The cost Americans are paying to provide childcare for their kids has risen dramatically since 2019, outpacing inflation overall, which has also risen substantially, according to the Bank of America (BofA) Institute.
The average childcare payment has risen by 32% since 2019 to $700 a month as of September, affecting middle- and upper-income households the most, according to data compiled by the BofA Institute. In that same time period, general inflation, as measured by the Consumer Price Index, rose 20% following a highly inflationary period since President Joe Biden took office in 2021, according to Axios.
“This could have a meaningful impact on consumers because over 12% of US households pay for childcare on a regular basis, according to the Department of Health & Human Services, and any further increase in prices would disproportionally weigh on families with young children,” the report from the BofA Institute reads. “According to a recent survey by Care.com, for parents that pay for childcare, 67% are already spending 20% or more of their annual household income on such services.”
Childcare-specific costs could rise even higher as the Child Care Stabilization Program in the 2021 American Rescue Plan expired on Sept. 30 and provided subsidies for childcare providers, presumably pushing down costs, according to the BofA Institute. Families with children are using their savings to pay for the higher costs, drawing from their savings at a higher rate than the general population year-over-year.
Cities like San Francisco and Seattle had the highest increase in childcare costs since 2019, while Charlotte and Miami saw smaller increases, according to the BofA Institute. Compared to this time last year, Tampa’s childcare costs rose the fastest at 12%, while New York saw costs drop by 2%.
Inflation has remained elevated since it peaked at 9.1% in June 2022, measuring 3.7% in both September and August, far from the Federal Reserve’s 2% target. In response, the Fed has raised its Federal Funds rate to a range of 5.25% and 5.50%, the highest rate in 22 years.
Economists have pointed to Biden’s economic policy, which features high-spending programs, as the cause of the inflation seen under his tenure. The president approved $1.9 trillion in new spending in the American Rescue Plan in March 2021 and signed the Inflation Reduction Act in 2022, which added $750 billion in new spending.
The White House did not immediately respond to a request to comment from the Daily Caller News Foundation.
Will Kessler on November 1, 2023
