U.S. Workers Spend Up to 29% of Their Income, on Average, on Child Care for Kids Younger Than 5

Child care costs are crazy expensive — and they’re rising, according to a new report from LendingTree.

In 2020, child care costs for kids younger than 5 ate up between 17% and 20% of the average American worker’s yearly earnings. In some states, that percentage reached nearly 30%.

To discover this, LendingTree researchers analyzed data from the nonprofit Child Care Aware of America on the cost of center-based child care in each state (where available) and annual wage data from the U.S. Bureau of Labor Statistics.

There is some good news, however. Wages are rising across the U.S., too, and in 2020, that growth outpaced the growth of child care costs in most states. That means child care that year became a little bit more affordable for millions of Americans.

Key findings

• Child care costs for kids younger than 5 eat up between 17% and 20% of the average American worker’s yearly earnings. In Hawaii, that percentage climbs to 29% for infant care — the highest of any state in any age group.
• The bad news: Child care is getting more expensive, regardless of your kid’s age. The cost of full-time center-based child care for kids younger than 5 rose across the U.S. between 2018 and 2020. The price jumped 5% to $12,411 for infants, 5% to $11,379 for toddlers and 7% to $10,008 for 4-year-olds.
• The good news: Wage increases outpaced child care cost growth in 2020. The percentage of average wages needed to pay for infant care fell in 39 states, while the percentage needed to pay for toddler care fell in 36 states and the percentage needed to pay for 4-year-olds fell in 36 states.
• Only seven states saw child care costs for all age groups rise faster than wages. This geographically and culturally diverse group includes Michigan, Rhode Island, Tennessee, North Carolina, Arkansas, Illinois and Washington state.

Center-based child care eats up big chunk of average worker’s wages

Isn’t news to any parent that child care is expensive — and no state’s residents are immune.

In each of the 50 states and the District of Columbia, the cost of center-based care for kids younger than 5 eats up at least 13% of the average wages for a worker in that state. In some states, depending on the child’s age, that percentage can climb as high as nearly 30%.

• In Hawaii, it takes 29% of the average worker’s wages to pay for infant care. That’s the highest in the nation.
• In Vermont, it takes 25% of the average worker’s wages to pay for toddler care, the highest in the nation.
• Vermont again tops the list when it comes to care for 4-year-olds at 24%.

At the bottom of each list is Mississippi at 13% or 14%, depending on the child’s age.

Using a simple average across the 50 states and D.C., we found that American workers spend an average of between 17% and 20% of their average yearly wages on child care for their kids younger than 5.

In a nation where most people are on a budget and living paycheck to paycheck, that’s a big, big deal.

Full rankings: Percentage of average wages needed to pay for average in-center care for infants, toddlers and 4-year-olds

Bad news: Child care getting more expensive, regardless of age

Unfortunately, child care costs are continuing to rise, up anywhere from 5% to 7%, depending on the child’s age. Using a simple average across U.S. states between 2018 and 2020, prices jumped:

• 5% — from $11,786 to $12,411 — for infants
• 5% — from $10,849 to $11,379 — for toddlers
• 7% — from $9,349 to $10,008 — for 4-year-olds

The growth isn’t isolated to a few states, either. From 2018 to 2020, infant care costs grew in 42 states, while toddler care costs grew in 35 and 4-year-old care costs grew in 45.

Michigan residents have been hit the hardest, with increases ranging from 26% to 34%, depending on the child’s age. Meanwhile, Arkansas saw the biggest increase for any single age — a stunning 46% increase in the cost of care for 4-year-olds — but grew 16% among other age groups.

The two states where residents fared best? Maine and Oregon. Both states saw double-digit decreases for child care costs regardless of age, including a 24% decrease in infant care in Maine. Those states, however, are far more the exception than the norm.

Full rankings: States with the biggest increases in child care center costs for infants, toddlers and 4-year-olds

Good news: Wage increases outpaced child care cost growth for many in 2020

Child care costs aren’t the only things rising, however. Wages across the country are, too. In fact, in 2020, they rose faster than the cost of child care in most states, and that’s an excellent thing:

• The percentage of average wages needed to pay for infant care fell in 39 states.
• The percentage needed to pay for toddler care fell in 36 states.
• The percentage needed for care for 4-year-olds fell in 36 states.

Across the nation, only seven states saw child care costs for all age groups rise faster than wages. Michigan and Arkansas, which saw some of the sharpest increases in the nation in child care, were among those states, as well as Rhode Island, Tennessee, North Carolina, Illinois and Washington state.

Full rankings: States with the biggest increases in infant, toddler and 4-year-old care costs as a percentage of average wages

5 ways to deal with rising child care costs

Child care may have become a bit more affordable for some — at least compared to wages — but that doesn’t mean it isn’t still a huge challenge for millions of Americans. And with costs unlikely to start falling anytime soon, so your best move is to make a plan to pay it going forward.

Here are a few tips that can help:

• Budget, budget, budget: Whether you need to increase your income, reduce or reprioritize some expenses — or all of the above — the best way to begin making a plan is with a well-thought-out budget. If you haven’t made one yet, check out this LendingTree guide on how to use a budget to pay off debt. If you already have a budget, go through it again and make sure it still matches your priorities. A lot has changed during the pandemic — if your budget isn’t one of them, it’s probably time to give it another look.
• Consider changing your child care provider: If your child care provider’s costs have grown beyond your ability to afford them, it may be time to look elsewhere. This isn’t a step to take lightly, as far more goes into picking the right child care than just cost — still, difficult times can require difficult choices. Before you make a move, however, make sure you fully understand all the costs involved with the change.
• Try negotiating with your child care provider: It likely can’t hurt to ask if there would be a way to lower your payments. If you’ve suffered a job loss or a major reduction in income recently, let them know and they may work with you. Or, if you have skills that might be useful to them — think bookkeeping, website-building or handyman work — you could consider leveraging those skills to barter for lower costs.
• Consolidate your debts: This is a great way to reduce the amount of interest you pay on your debt and streamline your life. If you have good credit, a 0% balance transfer credit card can be a godsend. Cards can offer up to 21 months interest-free on transferred balances, and those balances can often be transferred from more types of loans than just credit cards. They typically come with a one-time fee of 3% to 5% for each transferred balance, but the savings can be substantial even with that fee. Or, if your credit isn’t great, consider a personal loan — they won’t come interest-free, but they may feature lower rates than your current credit card.
• Take advantage of government assistance and other programs: Depending on your financial situation and other circumstances, the government might provide financial help. For example, states have programs to help low-income parents pay child care costs so they can work. Programs exist to help military families struggling financially to meet their child care needs. That’s just to name a few. Check out ChildCare.gov for more information.

Methodology

LendingTree researchers used data published by Child Care Aware of America in 2021 and 2019 reports to calculate the changes in average in-center child care costs for infants, toddlers and 4-year-olds between the 2018 and 2020 years.

Each state may define infant and toddler differently, so we can’t explicitly say what age ranges these cover. However, Child Care Aware of America notes that infants typically range up to 12 months old, while toddlers generally are 13 months to 3 years old.

Researchers compared average in-center child care costs to the average annual earnings of wage workers in each state during those years, as reported by the U.S. Bureau of Labor Statistics.