Summary
Lanea and Crystal delve into the pressing issues surrounding childcare, focusing on the exorbitant costs, the challenges of finding quality care, and the financial burdens faced by parents. They discuss the inadequacies of government policies and compare the US childcare system to those in other countries, highlighting the need for systemic change. They emphasize the broader societal impacts of childcare issues, affecting not just families but communities as a whole.
Takeaways
- The total credit card debt in the US has reached a trillion dollars, exacerbating financial strain.
- Affordable childcare options are scarce, with many families struggling to find suitable care.
- Government policies on childcare are inadequate and need reform.
- Countries like Canada, Germany, and the UK have better support systems for parents.
- The US lacks standardized childcare subsidies and paid parental leave.
- Childcare issues impact not just families but the broader community.
- The current system is unsustainable for many families, leading to financial distress.
Transcript
Crystal (00:00)
Hi, I’m Crystal, the founder of the Piggy Bank Patrol, a podcast that gets parents talking about money. Myself, along with my co -founder, Lanea are financial analysts and new parents. We want to empower parents to learn healthy money behaviors while breaking cycles and teach children about money.
As always, the piggy bank patrols content is intended for educational, informational, and entertainment purposes only, and is not to be taken as legal, financial investment, or tax advice of any kind.
Crystal (00:30)
Today we’re diving deeper into the costs of childcare. Lanea was researching last week’s episode, she ran across the Care .com 2024 Costs of Care wanted to share a quote from their CEO, Brad Wilson. Quote a healthy economy depends upon the ability of people to save and spend. But given the crushing weight childcare costs, those pillars are crumbling.
The childcare crisis should be a major red flag for everyone, not just parents. It is a systematic failure that will impact our nation’s economic growth, which impacts us all.” And we think that’s why afforble care is so important to our economy and the crushing weight that parents are feeling right now.
To begin, we should start with the average cost of childcare.
Lanea (01:25)
And I think really the cost of childcare depends on so many factors because you’re really dependent on the type of care and that in turn kind of affects the quality of care, the location and the age of the child. So according to that same study, they pulled different types of care. So they pulled nannies, daycare, in -home daycare center, and then babysitters.
And if you’re looking at a nanny, it’s about $766 per week on average. So that’s about $39 ,000 a year. I think the vast majority of people will probably fall into daycare or the in -home center. So daycare is about $321 a week or $16 ,500 per year.
And this actually saw one of the largest increase of any of the type of care, which is interesting because it’s one of the most utilized. So it almost is a double whammy to parents that the most utilized type of care also saw the biggest increase. Next we have in -home centers or family care centers. And that’s about
230 a week or 12 ,000 per year, followed by babysitting, which is 192 per week on average or 10K a year. And like I said, these dependent based on your locality. When I personally was looking into care, we toured some centers and we looked at in -home ones. And I think that Nebraska, the average for
the care .com survey is really close to here. think that 320 mark per week was exactly what we were looking at when we were touring with family care centers. One of my friends was looking at she kind of asked around and the in -home ones were about $800 per month.
have you priced for your area?
Crystal (03:21)
when I was pregnant I tried, but they refused to give me pricing over the phone or email and they wanted me to go in person and I was working full time and it was winter so I not about that life.
Lanea (03:35)
That’s so crazy that they make you come in before they will give you a price.
Crystal (03:40)
Yeah, I feel like it was a really strong Sale tactic. The town that we lived in before it was a larger town. So the centers there were a lot more private, religious based. There was one near our house that wasn’t, but they still required us to tour them before they’d give us.
any sort of pricing information and that’s just a, huge turnoff for me.
Lanea (04:06)
Yeah, I can’t remember at this point, because we didn’t tour very many places. I did the step up to care. So I kind of looked by our house to see what was available there just because I didn’t really want to drive across town. So we didn’t end up touring very many places, but the ones that I
Crystal (04:15)
Mm -hmm.
Lanea (04:27)
I felt like they offered their price list beforehand. I couldn’t be wrong. that’s probably closer to 18 months ago at this point.
Crystal (04:36)
Yeah, you started way in advance.
Lanea (04:39)
was thinking back and I started before I even hit 12 weeks just because I was so scared of the, wait list that I didn’t want to not get into a place that I really wanted.
Crystal (04:53)
Mm -hmm. And I think you even applied for one and you’re still on it?
Lanea (04:59)
Yeah, that one, it was either like 18 months or two years, and you couldn’t even get on it until your child was born. So there’s that. But we’re still on the wait list for that. So we paid $20 to maybe get there when he was three. We’ll see.
Crystal (05:07)
no.
Lanea (05:17)
people are reportedly paying more than $1 ,500 per month on childcare expenses. Over 50 % of respondents are paying more than $1 ,500 a month. And I think that’s
probably on average for less than two children because I have very, very, very affordable childcare right now. We were really lucky. And if we had two kids, it would be well over 1500.
Crystal (05:43)
part of why the day cares increased and I don’t have the hard data on it, but it says it’s % from 2022. think largely in inflation, but employees to work in childcare has been really hard.
Lanea (06:03)
absolutely, because they don’t pay worth crap.
Crystal (06:06)
I know in a lot of the mom groups, they’re like, if you need daycare, you should get a job at a daycare center.
Lanea (06:13)
I saw that too, yeah.
Crystal (06:16)
Which is pretty creative, but…
Lanea (06:18)
Well, what’s interesting to me about like the whole subsidy thing versus, you know, like working in a daycare to get daycare assistance is the US Department of Health and Human Services. They state that in order for childcare to be considered affordable, it has to cost families no more than 7 % of their household income. I don’t understand why there’s such a gap between what they state is affordable.
and the assistance.
Crystal (06:48)
Yeah, instead of the 16 some thousand dollars or the $12 ,000 a Raph’s income alone, that would be $3 ,000 a year. That for sure does not pay more than a few weeks worth of an employee’s paycheck. There’s max limits on how many infants they can have. Yeah, the cost is going to have from somewhere.
Lanea (07:06)
absolutely not. Yeah.
Crystal (07:14)
it’s coming from pocketbooks instead of legislation making sure that the economy keeps economying.
Lanea (07:23)
Well, and you have to make sacrifices on the quality of care too, which we landed on the in -home one and that’s hard because they don’t offer some of the benefits that, centers or daycares are going to offer like preschool. my in -laws are actually dealing with this right now. My niece is two and a half and they started.
Crystal (07:43)
Yeah.
Lanea (07:47)
taking her to an in -home one, but they don’t offer any education at all. It’s very much just babysitting. So now they’re balancing the decision of potentially going to a center versus a preschool a couple days a week and duly paying her take their kid to a preschool and save the in -home spot. they’re balancing which one is more affordable. And they have the luxury to even do that because
Crystal (07:54)
So.
Lanea (08:13)
because Adam’s parents are both retired. Now they can’t watch the kids 100 % of the time, but they can pick them up and drop them off a couple times a week. But not all parents have that flexibility or that luxury.
Crystal (08:27)
I was just reading a opinion article by this one grandma and no shade on her. get it. But she’s like, I didn’t raise my children alone just so I could grow old and then finally retire and then spend my days changing diapers. And like I change.
Lanea (08:47)
Hahaha!
Crystal (08:51)
Up to 25 diapers a day. I hear her she earned it But at the same time families don’t have a lot of options
Lanea (08:59)
Well, even having a grandparent that could watch is really a luxury. Adam’s parents are just too old. One of them’s 80, one of them 70, and they just cannot, physically keep up with a toddler, It’s just not possible. And my parents are still working because retirement age is
up. It’s just not very many people I know have that luxury of even having a person that’s able to let alone willing.
Now this was over 18 years ago now, but my grandma moved in with my aunt and uncle when they had twins to help take care of them. So she moved across the state, and it was kind of a dual benefit because she could no longer manage household bills alone, but she also provided childcare as well. it…
Crystal (09:41)
Aww.
Mm -hmm.
Lanea (09:55)
I that’s one thing, but that’s a sacrifice on the grandparents and that’s a sacrifice on the parents as well.
and only child care just expensive, it’s hard to find, there’s daycare – deserts now. And I didn’t really run into this very much. But I know in the last year, Lincoln has had I think, four or five daycares closed. So that’s over 1000 children.
Crystal (10:06)
Okay.
Lanea (10:23)
that have to find a different daycare.
when we were looking at daycare and we started from pretty much the moment that I got pregnant, because I was really scared about not getting a place at a spot that I wanted.
Crystal (10:35)
Mm -hmm.
Lanea (10:36)
So I looked into options and Nebraska, and I think that this might be more nationwide too, but they have a step up to quality program. And so if a provider wants to participate, they’re assigned a rating and the rating incorporates the environment, staff outcomes, et cetera. However, they really just pretty much need to sign up to be on the list.
So that’s where I searched. and the only reason I found our daycare is because they are two blocks from our house. I never would have found her otherwise because she doesn’t really advertise.
it’s hard to find a place. And then once you find the place, you have to pay for it. And that’s the crazy part is how parents are paying for it because it’s so unaffordable for the vast majority of people that they’re literally tapping into savings in order to pay for daycare on that care .com article.
It’s kind of scary because 35 % of parents are saying that they have to depend on their savings in order to pay for daycare. And even more concerning is that 68 % are saying that it’s not sustainable and they expect to have six months or less before their savings are depleted. So what happens after that six months? How do you pay for daycare? Well, then they’re making sacrifices because the majority of
Americans can’t even cover a $200 emergency. And pretty much everybody on that survey, I think it was 91%, reported making major sacrifices such as changes to their work, their life, or their finances just to afford childcare. So people are working multiple jobs or they’re reducing their hours at work so they on and off with their partner
handled child care or they’re moving closer to their family or they’re going into debt or leaving the workforce and that you just to pay for child care.
Crystal (12:38)
it feels like it was just yesterday, but it was in the second quarter of this year, 2024, the total credit card debt in the United States was over a trillion dollars, which is at its highest recorded. And if you’re taking out money for savings to pay for childcare, you best bet you’re putting stuff on credit
Lanea (13:00)
Absolutely, And at that percentage too.
Crystal (13:01)
So it’s just it’s just compounding and like once you get to a certain point, you will not be able to turn the tide or catch up. Something will have to give.
Lanea (13:12)
No, no. Yeah, you’re gonna go under.
we pay $750 a month for daycare and ours is 6 .5 % of our income. And we money.
I don’t understand how having literally the most affordable option in Lincoln, we’re still that close to 7 % of the household incomes in order to be considered affordable.
we have wiggle room. I don’t understand if you were making half that, how you would be paying more. And we have one child too. So I don’t know how people are doing it. I really just do not. When you look at the savings rate and you look at the debt and you look at the cost of housing and the cost of food and everything, it’s not sustainable.
Crystal (13:49)
Yeah.
Right.
all of that adds up to way more than 100%. So all of these, all the government entities are just not communicating on what’s affordable
Lanea (14:10)
absolutely.
Crystal (14:15)
Housing is supposed to be less than 40 % according banks giving out underwater mortgages. 40%, aren’t we supposed to be saving 25 % for retirement? and don’t forget the 7 % for health insurance, which is usually way more than that. Yeah, so.
Lanea (14:35)
Way more, yeah.
Crystal (14:37)
Pretty close to 100.
Lanea (14:38)
Well, It’s a pretty bipartisan understanding that the government needs to step up when it comes to childcare. It’s just nobody is holding our politicians accountable. Nobody. Both the presidential and vice presidential candidates have said that they would like to expand the child tax care credit,
that’s where the accountability comes in. You can’t say that you want to expand something and then not freaking do it. And it goes both ways.
The Democrats, they had control for the first two years under the Biden administration. Did they do anything substantial to address the child care crisis? Hell no. the subsidies that existed under the American Rescue Plan due to the pandemic, they expired under their watch. I’m just so disappointed when both parties claim to be family friendly, but the situation gets worse. It’s just ridiculous.
It’s just not sustainable. And like I said earlier, weird when they release a figure that 7 % is affordable, but then there’s such a gap between childcare subsidies and income levels, and they people not to work. So I see.
I’ve seen both sides of it, I just don’t understand how they’re going to fix this.
And I just did the math because
the average household income is $74 ,580. We’ll take that divided by 12. We’re not going to count taxes or anything. That’s $6 ,217 a month. Take that times 7%. It’s $435 freaking dollars. That is about one week worth of daycare expenses compared to one month.
so in your ideal world, say you had the power, what would you do in order to fix the childcare crisis?
Crystal (16:35)
Thank
Jesus, I don’t even know. We must do better if we intend to remain the top performing country in the world.
other countries like Germany France and Canada and the UK, just a short list to name a few have all figured out ways to support their parental workforce.
And they’re not perfect, but they’re a hell of a lot better than what we’ve got going on, which is basically nothing. And if I recall correctly, Germany and Canada also have programs to pay grandparents who stay home to take care of the grandkids.
Lanea (17:25)
There’s one other country, I think it was Finland, that proposed that as well.
This is just, you know, personal speaking. I don’t have a problem with grandparents helping out. But it just seems kind of crazy to me when not everybody has that luxury of having parents. that seems just so short -sighted. it seems like such a small…
portion of the fix. I think the larger portion is there’s paid parental leave, there is universal child care, there’s private childcare subsidies. It’s more standardized and we have none of that in the US.
And we have it for school. there’s K through 12 public schools across the U S but you don’t have younger It exists in other countries that exist in the U S at a certain age, but not for childcare. That’s just crazy to me.
Crystal (18:28)
new parents from ages zero to five kind of get kicked in the teeth for five years.
Lanea (18:35)
Yeah, yeah.
And it’s just weird on the one hand you have both parties saying that they’re the family friendly party. there’s a crisis because people just won’t have kids. Well, it’s probably not because they won’t have kids, it’s that they can’t afford them.
or that they would have to make sacrifices so extreme that their quality of life goes down.
And like I’ve said before, with Adam and I, it’s been hard on our relationship and it’s not even financially stressful. if it’s hard, not financially stressful, how stressful would it be if you add financial issues on top of that? Like if you’re going into debt every month just to cover childcare.
Crystal (19:19)
just so you can go to a job to bring home a paycheck that doesn’t cover your child care.
Lanea (19:24)
Exactly. But if you don’t go to the job, then you’re potentially derailing your career for years and years to come. It just there’s not a good win situation.
Crystal (19:36)
it impacts everyone. Even if people think it doesn’t because they don’t have kids or their kids are adults, it impacts them because what impacts your neighbors impacts you.
Lanea (19:47)
And that wraps up our discussion on the daunting and overwhelming task of finding and paying for childcare. As we’ve talked about the search and paying for quality childcare is just stressful. We don’t have good answers because one doesn’t seem to currently exist. We can only share what we are doing with our own families. Thanks for joining us
today and we’ll be back next week with another important topic.
Lanea (20:15)
Thanks for listening to today’s episode. Please remember that finances and parenting is a complex balancing act. But remember, By learning and growing together, we can build a brighter future for ourselves and our families. If you have any questions or want to share your experience, reach out to us at YouTube, Instagram, or Spotify at Piggy Bank Patrol. We would love to hear from you.
Sound Bites
“Over 50% of respondents are paying more than $1,500 a month.”
“35% of parents are saying that they have to depend on their savings.”
“91% reported making major sacrifices just to afford childcare.”