All About Babies

Daycare Costs More Than Rent for Many Families

The crazy cost of daycare may explain why more moms are staying home.

little girl playing at daycare Maskot/Getty Images
I remember touring a very nice daycare shortly after my first daughter was born. Afterwards, I stepped into the director's office to discuss the details, including the cost. When she informed me how much full-time care would run me, I nearly ran out of there. It was as much as a college tuition!

That experience was my first introduction to how wildly expensive childcare can be. The sticker shock has worn off a little over the years, but on some level, it still dumbfounds me that paying for a nanny or daycare takes up such a significant chunk of one's salary.

I couldn't believe what I was reading when I saw a recent study that found, for many, childcare is more expensive than rent. Yes, according to the Economic Policy Institute (EPI), a roof over your head is more affordable than paying someone to watch your kids so you can work (presumably to pay them).

Of course, childcare costs vary greatly depending on where you live; but so do rent costs. And salaries. So you see it's all relative, and potentially very expensive.

Work-Life Balance in America

What I found utterly fascinating about this study is that childcare and nursery school costs have risen 168 percent over the past 25 years. And according to a recent Care.com survey, the average cost of childcare across the country is a whooping $18,000 per year!

So let's do a little basic math, given that number, and that the U.S. Department of Health and Human Services says affordable childcare should account for no more than 10 percent of a family's overall budget. That means your household income would need to be around $180,000 for it to make sense to send a child to daycare.

But consider that researchers say real childcare costs are closer to 30 percent of one's take home pay. So we are really looking at a family who make $60,000 paying nearly a third of their income to childcare. That's pretty rough, to put it mildly. Not to mention that researchers have found low-income families are paying the largest chunk of their incomes on childcare. Consider, too, that in 33 states, families are spending more on childcare than to send kids to in-state, public colleges. And what if you have multiple children?

I need to sit down.

At what point do you say it's not worth it to be a dual income household anymore? Well, according to Care.com, 69 percent of parents say the cost of care has impacted their career decisions. A Pew Research Center survey found more women are staying home; 29 percent in 2012, versus 23 percent in 1999. And now this research underscores the reality that the rising cost of childcare is forcing many women to bow out of the workforce.

The issue is so glaring, as Fortune.com reports, even President Obama called attention to it at his last State of the Union address. In the meantime, us working moms are left to grapple with a seemingly impossible equation: money in, versus money out, and what it's all worth.

What's your take?

Melissa Willets is a writer/blogger and a mom. Follow her on Twitter (@Spitupnsuburbs), where she chronicles her love of exercising and drinking coffee, but never simultaneously.