September 20th, 2021


cost of child care

I'd wondered why child care is so expensive yet pays the workers so little. I spent part of yesterday reading articles and watching videos; the answer seems pretty simple.

Average US fees are like $10,000 per kid. So say a worker is caring for 3 kids. That's $30,000, to pay for everything. Even if overhead is very low, so that 80% goes to compensation, that's just $24,000 to pay salary and payroll tax and (ha ha) benefits. If labor gets just 60% (still high compared to most other retail business), we're down to $18,000.

If there are 5 kids, those numbers become $50,000 gross, $40,000 at 80% labor, $30,000 at 60%. But quality of care is thought to drop, and many states require 3-4 kids per carer.

Mississippi allows 5 to 1, though it seems workers get paid the same low rate; instead parents only have to pay $5000 for child care. (Source) Of course rents matter for overhead -- Massachusetts requires 3 to 1, and the average fee is more like $16,000. (Though some quick searches claim pay is more like $30-35k, of course that has to pay MA, largely Boston, rents as well.)

Do the numbers check out? MS: 5x$5000 = $25,000. Searches claim $17,000, $22,000, $25,000 -- latter may be *teacher*, vs. an aide; one video suggested 40 kids might have 3 teachers and 6 aides. MA: 3*$15,000 = $48,000, allowing $28-38,000 in labor.

Going the other way: if a worker makes $30,000/year ($15/hour minimum wage, we'll ignore what daycare hours are actually like), and has 4 kids, and overhead is 25%, fees have to be 30/0.75/4 = $10,000/year. Except I forgot payroll taxes, so probably more like $11,000.

So yeah. it's pretty intrinsically expensive. How do other countries offer free child care? It's possible they skimp on the ratios, but mostly it must be because the government spreads the cost over all taxpayers. Instead of a family paying $10,000 for a few years, everyone's paying like $1000 (*very* averaged) every year.

(If a kid needs care for 5 years, $50,000 total, and pays taxes for 40 years, as an adult they pay $1250/year of paying taxes.) See the comment count unavailable DW comments at