Childcare Costs Even More Than Rent in Most of the U.S.

Daycare costs are the biggest line item in many household budgets, Economic Policy Institute data show

Just when you thought rent was too damn high, more evidence now shows that childcare costs are too damn higher.

Among families with two children, the price of care exceeds rent in 500 of 618 areas, according to data compiled by the Washington-based Economic Policy Institute, a resource group that advocates for workers. Families in Binghamton, New York, are the worst off. There, childcare is almost three times as expensive as checks to landlords.

EPI mapped the disparities in housing and childcare costs, building on August research that tackled how family budgets could (or couldn't) handle those bills. The map below shows the amount of money a two-parent, two-child family would need to spend to live a modest life. The darker the blue, the higher the costs. 

Annual income necessary to secure a modest yet adequate standard of living for a two-parent, two-child family, 2014 Note: Data for all 10 family budget types and all 618 family budget areas are available via EPI’s Family Budget Calculator.
Annual income necessary to secure a modest yet adequate standard of living for a two-parent, two-child family, 2014 Note: Data for all 10 family budget types and all 618 family budget areas are available via EPI’s Family Budget Calculator.
Source: Economic Policy Institute Family Budget Calculator (Gould, Cooke, Kimball 2015)

A booming population of millennials, now entering prime child-bearing years, has added to demand for daycare that's outpacing supply. That's pushing those childcare costs up faster than overall inflation, and has some economists worried that either consumer spending or labor-force participation (already quite low) could suffer as a result.

Nationally, the costs of childcare and nursery school have surged 168 percent since the end of 1990 compared with a 76 percent increase in total consumer prices, according to the Bureau of Labor Statistics. 

In a large swath of the U.S., childcare costs also exceed that other hefty line-item on family budgets: college tuition. Residents in 33 states and Washington, D.C. pay more for infant care than for the average in-state college tuition at a public, four-year institution, EPI reported.

"Parents of an infant are going to be, on average, younger than the parents of a college kid so they're going to be earlier in their careers and it's going to be even harder for them to make these kinds of payments," said Elise Gould, EPI senior economist and co-author of the report. "It's not surprising that many women drop out of the labor force, so there are costs to this."