Child Care in America Is Broken. Here Are Five Ideas for How to Fix It.

First of all, for child care to be effective, you need to get rid of the dog and make a kid. If you're living alone, go out there, hook up, and start producing life. Don't give me that crap that you've already raised children or are entering menopause.

It takes a village. We need more warm bodies.

Child Care in America Is Broken. Here Are Five Ideas for How to Fix It.

Parents are paying more than they can afford, but daycares and preschools can barely make ends meet. It is a market failure—but it doesn’t have to be.

By Te-Ping Chen

Aug. 20, 2025 5:30 am ET

This week, we’re bringing you stories about what it costs to raise a child in 2025, and how families are making it work.

Child care in America is broken.

Working parents with young children are stretched thin; a year of daycare can easily cost more than a year of tuition at an in-state college. At the same time, child-care workers are severely underpaid, often earning barely enough to get by and with no real path to ever make much more.

It is a problem with broad repercussions for the entire economy. Parents who can’t afford quality care, or can’t find it, can’t work. Young adults who are scared off by the cost of care might be less likely to have that second child, or even to have children in the first place.

So, is there even a solution? We asked leading thinkers to weigh in.

First understand the underlying problem

Child care is expensive mainly because people are expensive. States enforce strict staffing ratios to ensure safety and quality. For example, in many states, an infant classroom can’t have more than four babies per teacher.

Trimming these costs is all but impossible. Daycares can’t deploy AI to change a diaper, or hire a remote worker to give a kid a hug. A typical daycare might spend between 60% and 80% of its budget on wages, researchers say.

All that makes it hard for daycares to offer good pay. Child-care employees are some of the nation’s lowest-paid workers, earning a median $15.41 an hour. Many don’t get healthcare benefits. That all makes it hard for daycares to find and retain good teachers—and that in turn makes it even harder for parents to find a daycare slot.

“In child care, you’re often making less money than Walmart greeters,” says Heidi Hagel-Braid, chief executive of the nonprofit First Children’s Finance. “The math doesn’t math.”

Daycares that want to raise their teachers’ wages have to hike their tuition fees, and many parents can’t afford that. Families in the U.S. paying for child care spent an average of 22% of their household income on such services, according to Care.com survey data.

Figure out the best ways to train and equip teachers

The rules for who can teach at a daycare or preschool vary significantly, which can create problems.

Some districts require at least some preschool teachers to have a college degree. But teachers who take on student debt might soon have to decamp for the higher wages at elementary schools. Other states don’t even require daycare workers to have a high-school diploma. But teachers without much training can quickly feel overwhelmed and quit.

Linda Smith, policy director at the University of Nebraska’s Buffett Early Childhood Institute, recommends ensuring each classroom has a teacher with something called a Child Development Associate credential. In her experience, Smith says, doing so significantly helps drive down turnover and improve quality.

CDA classes can be completed within a matter of months, often at local community colleges, and involve training in classroom management and childhood development.

Give tax breaks and business training

Daycares are businesses just like laundromats and health clinics, but they often aren’t run by businesspeople.

Connecting daycares with business mentors could help—especially for parents starting daycares out of their homes.

“You don’t go into child care because you want to make money,” says Michele Kennedy, 55 years old, who started a daycare at her house in Omaha, Neb., 23 years ago. In her case, Kennedy wanted a business that would allow her to stay home with her own children, and anyway, she loves kids. Today, she works about 65 hours a week and makes just $35,000 a year.

Kennedy has received coaching through the Nebraska Early Childhood Collaborative, a nonprofit that trains child-care providers on everything from tax preparation to how to write a contract. Such training, she says, has saved her thousands on taxes and helped her tighten up some of her business practices, like spelling out more clearly to parents what time she closes each day.

Separately, researchers say, the government could offer breaks to help daycares stay in business. Ideas include eliminating property taxes on in-home daycare owners and helping cap increases in liability insurance. The government could also assist with startup costs, such as installing playground equipment or retrofitting a building.

Get buy-in from companies

Parents are usually the ones footing the bill for child care in the U.S. But companies benefit when parents are freed up to work—and the government, for its part, benefits from getting taxpaying citizens.

Industries that have their own high turnover rates—restaurants, warehouse operators, manufacturers—have in recent years become more likely to offer help for employees, such as paying for backup care or sometimes even opening subsidized daycare centers on site. Employers say it can save money in the long run because the cost of finding, hiring and retraining new employees is steep.

Several states are also experimenting with models where employers contribute to child-care payments for families, helped by state matching funds. In Michigan, for example, under an initiative launched in 2021, if businesses pay one-third of an employee’s child-care costs, the state will contribute another third, with the employee paying the rest.

The program is open to any household making between 200% and 400% of the federal poverty level, and so far 260 employers are participating. The program is voluntary, but Emily Laidlaw, deputy director at the Michigan Department of Lifelong Education, Advancement, and Potential, says businesses in her state were some of the program’s most vocal advocates.

“They understand how it helps them,” she says.

Change the way America thinks about child care.

In the U.S., daycares and preschools have typically been viewed as a babysitting service. The K-12 system, on the other hand, is seen as a public good.

But many cities, counties and states are exploring new ways to boost child-care providers. The economic benefits are part of the equation. But these programs have also been spurred by a growing belief that good daycares and preschools are also good for children, whose brains are shaped powerfully and in lasting ways when they are very young.

Florida recently started offering tax breaks to businesses that provide child care for employees. In Louisiana, taxes on sports betting, cannabis-derived products and casinos raise money for early-childhood education.

Misty Heggeness, an economist at the University of Kansas, says there are precedents for the government getting more involved in child care. For decades, Head Start, a federally funded program, has worked to promote school readiness through programs for kids through age 5. During World War II, the government subsidized child care in an effort to get more women into the workforce. The Defense Department also currently provides subsidized child care to children of members of the military community.

“I don’t think this is rocket science,” Heggeness says. “There’s already a road map for it with public schools—we just need to extend the age down.”