Apr 16, 2024 - Economy

Why child care costs are soaring

Data: Bureau of Labor Statistics; Chart: Axios Visuals

The cost of day care and preschool rose 4.4% in March from the year before — outpacing the overall inflation rate, per the Bureau of Labor Statistics.

Why it matters: Rising costs are putting stress on families, with some spending at a slower pace and dipping into savings and, there's even some evidence that parents are leaving the workforce entirely.

State of play: The decline in pandemic-era child care benefits and rising wages for child care workers are part of the equation.

  • Last year, the median weekly wage in the industry was $635 — or about $33,000 a year. That's a 27% increase from 2019, even after adjusting for inflation.
  • And pay is still rising. Wages were up 4.8% for these workers in March over last year, according to analysis of pay in job listing data from the jobs site Indeed. That's compared to a 3.1% rise overall.

The big picture: This is hardly a story about high pay run amok — wages are still extremely low in the industry. Rather, child care providers are struggling to attract and retain workers in these low-paying jobs.

  • The end of pandemic-era benefits eliminated the cash providers were using to fund bonuses and higher pay for workers — pushing some to find other ways to pay employees, like raising tuition.

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