Are the Claims of Rising Child Care Costs Exaggerated?

Yes and no. It depends not so much on who you ask, but rather on who it is doing the asking. The short answer is that child care costs are rising fast—faster than inflation—but mostly if not entirely at the upper-end of the cost range. In other words, claims of skyrocketing child care costs are based disproportionally on higher-income households choosing to spend more on enhanced child care programs. Meanwhile, the costs for average-income households have largely risen in lockstep with inflation, while the costs for lower-income households have been largely stagnant.

Nevertheless, many news articles on the subject—as well as the U.S. Census Bureau’s own report, “Who’s Minding the Children?”—will simply claim the average cost of child care is going through the roof, while framing the issue as one of affordability rather than a difference in quality. There is also growing anecdotal evidence that there’s a widening gap in resources between the best and worst-funded programs, which would make sense.

From news sources with an ulterior motive, the claims are almost definitely exaggerated, but this is also a case in which the headline-grabbing statistic simply isn’t necessarily representative of the experience for the “average” person. Other news sources take a more balanced approach or even explicitly point out that the biggest problem is adequate program resources as much as rising costs for lower and average-income families. Interestingly, both sources are citing the same set of statistics from the Survey of Income and Program Participation (SIPP). A big part of the difference in how this data is cited and interpreted is something as simple as using the median average rather than the mean average for household spending on child care costs.

For those familiar with the scale of income and wealth inequality, the idea that the activity of those at the very top would have a noticeable effect on the average isn’t surprising. So, before you get too discouraged about the prospects of affording day care for your children, you should know that some of doomiest and gloomiest news articles out there may not reflect your situation. If you’re interested, use this link from FiveThirtyEight to read more about the differences in how this data is interpreted and represented in the media.

What does this Mean for Today’s Families?

Again, what is clear is that wealthier households have been spending a lot more on child care over the last generation. The latest data suggests that even if you’re a member of the upper middle class looking to put your child in a more expensive and well-resourced day care facility, the recent acceleration of inflation in these programs has also been showing signs of slowing. Overall, it seems what’s changed over the last generation is something of the American Dream itself. For a growing number of families, the ideal scenario doesn’t depend on one of the parents being at home to raise the children. Instead, it’s having the financial resources to be able to place their children in the best day care programs in their community.

What’s stayed the same is the cost of child care for lower income families as well as their struggle to afford it. Over the last 5-10 years, the cost of many basic household necessities has gone up—and has gone up considerably faster than household wages. This has made it more difficult to make ends meet on nearly every front. So, to the extent that you’re feeling pinched, know that you’re not alone and it’s not all in your head. However, to the extent that you’ve been reading in the news that child care and day care costs are rising so much faster than inflation that soon day care will be out of reach for all but upper middle class and extremely wealthy, know that these news headlines are somewhat misleading.