It’s becoming markedly more expensive to run a child care business. And as public funding fails to keep up with inflation, those costs are getting passed on to families that in many cases can’t afford to pay more.
Those are some of the main findings of a new report by the National Association for the Education of Young Children, which earlier this year surveyed more than 7,000 early childhood educators from a variety of early learning programs across the country.
The cost for food and supplies has increased the most, providers say, followed by maintenance for facilities and liability insurance. Child care programs have long reported challenges obtaining and affording liability insurance, which is required for child care centers in many states.
In an attempt to stabilize their businesses, 65 percent of the center-based providers and 31 percent of the home-based providers reported increasing tuition over the past year. Many families cannot afford to pay more, however. A study released in January by LendingTree found the average annual cost of child care for an infant and a 4-year-old is more than $28,000 a year, meaning a family with two children would need to earn more than $400,000 to have child care account for 7 percent of less of their household income, a federal metric for affordability.
“There is a significant gap between what parents can afford and what early childhood educators need to live,” NAEYC CEO Michelle Kang said in a statement. “As public funding stagnates and costs keep rising, more early childhood educators will leave the field, and more programs will close—with lasting consequences for children, communities, and our economy.”
These findings add to growing concerns around the stability of the child care industry post-pandemic. In anticipation of federal funding cuts to programs such as Medicaid and the Supplemental Nutrition Assistance Program, also known as food stamps, some states are making up for a budget shortfall by slashing state funding for child care.
More than half of program leaders who were surveyed by NAEYC said they have seen consequences from raising tuition, including an increase in families leaving their programs. Sixty-one percent of respondents said their programs are underenrolled because so few families can afford to pay.
In Philadelphia, Mary Graham, executive director of the early learning program Children’s Village, said liability insurance has skyrocketed over the past few years, from $45,000 in 2024 to $62,000 this year. “I almost had a heart attack,” Graham said.
Costs for food, health insurance and worker’s compensation have also increased for the program, which opened in 1976, leading to a deficit of $200,000 this year.
It’s the first time the program has had a deficit in more than three decades. Graham prides herself on offering a living wage and benefits to her 76 full-time staff members, who care for children from infancy through school age. This year, however, she had to cut back on substitutes as well as the amount of money she was planning to put toward raising salaries. Despite an increase in children identified with disabilities in her program, she is unable to put an extra teacher in those classrooms to provide support. “Kids need it, but we can’t,” Graham said.
“It means we have to be more creative,” she added. “We do what we can.”
This story about the cost of child care programs was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.
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