Dakota was cited as the closest to the benchmark, though still well short.
Beyond price, many parents face limited options that can force difficult tradeoffs. Child Care Aware of America reported that in 45 states and Washington, D.C., the average annual price of center-based care for two children exceeded typical annual mortgage payments, and that in 49 states and Washington, D.C., the price for two children exceeded median annual rent payments. The group also found that in 41 states and Washington, D.C., infant center-based care cost more than in-state public university tuition.
Policymakers have continued to use the 7% standard as a reference point for affordability in public programs, even as advocates argue it can still be out of reach for many families. A federal rule published in 2024 revised Child Care and Development Fund requirements, including provisions aimed at limiting co-payments for families receiving assistance to no more than 7% of income and making it easier for states to waive or reduce co-payments for certain households, including some living near or below poverty thresholds.
Pressure on parents and the workforce
Researchers and analysts describe child care as a key cost driver for parents of young children because it is often paid weekly or monthly and cannot easily be deferred. LendingTree’s chief consumer finance analyst, Matt Schulz, said in the report that high child care costs can force families to make major sacrifices, leaving less money available for saving, paying down debt, or meeting other routine expenses. The affordability gap, measured against federal benchmarks, underscores how child care has become a defining expense for many U.S. households with young children. – By Content Syndication Services.