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Mar 4, 2024

The Childcare Cost Dilemma

Sponsored Content provided by Jane Morrow - Executive Director, Smart Start of New Hanover County

A quick perusal of the news will find many stories about the high cost of childcare.  “How can it be so expensive?” is often the lament of a harried parent trying to make ends meet.
Childcare is certainly a big percentage of many families’ budgets, especially because so many families with young children are just starting their careers.  Full-time childcare for one infant can cost 17.8% of the median household income of a family in New Hanover County.  For someone earning $15.00 an hour it can be over 38% of their gross income.  Cost generally declines as children age, but families with more than one child enrolled have to pay for each child separately.  Care for children is simply unaffordable for many families.  In fact, according to the U.S. Department of Health and Human Services, child care is affordable if it costs no more than 7% of a family’s income.
Thankfully, we have some programs that can help families.  There are childcare subsidies that pay up to a set market rate once a family has contributed 10% of their gross income.  New Hanover County helps fund a number of classrooms for low income three-year-olds.  New Hanover County Schools manage the Federal Head Start program and the State NC Pre-K program for three- and four-year-olds, all of which are free for families. These programs, however, don’t meet all of the need in our community and not all of them are full day.
While the cost of care is a large part of a family’s budget, the hourly rate paid for care is pretty low.  Most families will use 9-10 hours of care a day, five days a week.  If they are paying $250 a week for a toddler, that is just over $5 an hour for care.  The cost of child care is simultaneously inexpensive on an hourly basis but still unaffordable for most families because of the large quantity of care that must be purchased when someone works full-time.
The childcare fees a family pays cover not just their teacher’s salary but also must help pay for the director, other administrative staff, a cook, a floater, etc.  For most programs 70-80% of revenue goes towards salary.  Out of the remaining income, the childcare program has to pay the rent or mortgage, liability and other insurance, utilities, food, classroom materials and supplies, cleaning, and more. In order to manage this, wages for childcare teachers remain low compared to other jobs with similar skills and duties.  Wages for early educators in New Hanover County average between $14.00 and 18.00 per hour. 
As one commenter on a Reddit thread said, “Yeah, we can’t afford to pay them more and they can’t afford to charge less.”
Childcare is a labor‐​intensive industry which can’t be automated.  There is also a limit on how many children one teacher can care for - both because of state regulations and because parents demand safe and supportive care for their children. 
In order to work, parents need high quality childcare; programs where they know their children are safe, healthy, learning, and nurtured.  That costs money.  As with any expense, the higher the cost in one area, the less funds are available to spend in other areas.  Families with high childcare costs are less able to save for emergencies, for retirement, for college, for a downpayment on a home and may defer other spending as well.
Thus, the cost of childcare has an impact not just on each individual family but on our economy as a whole.  Parents may turn down jobs or work fewer hours when faced with high childcare costs, which, in turn, puts pressure on wages across the board.
Just as the cost of child care has impacts beyond the family, solutions can not be found only within each family.  Businesses, federal, state, and local government, and philanthropy are all needed to build systems that support children and working families. Together we can help ensure that children get a good start in life and that we have a strong and vibrant economy. 

Smart Start of New Hanover County is our local hub for early childhood – the first 2,000 days of a child’s life.  We work with early educators to enhance quality, we assist with the cost of childcare by supporting the local childcare subsidy program, and we work with families to strengthen their ability to support their children’s development. Connect with us to learn more about why early childhood matters, why it is important for your business both today and in the future, and to learn how you can advocate for investment in the early years.

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