How Households Are Coping With Youngster Care Prices Publish-Pandemic – Forbes Advisor

Editor’s Note: Forbes Advisor may earn a commission on sales made through affiliate links on this page, but this does not affect the opinions or ratings of our editors.

Ashley Delehunt Belson has two options. The 34-year-old mother can go back to work paying $ 800 a month for day care for her four-month-old son or stay at home and look after him by herself. The latter is becoming the choice that Belson is more seriously considering.

Previously, Belson worked in the travel booking industry. In July 2020, the company closed for good after the pandemic stopped most travel. She tried to find work elsewhere but couldn’t. She called it “a terrible time to look for a job”.

Belson lives in Durango, a small town in southwest Colorado with a population of just over 18,000. The city lives from tourism and hospitality. Employment in these sectors is recovering as the region clears the pandemic, but any of the many tourism jobs now available would not be financially feasible for Belson and her family.

“I could get a job in a downtown store, but those aren’t the jobs that can finance my life and childcare,” says Belson. Instead, she could start her own nanny business – not because it’s her passion, but because she doesn’t think she can find a new part-time job that gives her the flexibility to work remotely and take care of her child.

Parents struggle with childcare costs as they figure out their new normal

While the United States may be emerging from the pandemic, families across the country are still struggling to figure out how to manage childcare. As the virus ripped through communities, many daycare centers were closed. Parents faced the daunting task of managing work from home and watching their children around the clock.

Now they are struggling to find a daycare center that offers space for their children – and that does not cost them a fortune.

Even before the pandemic, childcare was known for its exorbitant costs, which vary depending on the state. The average annual childcare cost for a four-year-old in New York is $ 12,358, according to the Economic Policy Institute, a nonprofit, non-partisan think tank. It costs $ 6,411 in Kentucky but is still considered “out of reach” for low-wage workers. Overheads, liability insurance, license fees, and labor costs all contribute to the total price.

Now there is some evidence that the pandemic could fuel those costs. According to Care.com’s annual survey published in June 2021, 85% of parents say they spend 10% or more of their household income on childcare. That is a significant increase compared to 72% in the previous year.

62 percent of families said they were more concerned about childcare costs now than they were before the pandemic.

Rachel Wheaton, a 35-year-old mother of two in Lakeland, Florida, has seen her childcare costs rise. Before the pandemic, she paid $ 125 a week for her two children to attend half-day care. Now she spends $ 310 a week – which means she pays 1.5 times her mortgage payment on childcare bills every month.

Wheaton said the daycare raised its rates after reviewing the pricing of other daycare in the area and adjusting staff pay to $ 15 an hour.

Wheaton pays $ 180 off her weekly paycheck to cover some of the cost and puts the rest on her credit card, which means she accumulates interest and pays even more over time. She says her “savior” will be that her two children will qualify for a county-funded special school in August so that she doesn’t have to pay for childcare.

“If I had to keep doing this, I couldn’t,” says Wheaton. “I don’t know what I would do.”

Parents can bear additional costs due to rising daycare costs

Daycare centers do not raise their prices out of spite. A mix of increased procurement costs, such as providing personal protective equipment (PPE) to staff, and labor shortages are responsible for the increased pressure on parents.

The Kiddie Academy, a franchise day care system with more than 275 locations in 31 states, reports that average weekly tuition fees have increased since 2019. But Chief Marketing Officer Nicole Salla says the tuition fee increases, which vary by location, “keep pace with the increase in franchisee spending over the past two years.” The Kiddie Academy cites the need to provide additional cleaning supplies and personal protective equipment and rising Food prices and staff costs as the reason for the price increases

“Like most vendors (and businesses in general), we help our franchisees set their prices to keep up with the industry,” Salla said in an email to Forbes Advisor. “This is necessary to ensure a consistent, high-quality experience for the families we care for.”

And for day-care centers with stable prices such as KidsPark, the search for staff has become an obstacle. The chain has 22 locations in nine states.

Fewer staff means fewer children can attend daycare as licensed child carers have to maintain a standard carer-to-child ratio. Now that parents are going back to work, demand is increasing – and some daycare centers cannot keep up.

The hourly billing KidsPark continues to have different opening times in many centers because there are not enough staff available to work. Most centers are open from 7 a.m. to 9 p.m., but many stayed open until midnight on busy weekends. Only a handful of KidsPark centers are currently open on Sundays, a day that used to be part of the normal operating schedule.

“It’s hard to find people to recruit,” says Debra Milner, CEO and founder of KidsPark. “We schedule interviews and hope people show up, but we get ghostly.”

KidsPark pays its employees based on experience and level of education, with wages varying depending on the federal state. Milner reports employee wages of $ 12 to $ 28 an hour.

Although, in his opinion, KidsPark offers competitive wages, it still struggles to find and retain employees, which Milner says could be due to high unemployment benefits that exceed the level of such positions. Oddly enough, KidsPark is still receiving applications even though some candidates fail to show up for scheduled interviews. Milner wonders if this is meant to be ticked a box in order to receive unemployment benefits.

“Maybe people feel that if they are at least applying for positions, that doesn’t mean they have to show up for an interview. I wish I had an answer, ”says Milner.

If KidsPark could hire more staff, Milner could go back to its regular hours – and watch more kids.

What can be done to help parents find childcare?

The benefits of quality childcare, according to the Federal Reserve Bank of Atlanta, are twofold: it increases the productivity of parents’ labor and makes the children successful when they get to school. The bank describes childcare as “integrated for short-term economic endeavors and longer-term economic health and family success”.

Parents know how important childcare is to their child’s development – and it puts pressure on them to bring their children to quality facilities.

Wheaton could send her kids to a cheaper daycare and save $ 50 a week, but she would still be over budget. And the more expensive facility her children currently go to has, she says, a higher standard of care.

The White House recognizes the burden of childcare costs on families. In April, Biden unveiled its $ 1.8 trillion American Family Plan, which would include $ 225 billion in funding for childcare reform in America.

The plan would limit the cost of “high quality childcare” for low and middle income families to no more than 7% of their income. ”Support would be available to families earning 1.5 times their median national income. It would also create a universal free preschool for all 3 and 4 year olds.

The catch, however, with the limitation of aid is that some families have difficulties even when their income is above the threshold. For example, Wheaton says she makes just $ 2,000 above the annual income limit in Florida to be eligible for government-sponsored childcare. She wished there was some sort of staggering to help families like hers who are living in the income gap.

In response to the increased financial burden caused by the pandemic, the Biden government has also made significant changes to the child tax credit. She temporarily increased the balance this year up to $ 3,600 for each Eligible Child under 6 and up to $ 3,000 for Eligible Children ages 6-17 for families or households with no predictable income.

For a married couple with an annual income of $ 45,000 and two children under the age of 5, that means they will receive $ 7,200.

Estimate the tax credit payment for your child

Wheaton says increasing the child tax credit will be of great help to their family, but admits that daycare centers are still struggling and in need of help.

Biden’s American Families Plan says it would provide funding to childcare providers to “meet the real cost of high quality early childhood education,” but it doesn’t say how much or how the facilities would get the funding. Biden’s original infrastructure plan included an item to rehabilitate childcare facilities, but this was removed from the latest compromise.

For now, the American Families Plan has tacitly faded into the background, while Biden’s other major initiatives, like the Infrastructure Plan, take precedence.

Until then, Wheaton will continue to make sacrifices to make everything work financially – including making her family’s new furniture to save money. Belson is still considering becoming a nanny but hasn’t quite made up her mind yet.

Both agree: childcare is an additional burden for their families. But it’s one that they have to find out.