Child-care cost increases more than overall inflation, and some families struggle to 'take the hit'

Wall Street Journal graph, from Bureau of Labor data

Besides the stubbornly high food prices, an even greater financial stress looms over some families--child care expenses. "The national average price of daycare and preschool services rose 6% in July from a year before, the Labor Department reported recently. That was nearly double the overall inflation rate of 3.2%, which was down from its recent peak of 9.1% in June last year," reports Christian Robles of The Wall Street Journal. "Parents could see their child-care bills climb higher this fall as providers boost tuition to cover rising costs and federal pandemic aid ceases."

Parents or caregivers have few options for child care in the first place. Danielle Ganje, a communications director and mother of three, "said she is paying about $2,500 a month for child care this summer. That is at least 10% more than last summer and more than her monthly mortgage payment." She told Robles, "We don't have many other options, so we just have to take the hit."

Much of the increase is attributed to labor, food and utility costs. Robles reports, "Child-care workers earned an average of $19.95 an hour in June, up 4.6% from a year earlier, according to the Labor Department. Providers are also facing the end of child care stabilization grants, which began in 2021 and helped providers stay open during the pandemic. "By the end of last year, more than 220,000 child-care providers serving as many as 9.6 million children had received such funding, according to the Department of Health and Human Services."

"Nationwide, a lack of affordable child care has pushed many Americans, particularly women, out of the workforce, economists say. Providers can pass on only so much of their rising costs to parents before some cannot afford their services, Robles reports. Jeannie Farewell, owner of Tiny Tot Daycare, in rural Chambers, Neb, population 288, "said federal assistance totaling at least $7,200 covered some of her increased costs including for propane and bags of potatoes. She works 60 hours a week for about $10.50 an hour, Nebraska’s minimum wage. She has raised pr.ices to $3.50 from $3.00 an hour per child since May 2022, to cover rising costs."