October 4, 2016
Day Care Costs Factor into Mom’s Work
In 26 states, the average cost of full-time care for just one infant at a day care center approaches or exceeds $10,000 a year, according to ChildCare Aware of America.
No wonder many new mothers (and sometimes fathers) ask themselves: Is it even worth it to work in the first place?
Proposals by both presidential candidates to subsidize care for the nation’s 11 million pre-schoolers amount to non-partisan recognition that parents need some help.
The IRS does provide a child care tax credit of up to $3,000 for one child and to $6,000 for two. But despite this, the United States lags well behind Europe in the financial assistance extended to parents of young children.
The result is that the child care costs shouldered by two-earner American families – the percent of their after-tax incomes that go toward care – are two times what parents pay in countries that subsidize care, such as Germany, Australia, Sweden, Denmark, France and Greece, according to the OECD.
A series of academic studies over more than two decades document a deep and enduring link between steep child care costs and mothers’ decisions to drop out of the labor force.
One study in 2005 found a “striking” impact on mothers when Quebec made child care for pre-schoolers affordable by putting in place subsidies for private day care in the late 1990s, which capped parents’ daily costs at $5. The program spurred big increases in child care use in the province. The study found that universal day care also significantly increased married women’s labor force participation, by 14 percent.
Quebec’s cap was increased but remains low – $7.30 per day – for the lowest-earning families under a new sliding scale based on a household’s income. The highest cap, at $20 per day for families earning more than $150,000, amounts to about $5,200 per year for care.
Certainly, one big reason a mother chooses to stay home after the birth of her first or second child is her instinct that it’s good for the children. But a 1992 study showed that child care costs factor into the decision.
First, the researchers found, mothers were more likely to work if they had access to free informal care from, say, a relative. For mothers who pay for care for pre-schoolers, their estimated labor force participation would be as high as it is for women with older children in school “were it not for the cost of child care.” Policies to subsidize care, the researchers concluded, would sharply increase the share of mothers who work.
Deciding whether mom should work is a complex family decision – and it’s not just about money. It’s about nurturing our children, good parenting, and evaluating all our options. For example, Quebec’s program presents serious non-financial concerns for parents, new research shows: health problems and even crime were higher among teenagers who, as children, flooded into the expanded day care program.
But really expensive day care narrows the options for mothers.