Child Care Costs Have Increased 41% Amid COVID-19

Child care costs were already high pre-coronavirus pandemic, but they’ve only gotten more expensive. Amid the pandemic, center-based child care costs have increased by 41%, or $14,117, up from $9,977 pre-pandemic.

LendingTree team analyzed data from the Center for American Progress and Child Care Aware of America to find the costs for center-based child care providers and how these costs are impacting households during the pandemic:

• Center-based child care costs have increased 41% yearly per child (a $4,140 increase) compared to pre-pandemic costs, which could be causing added strain on household budgets as those costs get passed on.
• Georgia, Florida and Louisiana have seen the largest increases to child care costs for children ages 3 and 4 — an annual average of at least 144%.
• Parents in Indiana and Vermont are feeling the impact most, with 20% and 19%, respectively, of household income going to center-based child care costs

A 2020 LendingTree survey found that more than half of parents with young children were in debt because of the coronavirus crisis. The crisis is costing center-based child care providers an additional 41% yearly per child compared to pre-pandemic costs, which could be causing added strain on household budgets as those costs get passed on.

Cost increase per child for center-based care providers amid coronavirus pandemic

Here’s a state-by-state breakdown:

A large cost for care centers is staffing. In fact, personnel expenses account for about 70% of a child care provider’s total budget, according to the Center for American Progress. Those costs have increased as the pandemic has continued. Of course, there are added costs of conforming to COVID-19 guidelines.

“Keeping kids safe during a pandemic isn’t cheap,” said Matt Schulz, LendingTree’s chief credit analyst. “So much more is being required of these centers during the pandemic, and these new, tougher safety guidelines from governmental agencies have forced them to ramp up their spending in order to comply.”

Social distance guidelines may also have shrunk the capacity for many child care centers. That can translate to less revenue per child — so an increase in cost per child makes sense. “Many day care [centers] have few options other than raising costs for parents in order to recover some of that lost revenue,” Schulz said.

There are some widespread differences — by state — in the cost increases per child for center-based care providers for both infants and toddlers, as well as 3- and 4-year-olds:

Cost increase per child for center-based care providers (by age group)

For the most part, costs increased more for center-based providers taking care of 3- and 4-year-olds, though some states saw a larger increase for infants and toddlers. Overall, the costs per child for these centers — looking at both age groups — have increased by 47% during the pandemic. But location also has a large impact on the increases.

For example, District of Columbia care centers had the smallest annual increase in costs for 3- and 4-year olds and the second-smallest yearly increase for infants and toddlers. However, D.C. also had one of the highest pre-COVID-19 child care center costs per child, at $15,576.

Meanwhile, center-based care providers in Ohio and Louisiana saw the largest yearly increases per child for infants and toddlers, with an average increase of more than 90% for each. Of interest, Louisiana had the lowest pre-COVID-19 child care center costs per child, at $6,546, but that figure jumped to $13,810 per child amid the pandemic — nearly $6,000 per child more than the lowest state (South Carolina, at $7,956).

Indiana and Vermont top the list, with 20% and 19%, respectively, of household income going to center-based child care costs.

States with the highest center-based child care costs as a proportion of income

Looking at the other end of this list, five states tied for the lowest percentage (11%) of income toward care, including New Jersey, Kentucky and North Dakota. Interestingly, even though households in these states pay the smallest percentage of their income toward child care, they soon may experience larger increases to their child care bills — the average care center costs increased over 50% in those states. Those rising costs can create issues for parents who want, or need, to keep their kids in day care.

“For many parents, removing a kid from their day care is the last option they’d want to consider, especially if the kid is thriving, learning and making friends there,” Schulz said. “Still, you may not have a choice. If you simply can’t afford your current child care anymore, shop around. You might be able to find a new center that works for you.

“However, the unfortunate reality for many American families is that one of the few realistic ways to reduce costs on child care is to have one of the parents stay home with the child full time.”

How to budget for child care amid the coronavirus crisis

Making changes to your child’s daily care situation is always tough — but it’s especially difficult now, when factors like safety and increasingly high costs play a more significant role. For those who don’t have any options, here are some steps that can help make child care a reality:

• Look for areas to trim back: “If you can’t reduce [child care] costs significantly, your best move may be to try and budget for the extra costs,” Schulz said. “Depending on how much the child care costs have risen, you may simply need to cut back on some extras, such as streaming services or takeout, or you may need to cut more deeply.”
• Consider increasing your income: Look into other opportunities to make money — if possible using your existing skills. For example, freelancing or getting a local part-time job can be great options. Make sure you have enough time to dedicate to that job to make it worthwhile.
• Ask if there are ways to lower your child care costs: As with any necessity, asking if there are options for lowering payments is something to consider. Explaining your circumstances, like a job loss or reduced hours, can work in your favor. With smaller facilities, offering skills — like bookkeeping or building a website — may provide a way to barter for lower costs.
• Consider debt consolidation: If you have existing debts, a debt consolidation loan can be a good option to lower your monthly costs, provided you have solid credit. However, keep in mind that this can increase your long-term costs, so weigh the pros and cons before going forward.
• Check with your state for child care grants: Many state governments have recognized the immense toll that the pandemic has had when it comes to child care, enacting financial assistance programs to help families manage. The level of assistance and qualifications will vary by state, but it’s still worth considering if you’re having trouble paying for child care amid the crisis.

Methodology

LendingTree researchers analyzed a September 2020 report from the Center for American Progress on costs for center-based child care providers.

2019 household child care cost data is via Child Care Award of America. Cost estimates were averaged across states and compared to average 2019 incomes for households with children younger than 5, via the U.S. Census Bureau.

For this study, infants are younger than 1, while toddlers are 1 or 2 years old.