How Much Should Day Care Cost Per Year?

A new report looks at spending by families on child care and the questions it raises for government and policymakers.
THE MEDIAN FAMILY IN the United States spends $8,320 annually on center-based day care and preschool for its young children, according to a report that explores the implications of that spending for parents, governments and policymakers.

Using data from the 5,500 households sampled for the 2016 Early Childhood Program Participation Survey, the Brookings report set out to determine the market price of center-based programs. The figure not only gives parents an idea of how much to spend on programs but it provides context for decisions surrounding government spending. The report is careful to acknowledge that even the market price it seeks to determine is going to have factored into it government intervention that includes some $26 billion in annual spending on federal programs to support child education.

Researchers calculated hourly and annualized prices for parents who pay for at least eight hours a week of center-based care for children under 5. The results were broken down by the age of the child, the region of the country in which they live, the education level of the parents, the parents' income and the hours of attendance.

The report found that families spend somewhat more in the Northeast and West and somewhat less in the South and Midwest. Spending, in dollars, rises among families with higher incomes and education levels, but it declines as a percentage of family income with rising socioeconomic status.

Additionally, as children grow older, spending decreased over the five-year age period the study covers. Infants are in center-based care for many more hours a week than their older counterparts. For example, median weekly hours for such infants is 40, whereas it is 24 hours for 4-year-olds. Prices paid by parents with infants match the longer hours spent in day care. Parents with infants also pay 60 percent more for their child to attend a center-based program than parents with 4-year-old children.
Although longer hours and more resources are spent on infants in day care, they have a lower participation rate in center-based care than older children. The report found child participation dramatically increased with age, with 69 percent of 4-year-olds attending these programs compared to 13 percent of children who attend from birth to age 1.

The price parents pay for those programs is determined by a multitude of factors, including the number of hours their child is enrolled, the child's age, the parents' financial resources and the communities being served, among others.

According to the analysis, many parents across a broad spectrum of socioeconomic levels utilize center-based care for their young children without needing government assistance. Even so, low-income families still spend a larger proportion of their income on day care, and that could make a case for "particular types of taxpayer supported subsidies."

"The realities of what families of different income and educational levels are paying for center-based programs are important to framing policy questions," the report said. "Evidence doesn't speak for itself but it gives voice and reason to those who see a problem and want to solve it."