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Report: Millennials Struggle to Find Affordable Childcare

parents-mi

Millennials are the first generation in modern history to have higher poverty rates and lower incomes than their two preceding generations, two major impediments to buying a home, raising a family, and pursuing more appealing career options.

Yet those two economic challenges are exacerbated by the rising costs of child care. “Quality, affordable child care is critical for all families, including millennials often just beginning their families and careers,” said Lynette M. Fraga, Ph.D., Executive Director of Child Care Aware® of America.

Key findings of the report include:

  • In 17 states and D.C., it takes at least 50 percent of millennial’s income to pay for infant child care in a center;
  • Millennial parents with two children (one infant and one 4-year-old) need to allocate at least 45 percent of their income to pay for center-based child care;
  • The government standard for affordable child care fees set by the Department of Health and Human Services is less than 7 percent of family income, yet across all states, the average cost of center-based infant child care exceeds 25 percent of the average median income for millennials—with Massachusetts, the highest at 68 percent.

Pew Research Center defines millennials as youth and young adults born between 1980 and 1997. Many of these young adults are in the midst of planning their families or are already raising children. These young parents juggle various demands in order to provide the best future for themselves and their families.

Millennial parents typically fall into two groups: those who are new graduates just beginning to start a family, and those who are returning to school, or hoping to return to school, to acquire a higher education after having a child or children. Both groups are struggling to afford and access quality child care.

“Our analysis shows child care is simply not affordable for millennial parents,” said Dionne Dobbins, Ph.D., Senior Research Director at Child Care Aware® of America. “Those with young children and those looking to start a family have to account for the expenses of maintaining a home, a child’s needs, and education related costs.”

Data reveals roughly 40 percent of student parents take on full-time work, and approximately half are unmarried—highlighting a population with a high demand schedule and lack of additional support for child care within the household. These parents also fit more into a single day than others; in fact, it has been estimated low-income young parents work the after- midnight shift at a rate three to four times higher than their non-parent counterparts, one illustration of the need for nontraditional hours for child care services that is often unavailable and result in parents relying on informal markets which can be dangerous.

millennials

Solving the deepening problem is not only an issue of concern for millennials, it is crucial for our economy. A Forbes article covering a Standard & Poor’s report states with millennials not purchasing homes, the U.S. could be missing out on $49 billion a year through 2019. In addition, if student loan defaults increase, the economy could be at risk since the federal government provides more than 85 percent of these loans.

As the debate on the President’s new budget begins on Capitol Hill, it is imperative that child care’s irreplaceable role in the American dream be recognized and supported. We propose:

  • Increasing significant federal investments in child care assistance for eligible children and increasing quality improvement efforts. We recommend an increase to the Child Care and Development Block Grant (CCDBG) Act of 2014 by $700 million in the FY 2018 budget. This ensures that CCDBG can be effectively implemented and families do not lose child care assistance.
  • Expanding the Child and Dependent Care Tax Credit (CDCTC) to help all families cover the rising cost of child care.
  • Increasing funding for the Child Care Access Means Parents in School (CCAMPIS) program, a U.S. Department of Education discretionary/competitive grant to qualifying institutions of higher education for low-income parents pursuing postsecondary education, despite granting nearly $15 million to 85 institutions in 2015.
  • Providing paid leave under the Family and Medical Leave Act (FMLA) and expand FMLA to cover all workers. Unfortunately, current law only stipulates unpaid leave for those who work in companies of 50 of more employees.

“As we see more young parents look to pursue a higher education as well as new graduates trying to start families, the need for child care is paramount,” Dr. Fraga said. “Child Care Aware® of America is committed to the mission of advancing a child care system that effectively serves all children and families. In working toward our vision, where every family has access to high-quality affordable child care, it is important to evaluate the issues facing our newest generation of families.”

Explore information on the millennial generation and how the changing economic environment impacts parents’ ability to afford child care at usa.childcareaware.org/millennial-map. The full Parents and the High Cost of Child Care: 2016 report is available for download here.

How Paying for Quality Child Care Upfront may Eliminate College Tuition Bill

Students painting in class

There is a school of thought out there that parents should invest in high quality child care for their toddlers and pre-schoolers, by paying for a nanny or an excellent early childcare option versus skimp on quality on the front end, and end up having to foot your child’s tuition bill when they get to college. The idea is that premium and superb early childcare pays off in the end. A child will be more likely to excel and perhaps get a scholarship or be confident and have the abilty to work while in school.

Here is one such argument, presented from a nanny support site, so understand the bias. It’s still worth a consideration:

With the cost of childcare equaling the cost of college tuition in some states, some parents must consider if they want to pay for quality childcare or save for their child’s college education. According to a report from Child Care Aware of America, as reported on Time Moneyland, in 35 states plus D.C., the average annual cost for an infant in center-based care was higher than a year’s tuition and fees at a four-year public college. If a parent finds that they can afford to either pay for high-quality childcare or save for college, choosing quality childcare is probably the right decision.

Here’s why: The early childhood years shape who a child is and what that child thinks, feels, and becomes. According to J. Fraser Mustard, PhD, “The early years of human development establish the basic architecture and function of the brain. The early period of development (conception to ages 6-8), affects the next stage of human development, as well as the later stages.” While many parents opt for center based care, hiring a professional and qualified nanny allows parents to hand select the childcare provider who will help shape who the child will become and govern the practices, principles, and philosophies under which that care is provided.

Low quality child-care can leave lasting damage. According to a Washington Post article that reported on the 2010 federally funded study published in the May-June issue of Child Development, teenagers who received high-quality care were less likely to engage in problem behaviors and scored higher on tests designed to gauge cognitive and academic achievement. Choosing high-quality childcare where children receive consistent customized, personalized, and individualized care sets children up for later success. Children can finance their own college education.

While most parents cringe at the thought of their children having to take out loans to pay for their college education, for many families that will be their reality. According to a Huffington Post article reporting on a study conducted by the Associated Press, 60% of college kids take out loans to help pay for college.

Unfortunately for parents there are no loans or viable long-term financing options for childcare and children can’t contribute to their own childcare fund, so financing a college education may be more realistic. As parents consider their childcare choices, oftentimes private in-home childcare in the family’s home is automatically dismissed as unaffordable, when in fact for many families, hiring a nanny can be the most cost-effective childcare option.

For families with two or more children who need childcare and parents who have long workdays and require flexible care, hiring a nanny can cost the same or even be less expensive than using daycare. Unlike with daycare, nannies are paid per family, not per child. And because the parents are the employers, they set the schedule and hours for the nanny to work.

When you add up early care, late care, and the per minute rate most day cares charge to parents who are running late, in addition to being a high-quality option, nanny care is surprisingly a financially attractive one too. Some parents believe that they should foot the bill for their child’s college education, while others feel that their child should foot the bill, and most feel that they should help out as much as they can.

But when it comes to childcare, there’s no real option. While some low-income parents may qualify for daycare vouchers or subsidized care, for most families the rising costs of childcare will just be something that parents struggle with until their children outgrow the need for it – leaving parents plenty of time to begin worrying about and saving for college.