Why Daycare Is So Expensive In America

Why Daycare Is So Expensive In America

September 1, 2019 100 By Stanley Isaacs


We are depleting
our savings dramatically. We take $10,000 a month out of savings, sell our stocks, whatever my financial adviser does. I don’t actually even know because I
don’t want to know because it makes me ill to think about, because I had a
good nest egg to buy a house at one point in life and now it’s paying for daycare. So, what’s a typical day
in the Rosler home? I’m usually the first one up and out
of bed, usually, with the cat, shower, make coffee, try and catch some news
on the TV before these guys start waking up. I usually go in around 6:30 and then
what you see now is generally the chaos that ensues. Yeah.
Yeah? Alright, hop down. Let’s wash our hands. Alright, I got to put you down so I can wash hands. Okay? (crying) Wait, Nathan, he’s going to pass out. I need your help here. Come here. Come here. I need help. She’s stuck on you? Yep. (crying) That’s very helpful. Thank you. Ready? Yes. Alright, let’s go. Cool Not bye bye. We’re all going in together. OK. Bye-bye. Uh. Still here. Hello. So I pay about $5,000 a month
for child care for the three children, which is insane. Nathan makes $100,000, after taxes that’s $65,000, and rent is $5,000 a month. So we don’t have that money. (singing) ” Ring around the Rosie” It’s really expensive to raise
a child in America. It costs more to send your kid to this daycare than it does to go to college just four blocks away. Child care costs are different from state
to state, even county to county. Overall, the cost of child care has roughly tripled since 1990, which is more than the overall rate of inflation. Today, it’s a multibillion-dollar business. And it feels like almost everyone is struggling to keep up. (singing) “E-I-E-I-O” Whether you live in Kansas, whether you
live in Missouri, whether you live in California or New York, the cost of
care is often beyond that which families can afford. It causes a lot of stress. Except for public education, almost every form of social service, social policy, has been privatized. Child care centers can’t afford to provide
it and families can’t afford to pay for it. The money will run out in the next
of couple of months and at that point I actually, have absolutely no idea
what we’re going to do. We’re not investing in the well-being and the development of the brains of our children and that’s sinful. The cost of child care is generally paid for by a combination of the government, parents and child care providers. In other countries like Denmark and
Sweden, the government foots most of the bill. In the U.S., the cost falls mostly
on parents and providers. To try and make sense
of how we got here, I called Sonya Michel, an expert
on America’s child care policy history. A lot of other countries have different
rationales for why they have child care, gender equity, preparing children
for school, boosting the economy, whatever. The U.S. to a great extent does not subscribe to those rationales. The issue of child care in America
has been around since the beginning of America itself. Native Americans carried their babies in
woven slings, colonial women put them in standing stools to keep
them from falling into fireplaces and African-American mothers sang white babies to sleep while their own children comforted themselves. In the 19th century, the answer
to who looked after your children generally came down to how
much money you had. There was this ideal of maternal care and
the woman in the home, the angel in the house. There were all these images that were used that some historians called the cult of domesticity. And so the ideal was that women would
stay home to take care of their kids. But that was an ideal that
really only middle class women were able to attain. Working class women, even if they had
a male breadwinner, the husband, the male could not generate enough income
to support the whole family. And so women had to work as well. And so then there was the dilemma
what to do with the kids. Since there was nowhere
to bring the kids, they would sometimes join their parents
at work, oftentimes in dangerous conditions at mines, cotton
mills, factories and farms. There was not even mandatory school
attendance until the late 19th century so kids could work and there
was no legal impediment to that. There was a mix of formal and
informal day nurseries run as charities. We’ve got something in this town that
every American town will soon have to have, a day nursery where working mothers
can leave their children to be cared for while they’re on the job. Although some people call the children
eight hour orphans, they arrive at the nursery as early as 6:00 in the morning and don’t leave until their parents get back from work. It wasn’t this kind of
feminist notion that we’re going to provide child care so women can enter
the labor force on an equal footing with men. From there, widow’s or mother’s pensions were born. A stipend was given to women who lost their male breadwinner because he was injured in a factory or died. So this was just the opposite of child care. Instead of supporting women so they could
go into the labor force, the government said we’re going to support women
so they could stay at home. But when World War II came,
the government started recruiting women to work in factories as the
men went out to war. On the production line, Rosie the Riveter
steps in when the draftees step out. American girls fill 105 millimeter shells
with a nonchalance of tea party. TNT. From 1940 to 1945, the total women in the workforce rose nearly 30 percent. And they very brilliantly realized that if women had children something had to be done for the children. So this was the first and only time that the American government at the federal level said OK we have to support child care. Essentially, the U.S. was the closest it had ever been to having universal child care. An amendment to the Lanham Act gave
families access to child care six days a week, including summers and holidays. And families only had to pay roughly
$10 a day in today’s dollars. But once the war ended and the men went back to work, government funding dried up and a lot of centers closed. In 1965, the Johnson administration
launched Project Head Start, a comprehensive child development program
as part of the president’s war on poverty. A head start for poverty’s children. In 1971, President Nixon vetoed a child
care plan saying it would weaken the role of family. Both of these women in Los Angeles are on welfare, aid to families with dependent children. In the 80s, government funding fell again with a public backlash against the idea of welfare for low income women. These are all programs President Reagan says
he wants to cut or tighten. We will tighten welfare. I thought welfare was already tight. Today the government covers less of the
childcare burden than it did in the 40s. But that’s not to say Uncle Sam
is completely out of the picture. The Head Start program is still
standing and provides roughly $9 billion in grants to community-based non-profits,
schools and health care centers. Even so, parents across the income
spectrum are struggling to balance their budgets with the cost of child care. There’s this butterfly dress or you have
this shirt that has buggies on it. So for years I was very good at
savings and always put money away every month, every week, every opportunity. Are you trying to hold Jory’s hand? The
money will run out in the next couple of months. And at that point, I actually have absolutely
no idea what we’re going to do A 2011 Census study found that on average families were spending seven percent of their income on child care. The Department of Health and Human Services used that data to recommend people not spend more than that. But if you look at how things
actually play out across the country today, there’s not a single state where the
cost of sending a toddler to a licensed child care center averages
out to actually meet that recommendation. For single parents, it’s even worse, creeping up to 65 percent of their median income depending on where they live. HHS said it’s considering updating its
recommendation with a more nuanced approach. Those families who don’t pay for child
care save money by either staying home or having family and
friends step in to babysit. I talked with Naome, a single mom
in South Orange, NJ about what it’s been like to try and make ends meet while paying for child care for her two youngest sons. Child care to me, partially, is amazing
and wonderful and I found the perfect situation for my family and
for my children for their development. And also it makes me physically ill because I have three children to the tune of $2,100 per child and we don’t bring in over $100,000 for a year. So we don’t even cover the cost of what it is for child care and half of our rent. I wanted to see if money really could
buy you peace of mind when it comes to child care. So I went to the
Manhattan office for Homefront Staffing. It’s an agency that places nannies,
butlers and chauffeurs for high income New Yorkers. Top firm lawyers and investment bankers, it’s still a struggle. I mean I definitely think if you have more money that there are more options without a doubt available to you. It’s still like the bottom line, what do you have left over after you pay for everything at the end of the month? Child care isn’t just an
issue to families bottom line. That stress can pile up
at the office too. Naome currently works at a university but she said in previous jobs if she called out sick she didn’t get paid. Even if they’re paid, like I said, a good salary and these are big corporations, they have a lack of performance at work. They’re stressed out, they’re going to
human resources saying like, what can you do for me? Do you have backup child care? My nanny called in sick. What do you do when your nanny calls
in sick and you have a child? Parents need to get their names on lists like before their child’s even born. And it’s a lottery to get in. I applied when I was three months
pregnant and there was a waitlist, which is shocking and bizarre but we’re in
New York City and I think that’s actually pretty typical. Today there are three
main types of child care. Non-profit like programs run by the YMCA, for-profit like Bright Horizons and government run like Head Start or Pre-K. All of this doesn’t even get into the market of private caregivers like nannies and au pairs. Most of the programs in the U.S. are privatized and those centers serve a lot of kids. The cost of care for child care really
is within the individuals who do the caring. The teachers and the nurturers
and the caretakers for those young children. Critically important individuals are expensive. It’s a very labor-driven industry. Licensed child care classrooms require a
specific ratio of kids to teachers. In New York, it’s one teacher for every four infants with a maximum group size of eight. As the kids get a little
older, the class sizes get bigger. HHS has this tool that you can use to estimate the cost to run a child care center in different states. After factoring in salary costs, benefits
and other non-personnel expenses, and revenues from subsidies and
tuition, their theoretical child care center came out with just
$2,537 in net revenue. I talked to one child care provider who
said it’s a good year if she just breaks even. I wanted to see one of these daycares in action. I found a place in New Jersey called Work and Play. It’s kind of like a WeWork meets daycare. Parents can work on the ground floor
and enroll their kids in the child care center downstairs. And it’s a different model than
most centers that charge tuition. Here, parents pay $15 an hour
for the times they do need. So if you just need care Mondays 9 to 1, you commit for a three-month session and only pay for those set times. As a business owner, I can see why it’s so expensive. You know, once you’re paying a salary there’s also payroll costs on top of that. And then there’s, you know, the facility costs, the heat, the electricity, the Wi-Fi, everything that you need. You also want to pay your teachers
well because, you know, it’s important. They’re just people trying to make
their life work as well. The median pay for child care workers in the U.S. in 2018 was $23,000 a year or $11.17 an hour. That’s slightly less than animal caretakers
like pet sitters and groomers. The childcare providers really feel that they cannot survive on the low salaries and the long hours. So you will see a high turnover rate. I talked with a lot of families who needed child care and most of their needs came down to three main things. Safety, quality and affordability. It’s not just urban centers
that are feeling the squeeze. The demand for child care is way higher than the supply all across the country. More than half of Americans live
in what’s called a child care desert. We did a study a couple of years ago
and we found there was space for only 27 percent of those children likely to need care. That’s a really low number where we don’t know where the rest of those children are being cared for. So it’s a huge concern for us. Some of those families who can’t get
licensed care may turn to unlicensed centers that are typically cheaper
but aren’t always safe. In some cases, it’s life or death. Barbara Bowman has been working in
child care since the 50s. She led early childhood education at Chicago Public Schools for eight years and spent some time consulting the U.S. Secretary of Education in 2008. I asked her what she saw as the biggest
hurdle to getting things done in Washington. Federal child care funding in the U.S. has been in this perpetual ebb and flow in response to cultural values. Today we’re facing record numbers
of women in the workforce. And for many Americans, the prospect of having a child means you have to decide whether or not it’s worth it to go back to work. If you don’t have access to the high
quality care, you know, you may see women having to stay home and take care of their children because they have no other options. Some clients have given up their jobs
because it doesn’t make sense for them to work anymore because all the money they’re paying is going to their child care. In Estonia, mothers are entitled to more than two and a half years of paid leave. But even in one of the most progressive countries for parental leave there’s still a pretty big gender disparity. Fathers in Estonia are only
entitled to two weeks. Meanwhile, the U.S. is the only developed country where neither mothers or fathers are entitled to any paid parental leave. That absence of federal legislation has resulted in a lack of access for working parents. In 2017, only 15 percent of American
workers had access to paid family leave. There are some states that have
taken paid leave into their own hands. As of May 2019, at least
five states had their own paid family leave laws. Of course, there are federal subsidies
for some families who can’t afford child care. But there are a lot of people who qualify but don’t actually get the vouchers. That’s in part because some parents
just don’t apply. Either because they don’t know about them or find the application process too daunting. In 2018, President Trump added an additional $5.8 billion in discretionary spending over two years to the Child Care and Development Block Grant. You can also write off up to $3,000 dollars in child care expenses from your taxes for one child. Up to $6,000 for two or more. The benefit you get from that write off depends on your income. Altogether, Americans claimed $3.6 billion in child care credit in tax year 2016. Compared to some other tax credits that cost more than $100 billion a year, the tax break for child care is pretty minimal. I mean, there is a child care tax dependent credit you get. It covers nothing, it’s like maybe two to three thousand dollars a year. There needs to be something that either you get a credit for having a caregiver in your home, much more than $3,000, that you know you can write off on your tax return. Or the corporations should have
other options when they’re hiring employees. So, money can buy you more options. But it seems like parents all across the income spectrum are stressed about the cost of child care. And politicians in Washington are
starting to take notice. That’s why I’m proposing
a big structural change. Universal high-quality child care and
early education for our littlest ones. It is un-American. We should be the number one nation for investing in children, investing in child well-being. The cost of raising a family… Ivanka Trump has pushed the
issue in the White House. It is a priority of this administration and it is a legislative priority to ensure that American families can thrive. President Trump included a measure in the 2020 budget proposal that would give new parents at least six weeks paid leave. And Democrats have put forward their own
paid leave proposal with the FAMILY Act. Republican senators Marco Rubio and Mitt Romney have put forward a paid family leave bill. It would let parents pull up to three months of their Social Security benefits to help cover leave after having a child. But as of early May 2019, neither
proposal has made it through Congress. And while these proposals
would help families with newborns, they don’t change much about the struggles of paying for child care for toddlers before they go to kindergarten. One Democratic proposal would try and address this by upping the child tax credit to $3,600 a year for families with young children. That would be spread out
over $300 a month. And on the heels of his universal Pre-K, New York City Mayor Bill de Blasio is rolling out 3-K for All, an effort to give three-year-olds in low-income neighborhoods access to free, all-day early childhood education. The program is currently up and
running in 12 districts across New York. On a smaller scale, Jamie’s talking with companies to see how they can make their corporate culture better for parents. There is definitely still a disconnect, I would say, between top management and human resources and just making it a priority. There’s no one solution, it is going to have to be a combination of solutions to help address this issue. Some people are tackling it by
adapting to the changing workforce. A lot of times the jobs that low wage workers have are on different hours that don’t match what the child care centers have. So they’re not typical 9 to 5 jobs. So that puts an additional challenge
on finding available child care. There are a whole lot more independent contractors now than there were 10 years ago. And statistics show that that number is
just going to be going up. They might not need five days a week of 8 a.m. to 7 p.m. child care anymore. She won’t let me pull her socks up. Marley and Jory were just holding hands with each other. Stop it. Awww. Let’s go. Let’s go see them. Come on kiddo. There’s nothing cheap or affordable. You do what you have to do for your
children and you want them to have the best possible early childhood experience
and entire life experience. And so once you’re a parent, doesn’t matter what you have, what you make, what you do. It’s all for them. And that’s where we are.