Child care costs still rising as the Trump administration eyes incentives to boost falling birthrate

While White House aides consider financial incentives for women to give birth, including the idea of a $5,000 “baby bonus,” families and individuals may be rethinking getting pregnant because of spiraling child care costs, experts say. The annual price of child care continued to rise in 2024, with prices increasing by 29% from 2020 to 2024, according to Child Care Aware of America’s latest annual report, released Wednesday. Meanwhile, a US Centers for Disease Control and Prevention report shows the US fertility rate is near a record low. The fertility rate last year – 54.6 births for every 1,000 women of reproductive age – increased less than 1% from the record low in 2023, hovering well below rates from years earlier. A drop in the birth rate is one of the possible impacts of rising health care and child care costs, a US government agency said this year. “While research is mixed, it is possible that these rising costs may contribute to the declining birth rates in the U.S. From 2010 to 2023, annual birth rates fell by 17 percent, from nearly 13 births to less than 11 births per 1,000 people,” a March brief from the US Department of Health and Human Services said. For Christine Davis, 37, a single mother and private investigator who lives in Connecticut, the financial and logistical challenges of managing child care are looming as she returns to work after her maternity leave ends this summer. She plans to use a rotating schedule of family members to watch her now 11-week-old son until he starts part-time day care in August which, she said, will cost her more than $200 for two days a week. Once her son turns 3, the preschool’s program moves to five days a week. She has been fortunate to have family to rely on for help, Davis said. “Going into wanting to have a child, that was kind of like a factor in it as well,” she told CNN. “Because I know if I didn’t have the support system that I do, I definitely think I would have thought twice about having a kid.” Her sister-in-law Stephanie O’Sullivan, 43, a clinical mental health practitioner and mother of two whose youngest child is 8, is grateful to have those early days of child care behind her, after paying for preschool costs that equaled a second mortgage for her family. But she knows that the need for child care doesn’t stop once children reach school age. O’Sullivan owns her own practice, working 10-hour days, often starting at 7:30 a.m. This year, her 8-year-old will need supervision – with local summer camps costing up to $5,000, she said. “What happens during the summer? What happens school break? Not every family can afford to take time,” O’Sullivan told CNN. “Because owning my own practice, well, guess what? I don’t get PTO. (If) I’m not working – I don’t make money.” Sending her daughter to camp is a “huge cost” for the family and very stressful, she said. “And in my mind, it’s just another way for women to be told, ‘Do you see, like, maybe you shouldn’t be working!’ But I’m the bread winner of the family.” Child care outstrips other costs While the five-year increase in child care prices from 2020 to 2024 was 29%, overall prices – with inflation – rose by 22%, the latest analysis from Child Care Aware of America found. The national average price of child care for 2024 was $13,128. It would take 35% of a single parent’s median household income to afford that national average price, up from 32% the previous year, the report found. This is substantially more than the current guidance from the US Department of Health and Human Services, which says child care shouldn’t cost families receiving federal child care subsidies more than 7% of their annual income. On average, placing two children at a child care center cost at least 19% more than the typical rent in 49 states, plus the District of Columbia. The tab also exceeded typical annual mortgage payments in 45 states, plus DC, according to Child Care Aware. The report examined care for an infant and 4-year-old. “Certainly families, parents, individuals are taking a step back, and cost is impacting whether or not they’re going to expand their family,” Bryan Jamele, Care.com’s head of government affairs and public policy, told CNN. Care.com is an online marketplace for families to find child care and senior care, among other things, and for caregivers to find jobs. Jamele advocates on Capitol Hill on behalf of the company’s customers and families and parents across the country. His recent focus as an advocate has been on taxation. “When you really peel that back and look at … families and working parents in this country, all they have is tax policy to help reduce the cost of care, and increase access to care,” he said. “I think everybody agrees, across the aisle, that we need to address this (cost of care). It’s important to address this. It’s important for our economy. It’s important for labor and workforce participation, especially among women,” Jamele told CNN. “Generally, the conversation right now in DC has focused very much around the Child Tax Credit. It’s been a fairly bipartisan discussion that’s going on, and so we’ve certainly been advocating for an expansion and enhancement of the Child Tax Credit,” he said. The Child Tax Credit was temporarily enhanced by the Tax Cuts and Jobs Act of 2017, increasing it to $2,000 per child and expanding refundability, according to the Tax Policy Center. But those provisions are set to expire at the end of 2025. ‘Supply and demand’ The cost of child care is “at its core, a supply and demand issue,” Jamele said. “There is so much demand for care, but it really exceeds the available supply, right? And so, we have to look at that in many ways,” he said. While demand is still outpacing supply, Child Care Aware of America’s latest analysis found an increase in both the number of child care centers and the number of family child care homes from 2023 to 2024 – a continuing trend seen since 2020. “It’s about growing that workforce. It’s about professionalizing that workforce. It’s about addressing issues that even day care centers face in just their day-to-day operations, and the burdens that go along with that,” Jamele said. “But it’s also making sure that parents are able to actually afford this without having to go into deep debt and pay more than … in some states, cost of college tuition.” In 41 states, plus DC, the average annual price of child care for an infant in a center exceeded in-state university tuition by 0.8% to over 100%, the Child Care Aware of America report found. It isn’t just an issue of “parents versus caregivers,” Jamele said. “Parents still believe that caregivers deserve to be paid more,” he said. “And so, this does demonstrate a need for systematic solutions that are going to help parents better afford their care, but we have to be aware of not impacting the well-deserved wages of these professional caregivers.” Child care professionals in centers across the US earn an average of $33,140 per year, according to the Child Care Aware report. Those wages, compared to the cost of child care, are something Davis has also questioned. “You think about how little the teachers actually get paid? And you’re like, wait a minute … How is this all working?” The Trump administration says it recognizes the financial challenges facing American families, and points to a January presidential memorandum as its step “to pursue approaches to reduce costs.” Addressing the child care cost issue will take a large-scale reimagining of the industry and how it is funded or supported by the federal government, Jamele said. “You really need to have government involved, you need to have employers involved, and the child care industry itself involved, to come up with a solution that addresses this. And it has to be thoughtful, and it has to be quite holistic,” he said. “Child care policy is good family policy, it’s good economic policy, and it’s critical to the future of our country, and it’s critical to the future growth of families,” he added.