Money Matters - Child Care Costs By State

 With both parents working in more than two-thirds of families with children, the personal-finance website WalletHub today released its report on Child Care Costs by State to put a spotlight on the places where taking care of children puts the biggest strain on Americans’ finances.

To identify the states with the highest and lowest child care costs, WalletHub analyzed the prices of family-based and center-based child care and adjusted them by the median income.
 

Highest % of Income Spent (Married Couples)	Lowest % of Income Spent (Married Couples)
1. New York	42. Georgia
2. New Mexico	43. Alaska
3. Washington	44. Alabama
4. Oregon	45. Louisiana
5. Vermont	46. Kentucky
6. California	47. North Dakota
7. Rhode Island	48. Utah
8. Hawaii	49. Mississippi
9. Colorado	50. South Carolina
10. Massachusetts	51. South Dakota

 

Highest % of Income Spent (Single Parents)	Lowest % of Income Spent (Single Parents)
1. District of Columbia	42. Iowa
2. New York	43. Arizona
3. Massachusetts	44. Nebraska
4. Vermont	45. North Dakota
5. Rhode Island	46. Maine
6. Washington	47. South Carolina
7. New Mexico	48. Idaho
8. Oregon	49. Alaska
9. California	50. Utah
10. New Jersey	51. South Dakota

 
Key Stats

• New Mexico has the highest cost of family-based child care for a married-couple family, which is 2.3 times more than in South Dakota, the state with the lowest.
   
• Hawaii has the highest cost of center-based child care for a married-couple family, which is two times more than in South Dakota, the state with the lowest. 
   
• The District of Columbia has the highest cost of family-based child care for a single-parent family, which is 2.9 times more than in South Dakota, the state with the lowest.
   
• The District of Columbia has the highest cost of center-based child care for a single-parent family, which is 2.5 times more than in South Dakota, the state with the lowest.

 
Note: All costs are as a share of income.
 
To view the full report and your state’s rank, please visit:
https://wallethub.com/edu/child-care-costs-by-state/151929

“It costs a lot of money to take care of a child’s needs, and many parents are left with the dilemma of whether to forgo one salary to do their own child care for the first few years or to shell out a significant chunk of their income for child care services. Married parents who both work can expect to spend as much as 13% of what they earn on child care, while single parents’ costs can amount to an astounding 51%.”
–
“New York is the state with the most expensive child care, costing around 11% to 12.8% of the median income for married couples, depending on whether it’s family child care (based in a private home) or at a child care center. Single-parent households have things even tougher, needing to shell out around 38.4% to 44.7% of the median income for child care.”

- Chip Lupo, WalletHub Analyst

 
Expert Commentary

Has childcare become less affordable over time? Why?

“Childcare has become less affordable over time. Childcare costs may exceed what some families pay in rent. The causes for the increase in childcare include the lingering effects of the COVID-19 pandemic, operational costs, limited public funding, and declines in available childcare options.”
Lori Latrice Martin, PhD – Associate Dean; Professor, Louisiana State University
 
“Child care has become more expensive over time. Data from the Bureau of Labor Statistics indicate that the price of day care and preschool has increased more than 20% from 2020 to 2024. This increase is worsened by higher amounts of inflation that occurred for part of this period; this increased costs for families across the board. Some of this cost increase reflects factors like supply and demand, increasing facility costs, staffing shortages, inflation, and wage increases for child care workers.”
Steven Meyers, PhD – Professor, Roosevelt University; Financial and Clinical Psychologist
 

Are high childcare costs influencing family planning decisions among young couples?

“High childcare costs are certainly influencing family planning decisions among your couples. They are having to decide how to create or adjust their work schedules so that they can earn enough to pay for childcare along with their other expenses. Other young couples are having to decide if it would be more cost effective for a parent to leave the workforce altogether. Some young couples may make difficult decisions like giving clothes to friends and relatives who may be able to assist with childcare thus reducing that expense. Young couples may increasingly live in multigenerational households for that reason. Young couples may also decide not to have children or limit the number of children to make childcare more affordable, whether they remain in the workforce or not.”
Lori Latrice Martin, PhD – Associate Dean; Professor, Louisiana State University
 
“We know that the US fertility rate has decreased, and some have suggested that the rising costs of child care is one reason. However, family planning decisions are influenced by many factors. Some are economic factors (for example, overall cost of living across many different areas), some are social (for instance, many families are having children at later ages), and others are personal (like whether there are family members who can assist with child care or how people balance their careers with building a family). Because there are so many factors at play, it is dubious to emphasize only one as the mean reason.”
Steven Meyers, PhD – Professor, Roosevelt University; Financial and Clinical Psychologist
 

How can local authorities help reduce childcare costs and improve availability?

“Local authorities could help reduce childcare costs by making childcare free to all. This is not likely to happen any time soon. Local authorities could in the interim continue to subsidize childcare for low-income families and charge other families based upon their incomes. Corporations could also consider providing childcare services through direct care or vouchers as one of many benefits of employment. Local authorities could provide grants to childcare providers to assist with their operating costs and provide tax and other incentives to increase childcare options.”
Lori Latrice Martin, PhD – Associate Dean; Professor, Louisiana State University
 
“Different levels of government can reduce child care costs in partnership with each other. The federal government helps with targeted programs like Head Start. The federal government also has block grants that are sent out to the states to administer. Local governments and communities then partner with their states and can assist when they modify zoning codes if needed, streamline licensing for facilities, provide grants, or offer tax incentives.”
Steven Meyers, PhD – Professor, Roosevelt University; Financial and Clinical Psychologist


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• Best & Worst States for Children’s Health Care
• Best & Worst States to Raise a Family
• Best & Worst States to Have a Baby
• Best & Worst States for Working Dads
• Best & Worst States for Working Moms
• States With the Best & Worst Budgeters
• Changes in Inflation by City
• States Where People Have the Highest Income