I am not in that market, but this seems implausible. My neighborhood is pretty prosperous, but I doubt that $400k/year is the standard. Yet kids do go off to daycare.
I believe it can be pretty high, but $400,000 seems utterly ridiculous to me. You spend $100K per year per kid just for child care? You can hire a live-in nanny for that amount of money.
The devil is in the details. The crux of the article is in these two lines:
> Across the U.S., the average annual cost of care for an infant and a 4-year-old is $28,190, according to Child Care Aware of America. The U.S. Department of Health and Human Services (HHS) considers child care affordable when it accounts for no more than 7% of a household’s income.
It’s been awhile, but the $28k number seems reasonable. It’s more expensive in different areas and the article goes into the numbers by state. But the part where it gets difficult to see is the 7% number. You only require $400k/year if you cap child care costs at 7%. When my kids were in daycare, it cost significantly more than 7% of our income.
The chart claims that you need to make over half a million dollars a year ($516k) to comfortably afford child care in Minnesota. I'm sorry, that is absolutely ridiculous.
Another way to look at that is one parent brings in 100% of their income, and when the second parent wants to get a job they have to sacrifice 14% of their pay to get childcare while they're away. That seems low to me.
Another way to analyze this is to look at how many children a single worker has to take care of to hit the same pay. If childcare for 2 kids is 14% of a salary, and salary is half the cost of running a daycare, then you need 29 kids per childcare employee?? How is that supposed to work?
Edit: And yes I'm aware subsidies can exist but this hits an area where the subsidies are so high that the 7% number still needs explanation.
Baumol's Law suggests the money spent on less automatable industries increases as the economy becomes more automated, so I question if the 7 percent figure is either realistic or achievable, given childcare is highly resistant to productivity gains through automation.
When I was a young kid, my mother was a “stay at home mom”, which meant that she babysat the kids of 5 or 6 of the other families in our neighborhood where both parents worked. For me, it was a wonderful experience growing up having a ready-made group of close friends and my mother close at hand. It did mean that my mother effectively sacrificed her career (though she eventually went to work for my father as his office manager and was instrumental to his success), but I’m certain she was not charging $20k/yr/kid (or whatever the equivalent in 1980s dollars would be).
What Americans seem to only just now be waking up to is that lack of work/life balance, lack of family leave accommodations, and loss of community has a very real, very tangible dollar amount cost. I’m very, very tired of the knee-jerk response to every “socialist” proposal being, “yeah, that’s great, but how are you going to pay for it?”
How are you going to pay for not having family leave? How are you going to pay for not having universal healthcare? How are you going to pay for not having tuition-free college for all? These choices have a cost, and Americans are paying that cost every day!
I have 4 kids (all under 12) and make quite a bit less than $200k with me being the only provider in the home and although I wouldn't say we're exactly where I want to be financially I don't think that were completely bankrupt.
I have so many thoughts on this from my own life experience. Latchkey kid, YMMV.
When I was a child, it was normal for neighborhood moms who didn't work to just watch kids for favors or a nominal fee. My memories are fuzzy, but I seem to mostly remember watching daytime TV soaps and eating PBJs probably more often than a child should.
Now that I'm older, I'm flabbergasted by regulations and costs for simple daycare. I've met numerous people who spend more on childcare than they make in a month. Not to sound trad anything, but that just doesn't make any financial sense to me.
I've no idea what the solution is. NM recently announced free child care, interested to see how that plays out. For everyone else... there's gotta be a saner solution.
Is this some American bullshit thing? There is no way that’s true in normal countries… here in a different part of northern hemisphere, we pay $100 usd per month 11 months a year…
Wow. My wife and I have 3 kids, all went to college.
At the time the first was born, we decided she’d stay home and be a full time mother. She coached them through school and ACT prep, which brought academic scholarships for all 3.
We have friends where the couple both stayed at work. Maybe they take nicer vacations than we do, some sent their kids to more expensive colleges. Oddly, I retired before anyone from that group. Some say they can’t afford to retire.
Trad wife worked out for us. My daughter has a career and is entering marriage age, I’m conflicted about that. I hate for her to leave her career behind, but that’s the path that worked for my wife and me.
21 comments
[ 4.1 ms ] story [ 43.3 ms ] thread> Across the U.S., the average annual cost of care for an infant and a 4-year-old is $28,190, according to Child Care Aware of America. The U.S. Department of Health and Human Services (HHS) considers child care affordable when it accounts for no more than 7% of a household’s income.
It’s been awhile, but the $28k number seems reasonable. It’s more expensive in different areas and the article goes into the numbers by state. But the part where it gets difficult to see is the 7% number. You only require $400k/year if you cap child care costs at 7%. When my kids were in daycare, it cost significantly more than 7% of our income.
Childcare is much cheaper in other countries, even relative to the lower earning potentials.
Canada for example is working towards $10/child/day childcare https://www.canada.ca/en/employment-social-development/campa...
Another way to look at that is one parent brings in 100% of their income, and when the second parent wants to get a job they have to sacrifice 14% of their pay to get childcare while they're away. That seems low to me.
Another way to analyze this is to look at how many children a single worker has to take care of to hit the same pay. If childcare for 2 kids is 14% of a salary, and salary is half the cost of running a daycare, then you need 29 kids per childcare employee?? How is that supposed to work?
Edit: And yes I'm aware subsidies can exist but this hits an area where the subsidies are so high that the 7% number still needs explanation.
What Americans seem to only just now be waking up to is that lack of work/life balance, lack of family leave accommodations, and loss of community has a very real, very tangible dollar amount cost. I’m very, very tired of the knee-jerk response to every “socialist” proposal being, “yeah, that’s great, but how are you going to pay for it?”
How are you going to pay for not having family leave? How are you going to pay for not having universal healthcare? How are you going to pay for not having tuition-free college for all? These choices have a cost, and Americans are paying that cost every day!
When I was a child, it was normal for neighborhood moms who didn't work to just watch kids for favors or a nominal fee. My memories are fuzzy, but I seem to mostly remember watching daytime TV soaps and eating PBJs probably more often than a child should.
Now that I'm older, I'm flabbergasted by regulations and costs for simple daycare. I've met numerous people who spend more on childcare than they make in a month. Not to sound trad anything, but that just doesn't make any financial sense to me.
I've no idea what the solution is. NM recently announced free child care, interested to see how that plays out. For everyone else... there's gotta be a saner solution.
At the time the first was born, we decided she’d stay home and be a full time mother. She coached them through school and ACT prep, which brought academic scholarships for all 3.
We have friends where the couple both stayed at work. Maybe they take nicer vacations than we do, some sent their kids to more expensive colleges. Oddly, I retired before anyone from that group. Some say they can’t afford to retire.
Trad wife worked out for us. My daughter has a career and is entering marriage age, I’m conflicted about that. I hate for her to leave her career behind, but that’s the path that worked for my wife and me.