Are 67% of parents spending more than a fifth of their income on child care?
Do you have an extra 20% of your income floating around?
In August, CNBC published a story headlined “Majority of parents spend 20% or more of household income on child care, report finds” and linked to a Care.com report of 3000 parents.
Before I continue, I want you to stop and think for a moment. If you aren’t currently paying for child care, do you have 20% of your income that you aren’t using? If you are paying for child care, are you spending 20% of your income? In the most recent consumer expenditure data release, the average housing expenditure was 26% of the average income before taxes. Could you spend on childcare about what you spend on housing?
The fun part about this claim is that there are a lot of different ways in which it doesn’t make sense and at least two different datasets to bring in. But first — it’s reasonable to assume that by “parents” and “children,” we’re all talking about families where the kids are of child care age. I’m not going to quibble with the report authors or journalists on that one. I’m also going to focus on the headline claim that a majority of parents are spending more than a fifth of their income on child care, which comes from the fifth paragraph of the Care.com report: “Of parents surveyed, 67% are spending 20% or more of their annual household income on child care.” I’ll try to get into the report’s other claims at a later date.
First up, which parents did they survey? The methodology says they surveyed 3,000 parents of children under 15 who are paying for “professional child care” — presumably excluding paying Grandma or the high schooler who lives around the corner. Here’s the problem — most kids don’t go to daycare or have a nanny. According to the 2019 National Household education Survey: Early Childhood Program Participation, only 59% of children under 6 have any regular non-parental care arrangement,1 and this includes family, friend, and neighbor (FFN) caregivers as well as nannies, child care centers, and in-home daycares.2
By looking at the publicly available data files, I can calculate how many children are in any sort of paid professional care. For this purpose, I’ve labeled care provided by a non-relative in the child’s own home as nanny care. Less than a third of children are in a paid center or nanny care arrangement.
And how much are the parents paying for these children? ECPP reports income as a categorical variable, but if we assume that each family in a category is making the category minimum, the median fee is 9% of income for the original study’s fairly restrictive sample. Looking at broader groups, the median fee as a percentage of income for all children is 0% of income and for children with a child care arrangement (paid or unpaid) it’s 4.5%.
But there’s another federally collected dataset with childcare costs — the Current Population Survey’s Annual Social and Economic Supplement. While CPS-ASEC does not collect data on the type of care, it does collect specific income and child care cost data, and its collected at the family level rather than the child level, so it accounts for families paying for care for more than one child. Among families reporting any care costs, the median amount spent on care was 5.4% of family income, with 9.3% of families spending more than 20% of their income. Filtering further to families with at least one child under 5 raises the median amount to 6.7%.
Here’s one final graph for fun: child care costs by income quintile.
I’ve put up a repository on Github. Here’s the NHES-ECPP code from this post and the quick bit from IPUMS AHTUS from the last post. Next time (probably): the other claims in the Care.com report and a link to the CPS-ASEC code from this post.
Table 1, Cui, J., and Natzke, L. (2021). Early Childhood Program Participation: 2019 (NCES 2020-075REV), National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education. Washington, DC.
It’s not clear to me whether Care.com’s methodology includes family child care homes in “professional child care” and ECPP also does not distinguish between the “friend and neighbor” portion of FFN care as “non-relative” care and in-home daycares, also called family child care homes, as “non-relative” care.
Do you have the data to validate the underlying numerator of that wildly high care cost percentage?
“How much does child care cost? (National average)
Here, the average weekly child care costs broken down by type of care for infants:
Weekly nanny cost: $736 (up 56% from $472 in 2013).
Weekly daycare cost: $284 (up 53% from $186 in 2013).
Weekly family care center cost: $229 (up 80% from $127 in 2013).
Weekly babysitter cost: $179 (up 92% from $93 in 2013)”