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How much does daycare cost? Probably more than you think

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Ian and Marjorie live a pretty typical life for a young, working couple in the suburbs of Orlando, Florida. Ian works as a security consultant, and Marjorie is a scheduling coordinator at a local hospital. They have two children, Lex, nine years old, and Lena, who just turned three.

Like many young families, they struggle with a mortgage, two car payments, and the rising cost of living. But, their biggest financial challenge: paying for childcare for the kids. It seems as if most of Marjorie’s salary goes towards daycare for Lena and after-school care for Lex.

How much does childcare cost?

Like all other goods and services, the cost of childcare will vary according to the location and the quality of the product received. Childcare costs will also take into account the age of the children.

According to Childcare Aware of America, the average cost of center-based daycare in the U.S. is $11,896 per year ($991 per month) for infants and $10,158 ($847 per month) for toddlers. In some major markets like San Francisco and New York, the monthly cost for infant care can exceed $2,400.

The cost for preschoolers is a little less than for infants and toddlers, averaging $771 per month. Infants and toddlers need more hands-on care, and more childcare providers must be assigned to each room.

The cost for in-home care for babies and toddlers isn’t much lower. The average in-home daycare charges about $9,000 per year ($752 per month) for infants and $8,426 per year ($688 per month) for toddlers. Charges for in-home care for preschoolers averaged $833 per month.

Family members or friends sometimes charge little or nothing to provide in-home care for kids, while some charge as much as traditional daycare.

Another option available to working parents is hiring a full-time nanny, which can be the most expensive route to take. Depending on your location, how much competition there is for qualified candidates, and how many children you have, rates typically range between $11 and $25 per hour.

The most qualified and experienced nannies sometimes request benefits, such as paid holidays, vacation, sick days, and employer-paid health insurance. Hiring a nanny makes you an employer, making you responsible for your nanny’s Social Security taxes.

If you have your heart set on having a nanny, but the cost is too high, consider doing a “nanny share.” In this scenario, the nanny cares for the child or children of two or more families at the same time. Your hourly cost is typically lower since you’re sharing the nanny, and your child is getting less one-on-one attention. Nanny shares can be full-time or part-time.

Last but not least is the babysitter. According to UrbanSitter’s 2020 National Childcare Rate Survey, parents pay babysitters an average hourly rate of $17.73 for one child, $20.30 for two children, and $21.49 for three children.

Of course, babysitting rates differ across the country. San Francisco, once again, leads the nation with an hourly rate of $21.17 for one child, while the rate is $12.53 in Las Vegas.

There may be several ways to get the care you need for your child, but it is still a worrisome financial burden for many families. According to’s 2021 Cost of Care Survey, 85% of parents, compared to only 72% in 2020, report spending 10% or more of their household income on child care.

“The profound impact that access to child care has on families has never been clearer than throughout the pandemic,” says Carrie Cronkey, chief marketing officer of “As we begin to fully re-engage with school and work, child care remains key both in terms of availability and cost.”

The survey also revealed that 94% of parents had used at least one major cost-saving strategy to save money on childcare in the past twelve months, including reducing hours at work (42%), changing jobs (26%), or leaving the workforce altogether (26%).

What can be done to help these parents ensure that their children are cared for affordably while still allowing them to remain employed and build a successful career?

How employers can help parents with the cost of childcare

Employers have the opportunity to help their employees who need child care, thanks in part to the tax code. The Employer-Provided Child Care Credit, under Internal Revenue Code Section 45F, gives employers who provide childcare for their employees a tax credit of up to 25% of qualified childcare expenditures, and 10% of qualified child care resource and referral expenditures.

A tax break isn’t the only financial incentive employers get by helping their employees with their child care needs. Employee retention must be considered.

“The Great Resignation” continues to quicken, according to an article in The Atlantic titled, “The Great Resignation is Accelerating.” Cited are Bureau of Labor Statistics revealing that almost 7 percent of workers in the hospitality sector quit their job in August, meaning that one in 14 hotel clerks, restaurant servers, and barbacks gave their notice.

The cost to employers to recruit and train new workers is yet another significant blow to their bottom line. This sector was especially hard-hit during the pandemic’s peak, and dwindling staff are not meeting customers’ expectations, affecting sales and profitability.

While some employers may not be able to pay for childcare for employees, many are increasing their work-from-home flexibility, something that employees have been clamoring for. In fact, a 2021 survey by Breeze found that 65% of employees would take a 5% pay cut if it meant their employer would allow them to work remotely full-time.

[ Related: A quick guide to great resignation of 2021 ]

Will the federal government step up?

It looks like the U.S. government could be about to take some pressure off of parents. The Build Better Act, which is currently making its way through Congress, includes 12 weeks of universal paid family and medical leave, allowing parents the time off to care for their newborn children. The benefits would likely start in 2023. It doesn’t quite compare with Japan and Norway — who each provide parents with 52 weeks of paid leave — but it’s a start.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published November 9, 2021
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