Study: Care For One Infant Costs At Least 10% Of A Family's Yearly Income In 48 States 

Key takeaways from Bankrate’s Cost of Infant Care Study

• Full-time center-based care for one infant costs at least 10 percent of family income in nearly every state, according to Bankrate’s Cost of Infant Care Study.
• The analysis found that New Mexico, Hawaii and New York are the least affordable states for full-time center-based infant care. Average prices for infant care for one child represent between 19.6% and 20.5% of median family income in each state annually. However, in 2022, New Mexico dramatically expanded its threshold for who qualifies for its state child care subsidy program, making thousands more families eligible for free child care.
• South Dakota, North Dakota and Utah are the most affordable states for full-time center-based infant care. On average, infant care costs 8.7% to 10.3% of a typical family’s yearly income in those three states.

from BankRate.com, Oct, 2024

A typical week for Diana Carter, a 35-year-old entrepreneur with three kids based in Charlotte, North Carolina, and her husband, involves coordinating day care drop-offs and pick-ups for their middle child. 

But that’s just the tip of the iceberg: They also homeschool their oldest son and have family stop by multiple times weekly to help care for their youngest child, among other caregiving and household responsibilities.

If juggling that wasn’t enough, the cost of child care constantly looms over their heads. Carter and her husband pay $315 per month for part-time day care for one of their daughters and anticipate that figure growing to $570 per month once their youngest begins attending a half-day program at their church’s preschool. 

In total, Carter says they’ve spent more than $7,000 on child care over the last five years. Full-time child care would be so expensive for them that it may not make financial sense to pay for it, she says. In that scenario, she would consider becoming a full-time caregiver.

“If we were to put our children in full-time child care, we would have to take a serious look at our budget and consider whether it would make sense for me to take a step back from my career,” she says. 

Child care has become one of the biggest expenses for parents no matter where they live in the country. A new Bankrate analysis finds that full-time center-based care for one infant costs at least 10 percent of a typical family’s annual income in 48 states and the District of Columbia. 

In some states, like New York and Hawaii, infant care costs can take up roughly 20 percent of a typical family’s yearly income. And some of the more affordable states in the country, such as New Mexico and Kansas, are surprisingly expensive when it comes to infant care. 

Our findings pull back the curtain on infant care costs across the U.S., revealing where they’re the most and least affordable. Whether you live in a higher- or lower-cost state for infant care, our analysis suggests there are ways for parents across the country to cope with exorbitant child care prices.

Infant care costs are high no matter where families live in the U.S.

To gauge child care affordability across the U.S., Bankrate looked at the percentage of annual median income spent on full-time center-based infant care for one child in 2023. The data for the analysis came from the U.S. Census Bureau and Child Care Aware of America, an advocacy group that works with state and local Child Care Resource and Referral agencies. We also compared the national average price of infant care to other big expenses in a typical family’s budget, using data from the BLS’ 2023 Consumer Expenditures Survey.

The average cost of full-time center-based care for one infant in the U.S. was $14,070 in 2023, according to Child Care Aware of America estimates. That’s more than a household’s average annual budget for food ($9,985 per year), health care ($6,159 per year) and transportation ($13,174 per year), according to our study. The only expense that cost more for households on average is housing ($25,436 per year). 

Nationally, $14,070 per year for one infant in full-time center-based care is equivalent to a monthly average of $1,173. According to U.S. Census Bureau data, a family with children under 18 years old in the U.S. earned an annual median income of $95,721 in 2023. That means it would take 14.7 percent of a family’s median income to afford that national average price tag, though the cost varies widely by state and locality, according to our analysis.

According to an analysis by the Center of American Progress, child care is generally most expensive for infants and toddlers and gradually decreases as children age. However, it can vary widely depending on the type of child care provider, the age and number of children in a household and where families live. 

Average prices for full-time center-based infant care range widely across all 50 states, including the District of Columbia, from $7,862 to $25,480 annually. This shows that the high cost of child care affects parents across state lines, forcing many to get creative with their budgets, withdraw from their savings, or take a step back from their careers. 

The motherhood penalty

Working mothers tend to feel more of the financial impact of high child care costs than their male counterparts because they’re more likely to reduce their hours, take lower-paying jobs or leave the workforce to accommodate for caregiving. Bankrate’s Motherhood Penalty Study found full-time working mothers earned 31 percent less in wages than full-time working fathers in 2023. If that wage gap remained the same over 30 years, those lost wages could add up to roughly half a million for working mothers.

In almost half of U.S. states (24 states), the percentage of family income spent on infant care is higher than the national percentage (14.7 percent). Twenty-seven states have a percentage of family income spent on infant care that is the same or lower than the national percentage. 

The experts we spoke to explained that significant regional differences in child care costs across the country are likely due to variations in the cost of living, local child care supply and demand and local labor forces.

“In most cases, that is driven by regional variations and local labor markets,” says Elliot Haspel, a child and family policy expert and author of “Crawling Behind: America’s Child Care Crisis and How to Fix It.” “I think it’s fair to say that in no state in America is child care broadly affordable, accessible and abundant.”

Sandra Bishop, senior director of research at Child Care Aware of America, says 70 to 80 percent of the cost of child care is due to staff costs because providers need high ratios of adults to children for basic health and safety reasons. At the same time, child care workers earn low wages, leading to broader staffing shortages and frequent turnover in the industry, Bishop says. A recent analysis by the Federal Reserve Bank of Chicago found that the median wage paid to childcare workers is in the bottom 5 percent of all occupations.

“We’re basically subsidizing the system on their [workers’] backs,” Bishop says. “That’s the dilemma.”

While child care providers nationwide are struggling to keep their doors open, many parents can’t afford to pay more. The end of September 2024 marked one year since COVID-19 federal funding for day care providers ended, which left many families scrambling to find affordable child care. Additionally, child care costs have risen exponentially over the last three decades, over 1.5 times faster than overall inflation since January 1991, according to Bankrate’s analysis of BLS data. 

5 least affordable states for infant care

• New Mexico, 20.5%
• Hawaii, 20.1%
• New York, 19.6%
• California, 18.7%
• Massachusetts, 18.4%

New Mexico is the least affordable state for infant care, with the highest percentage of income needed for child care for one infant (20.5 percent). Last year, families with children under 18 earned a median income of $65,952, and full-time center-based child care for one infant cost an average of $13,521. 

The average cost of infant child care isn’t significantly higher in New Mexico compared to other states, but families in New Mexico earn a relatively low median income, resulting in a higher percentage of family income allocated to child care. 

Despite being ranked No. 1 for the least affordable, New Mexico is one of the few states that widely supports subsidized child care and has tried to make child care accessible for most families. In 2022, New Mexico dramatically expanded its state child care subsidy program by doubling eligibility for families, from two times (200 percent) to four times (400 percent) the federal poverty line, according to a statement from New Mexico’s governor’s office. That means a family of four earning up to $124,800 annually can qualify for free child care, making thousands more families eligible. 

Hawaii, New York, California and Massachusetts round out the top five states where families spend the highest percentage of their incomes on infant child care. A typical family spends at least 18 percent or more of their income on infant care in those states. 

In addition to New Mexico, some of the country’s more affordable states are also some of the least affordable states for full-time center-based infant care. In Kansas and Minnesota, for example, the average cost of care for one infant represents between 16.6 percent and 17.3 percent of each state’s median family income annually. 

New Mexico isn’t the only state trying to bring child care costs down for families. Other states and cities have followed New Mexico’s lead, recently enacting policy reforms to make affordable child care more accessible to families in their communities. …

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