70% of families are paying rates the government defines as unaffordable. And nearly half of families spend 15% or more of household income on care.
Waltham, MA, July 16, 2019 – According to theCare.com 2019 Cost of Care survey, American families are cutting back substantially on other expenses in order to be able to afford child care costs, which are taking an increasing share of household budgets.
The sixth annual Cost of Care survey from Care.com (NYSE: CRCM), the world’s largest online destination for finding and managing family care, found nearly half of families spend 15% or more of their annual household income on child care. For the second consecutive year, the survey found more than 70% of families reported paying 10% or more of their income on care. (The U.S. Department of Health and Human Services’ (DHHS) definition of affordable care is 7%.) And two-thirds of parents say they’re spending more on child care than they did last year.
The survey also asked parents how they’re responding to the rising cost of child care. In addition to financial strain, child care costs have caused relationship tension for 36% of those surveyed; 39% said care costs have impacted family planning; and 39% said they waited longer to have children or had fewer children than they would have liked because of the high cost of care.
The results demonstrate the central role care plays in our economy. The good news is that more families are budgeting for child care: 84%, up from 68% last year and from 54% five years ago. But that positive trend masks a deepening crisis: While 70% of families say they’re able to afford their current care arrangement, the details of how they make it work tell a more complicated story. To cope with the high cost of care, American families told Care.com they are sacrificing elsewhere by spending less, saving less, paying off less debt, and even taking on additional debt.
This new data helps illuminate why child care is taking center stage in American politics and policy. Last year, Care.com Cost of Care data was cited on the floor of the House of Representatives, and lawmakers from both parties have recently unveiled ambitious new proposals to help fix America’s broken child care system. Measuring the impact of child care costs on families, businesses, and the economy is a key first step to solving America’s care crisis.
“Care.com’s data clearly shows a fact that’s often overlooked: Care is a driving force in our economy. The cost of child care has tripled since 1990, rising far faster than inflation, and becoming the biggest household budget item for many families – and families just can’t keep up,” says Sheila Lirio Marcelo, Founder, Chairwoman and CEO of Care.com. “Parents are under more pressure than ever to find reliable, affordable child care, but our current system is literally pushing parents out of the workforce and families out of the Middle Class. From all around the country we’ve heard stories of families struggling to find quality care they can afford. We simply can’t afford to continue to dismiss care as a ‘soft’ issue or a ‘women’s’ issue. As a society we need innovative, scalable solutions to our care crisis.”
CARE.COM 2019 COST OF CARE SURVEY INSIGHTS
What’s the impact on working parents?
Rising child care costs are surprising parents. A full 70% of respondents said child care costs were the #1 cost that surprised them when starting a family. Parents were also surprised by the interdependency between care and work.
Two-thirds of parents said that, prior to having children, they did not expect the cost of child care would influence their career decisions. Yet, nearly the same share of respondents, 63%, said they made career/workplace changes in order to afford child care. Moms especially felt the impact of care challenges on their careers. Common career moves included changing jobs for higher pay (38%) or asking for a more flexible schedule (36%). In total, more than half of moms scaled back their hours to save on child care, and 25% left the workforce altogether. And 22% of parents said they later felt regret over the concessions they made in their careers to take on unpaid care responsibilities.
Child care has also had a more direct effect on parents in the workplace with 74% of moms and 66% of dads saying their workdays have been impacted because child care fell through at the last minute. In those situations, 70% have used sick days and more than half (56%) have come in late; one in three moms has lost a day’s pay, while one in four brought their child to work. Recent analysis by ReadyNation estimates productivity problems due to child care challenges cost employers $12.7 billion annually.
Still, only about half of parents surveyed (48%) say their employer seems to care about their child care needs. Just 15% of working parents say their employer offers benefits like backup child care – but 86% say they wish they did. Those percentages are consistent with the availability of employer-provided care benefits in the marketplace. According to the most recent National Study of Employers, just 7% of companies provide child care at or near the worksite and only 5% offer backup care for employees when their regular care arrangements fall apart. While still in the minority, businesses who have begun offering care benefits have found investing in care gives them a competitive advantage.
“The challenge of finding reliable, affordable care isn’t just a problem for parents; there’s a snowball effect that also impacts their employers. But sick kids and school holidays shouldn’t mean parents miss the big meeting, that important deadline or are unable to pay their rent,” says Alyssa Johnson, VP of Global Account Management for Care@Work by Care.com. “When a company works to be a part of the solution, it’s good for their people, their brand and their bottom line. And we’re seeing more and more step up, especially in this tight labor market when there’s such a premium on talent.”
What’s the financial and familial impact of child care costs?
Although most families are spending well over the DHHS affordability threshold, 70% of respondents said they’re able to afford their current child care plan. But how are families making ends meet? An all-time high cohort of parents, 84%, said they budget for child care. By that, it turns out, they mean they’re spending less on everything else.
· –31% said they’d put themselves further into debt
· –37% stopped saving money
· –37% stopped paying off debt
·–44% made major budget cuts
·–41% reduced non-child related household expenses, like eliminating gym memberships or cutting the cord on cable
What can parents do to reduce the cost of care?
While 73% of parents found child care costs were more than they expected, there are several ways to mitigate the costs.
· Do their research. Once families know how much they can afford, they can pinpoint the most feasible child care option by researching current rates in their areas with free interactive tools like babysitter rates and nanny tax calculators.
· A Flexible Spending Account (FSA) is offered by most employers, which can include up to $5,000 before taxes and covers daycare, preschool, and nannies, ultimately helping families save up to $2,300 per year. Yet, the survey found only 1 in 4 parents actually contribute to one.
· Ask their employer for subsidized child care benefits. A small but growing number of employers have also begun to offer subsidized child care options, including backup care, which allow parents to be present and productive at work while knowing their children’s care needs are met.
· Take advantage of tax breaks made available to them by paying their caregiver above board. Beyond giving caregivers access to professional benefits, like Social Security and Workers’ Compensation, families can utilize the Child and Dependent Care Tax Credit when paying their caregiver legally. The tax credit can help save $600 for families with one child and $1,200 for families with two or more children. The bad news? Only 35% of parents claim it when filing their federal income tax return at the end of the year.
About the Care.com 2019 Cost of Care Data
The Cost of Care survey is an annual survey to measure the relative cost of child care in the U.S. and how care impacts families’ budgets and employment. The Care.com 2019 Cost of Care survey captured responses from 4,146 parents in the United States during the month of April 2019. Respondents were recruited from Care.com.
Weekly rates for a nanny and after-school sitter are based on Care.com 2018 member data, child care center and family care center rates are based on rate information from centers listed on Care.com, and au pair rates, which are based on data from Cultural Care Au Pair, Au Pair in America, and Au Pair Care. Affordability rankings are calculated based on the average cost of care in relation to the U.S. Census Bureau’s 2016 American Community Survey that includes the state median family income of households with children.
For more information about the survey, sources or to learn helpful tips on saving, visit Care.com/costofcare. Employers interested in learning how to best support their working families can visit care.com/careatwork.
Since launching in 2007, Care.com (NYSE: CRCM) has been committed to solving the complex care challenges that impact families, caregivers, employers, and care service companies. Today, Care.com is the world’s largest online destination for finding and managing family care, with 19.1 million families and 13.9 million caregivers* across more than 20 countries, including the U.S., UK, Canada and parts of Western Europe, and approximately 1.7 million employees of corporate clients having access to our services. Spanning child care to senior care, pet care, housekeeping and more, Care.com provides a sweeping array of services for families and caregivers to find, manage and pay for care or find employment. These include: a comprehensive suite of safety tools and resources members may use to help make more informed hiring decisions – such as third-party background check services, monitored messaging, and tips on hiring best practices; easy ways for caregivers to be paid online or via mobile app; and Care.com Benefits, including the household payroll and tax services provided by Care.com HomePay and the Care Benefit Bucks program, a peer-to-peer pooled, portable benefits platform funded by household employer contributions which provides caregivers access to professional benefits. For enterprise clients, Care.com builds customized benefits packages covering child care, back up care and senior care consulting services through its Care@Work business, and serves care businesses with marketing and recruiting support. Headquartered in Waltham, Massachusetts, Care.com has offices in Berlin, Austin and the San Francisco Bay area.
*As of March 2019
Senior PR Associate