I am friends with a married couple in their early 30s, each a well-paid professional. The due date for their second child was Sept. 1, exactly the cutoff date for school entry where they live. The birth was going to be by C-section so they could schedule the delivery within a window of a couple of days on either side of the due date.
If they chose Sept. 2 or later, their child would be the oldest in his class when starting public school (a very good thing from their perspective). But, compared with a delivery on or before Sept. 1, they would have to pay for another full year of daycare. They agonized over the decision.
The real angst of my economically fortunate friends pales in comparison to the financial challenges and difficult choices faced by parents who don’t have much discretionary income but need out-of-home care for a young child. They, like nearly all parents, want their child to be in a safe and developmentally supportive environment when left in the care of others. But there are limits to both what they can spend and the options for care where they live. Their choices affect their children, themselves and the family unit. We know less about this than we should, starting with simple facts about how much people in different circumstances are spending on child care.
I’ve recently carried out analyses using a new federal database (the Early Childhood Program Participation Survey of 2016) to calculate hourly and annualized prices for parents who purchase at least eight hours a week of center-based care using their own funds for a child under five who does not have a disability. I examined how the price that parents pay is influenced by the age of the child, region of the country, parental education, parental income and hours of attendance.
Participation rates in center-based care vary dramatically by the age of the child, starting with 13 percent of children from birth to one year of age regularly attending a center-based program and rising to 66 percent of four-year-olds.
For the country as a whole, the median price of parent-purchased center-based care is $8,320 a year and $5.31 an hour. Families spend somewhat more in the Northeast and West, and somewhat less in the South and Midwest.
K-12 public education costs about twice this on an hourly basis, in part because public school teachers typically make much more than early childhood center staff, the government doesn’t have the spending constraints of families, and the K-12 dollar figure includes spending on services for students with disabilities.
Center-based care is thought to cost more for infants and toddlers than for older preschoolers because a larger staff is necessary to care for the needs of the youngest children.
Surprisingly, the differences in hourly price by age of child are small, e.g., a median of $5.53 an hour for infants vs. $4.72 for four-year-olds. However, annual costs for infants and toddlers are much higher than for older children, e.g., $10,400 for infants vs. $6,500 for four-year-olds.
The disparity between hourly and annual price is due to infants being in center-based care for many more hours a week than older children. For example, median weekly hours for infants who are in center-based care for at least a day a week is 40, whereas it is 24 hours for four-year-olds.
More affluent families are paying more in absolute terms than less affluent families — an average of $11,652 a year for families making more than $150,000, compared with $5,900 for families making $50,000 to $60,000 a year. To the extent that price is associated with quality and long-term outcomes, the disparity between affluent and poor families in the price paid for center-based care should be of concern.
At the same time, while paying much less than more affluent families in absolute terms, families at the lower end of the economic spectrum are paying far too much in relation to their income. The U.S. Department of Health and Human Services defines “affordable” child care as consuming no more than 10 percent of a family’s income. But families in all categories of income up to $60,000 a year are spending more than that, or about 17 percent for families making $20,000 to $30,000 a year.
It is clear to me both from the facts here as well as related research on financial subsidies for families that children, families and the economy would all benefit from greater support for the child care expenses of lower-income families.
The most efficient and useful way for the government to achieve this is through direct transfers to parents in the form of vouchers or credits that can be used by parents, somewhat like food stamps, to shop for what they need in the way of out-of-home care.
In this scenario, the government would have the additional responsibilities of assuring that basic standards for quality of care are met by providers, and that incentives and supplementary investments are made as necessary to match supply and demand.
Grover (Russ) Whitehurst is a senior fellow in economic studies at the Brookings Institution. He was the founding director of the Institute of Education Sciences at the U.S. Department of Education. His areas of specialization include early childhood programs and program evaluation.