May 23, 2024 - Business

The folks aren't OK: Fewer parents say they're doing OK financially

The share of parents who say they're doing OK financially dropped significantly in 2023 while holding relatively steady for other adults, according to a new survey from the Federal Reserve.

Why it matters: "Parents are not OK" was a pandemic-era mantra, yet it seems just as apt today as parents deal with rising prices, particularly for child care.

Zoom in: The share of parents with kids under age 18 who said they were doing "at least OK financially" fell 5 percentage points last year to 64%.

  • The number is down 11 points from 2021, when many got a boost from monthly cash payments from the federal government.

The big picture: Parents' financial well-being has always trailed that of other adults. After all, they have to support all those layabout kids with no paying jobs who eat all their food (which is a lot more costly these days).

  • Now, the widening divergence may have to do with the increasing costs of child care. It's a huge expense for parents, close to what people spend on housing, which is the largest single monthly expense most people have.
  • Nearly 3 in 10 parents living with kids under 13 pay for child care; it's nearly 4 in 10 for parents of kids under 6.
  • Those not shelling out for child care are likely losing out on income to do it themselves. Mothers who were surveyed by the Fed "frequently said that they were not working for child care reasons," per the survey's authors.

By the numbers: The median amount parents paid for child care was $800 per month. For those using 20 or more hours a week, the cost was $1,100, according to the Fed survey.

  • That works out to between 50% and 70% of what folks spend on housing each month, per the report.

Stunning stats: The average annual price for two children at a child care center exceeded the cost of annual mortgage payments in 45 states, according to data out last week from Child Care Aware of America, which drills a little deeper than the Fed.

  • A single parent, earning the median income, would need to spend 32% of her pay to afford child care in 2023.

The bottom line: Rising prices are making people feel financially unwell— particularly parents who face an additional massive expense.

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