Jun 23, 2021 - Economy

America's child care sticker shock

Illustration of a fridge covered in fridge magnet letters spelling out "ka-ching"

Illustration: Sarah Grillo/Axios

Parents looking to return to the job market may find child care options have gotten pricier — and that's if they can enroll their kids at all.

Why it matters: The fate of the recovery partially relies on the return of parents who left the workforce to care for their children.

  • Federal Reserve Chair Jerome Powell told lawmakers on Tuesday the lack of participation by caretakers is holding back the labor market.

What to watch: An index that tracks day care and preschool costs has shot well above its pre-pandemic level. Its biggest monthly increase in two years happened last month.

  • Child care costs have been growing twice as fast as inflation since 2000, says Rasheed Malik, a policy analyst at the Center for American Progress.

Flashback: At the onset of the pandemic, massive under-enrollment helped push 1 in 10 child care centers to close permanently, Malik says.

What's happening: Higher costs for things like gloves for changing diapers and food for meals are getting passed on to families.

  • "Right now we have no choice but to go back to the paying parents [with price hikes] — those that don't qualify for any subsidy or child care assistance," says the National Childcare Association's Cindy Lehnhoff.

Another cost stems from the issue plaguing other low-wage industries: worker shortages. Child care centers are upping pay — by an average of $2 per hour — to lure back the exodus of child care workers, says Lehnhoff.

  • Staff shortages mean fewer slots for children, making a pre-pandemic problem even worse.

What to watch: The child care industry got over $50 billion in pandemic-era relief — with the biggest chunk set to be disbursed by states in coming months.

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