The only real solution is for young couples to have dogs!

Ok, your parents had you. I get that. But if you were "that expensive" to raise today? You wouldn't have been born.

Just kidding, they love you...you're priceless. Go ahead and have a shitload of kids. Strap in baby!

Why Child-Care Prices Are Rising at Nearly Twice the Overall Inflation Rate

Providers are boosting tuition as their costs rise and federal aid ends, straining some families’ finances

By Christian Robles, WSJ

Updated Aug. 17, 2023

While overall inflation has fallen significantly since last year, families with young children still face sharp increases in one of their biggest expenses—child care.

The national average price of daycare and preschool services rose 6% in July from a year before, the Labor Department reported recently. That was nearly double the overall inflation rate of 3.2%, which was down from its recent peak of 9.1% in June last year.

Parents could see their child-care bills climb higher this fall as providers boost tuition to cover rising costs and federal pandemic aid ceases.

“We don’t have many other options, so we just have to take the hit,” Danielle Ganje, a mother of three living in Blaine, Minn., said of recent price hikes.

Ganje, a communications director for a nonprofit organization, said she is paying about $2,500 a month for child care this summer. That is at least 10% more than last summer and more than her monthly mortgage payment, the 36-year-old said.

Her total child-care bill will decline in a few weeks when her 8-year-old and 6-year-old return to public school. But they will still require before- and after-school care, and those prices also are going up, she said.

Daycare and preschool services are among many basic household expenses still rising briskly this year, including food (up 4.9% in July from a year earlier), electricity (up 3.0%) and motor vehicle insurance (up 17.8%).

Rising child-care tuition also shows how past inflation in many categories—such as wages, rent and utilities—ripples through the economy today as businesses reset their prices to catch up.

Rising wages, other expenses drive up child-care tuition

Many child-care providers closed permanently early in the pandemic, and child-care prices rose more slowly than the overall inflation rate from March 2021 to February 2023, while many Americans worked from home. Child-care inflation has picked up since then as workers returning to offices fueled more demand, pay for low-wage workers jumped amid labor shortages.

Child-care workers earned an average of $19.95 an hour in June, up 4.6% from a year earlier, according to the Labor Department. That remains well below the average $33.50 an hour earned by all service workers on private payrolls, making it hard for providers to attract workers in a hot job market.

Wages and benefits account for 50% to 60% of the costs for child-care providers, according to the Treasury Department.

Meanwhile, providers face escalating costs for food, instructional materials, utilities and other expenses.

Child-care prices vary greatly across the country depending on region, the child’s age, and whether the provider operates from home, according to the Labor Department.

Fran Bush, owner and director of the Model Kids Learning Academy, a child-care provider in Nashville, Tenn., said she has raised her tuition prices by about a third since before the pandemic, partly to cover higher labor costs. She said she had to boost her workers’ starting wages to $15 an hour from between $13 and $14 and pay bonuses to attract and retain teachers.

“I wanted to make it as affordable as I could, pay our teachers and pay our overhead costs,” she said.

Many providers also lose federal financial aid next month with the expiration of the $24 billion Child Care Stabilization Program, which was created in 2021 to help them pay their bills and stay open during the pandemic. By the end of last year, more than 220,000 child-care providers serving as many as 9.6 million children had received such funding, according to the Department of Health and Human Services.

The consumer-price index increased 3.2% in July from a year earlier, up from June, the Labor Department said Thursday. However, cooling monthly readings paint a more encouraging trend picture. Photo: David Zalubowski/Associated Press

Bush said she received at least $174,000 in federal pandemic aid from the program and a bit more from Tennessee. The money “really helped us keep the doors open, workers paid and costs affordable,” she said. It helped keep “us from drowning.”

Nationwide, a lack of affordable child care has pushed many Americans, particularly women, out of the workforce in recent years, economists say. Providers can pass on only so much of their rising costs to parents before some cannot afford their services.

DeVonne Stewart, a single mother of three children, said she took on a third job—delivering food for Uber Eats—in February to help pay for child care. She was already working as a substitute teacher for Nashville Public Schools and as a technical producer for a nonprofit organization.

Stewart, 36, currently pays $225 a week for her 2-year-old daughter, Avielle, to attend Bush’s Model Kids academy. She enrolled her 4-year-old son, Brylee, in low-cost tutoring groups so he could enter free public kindergarten early.

“This isn’t really managing at all, this is scraping by,” she said. “It brings anxiety.”

‘I’m just gonna do what I can do’

Jeannie Farewell, owner of Tiny Tot Daycare, said she operates the child-care program out of a family home in Chambers, Neb. She takes care of eight to 10 children, ranging in age from six weeks to 13 years, Monday through Friday.

Federal assistance totaling at least $7,200 covered some of her increased costs, including for propane and bags of potatoes, she said.

“It’s just back to month-to-month, the income fluctuates,” now that her federal funding has ended, she said. She works 60 hours a week for about $10.50 an hour, Nebraska’s minimum wage. She has raised prices to $3.50 from $3.00 an hour per child since May 2022, to cover rising costs.

Farewell has no plans of raising prices again soon. However, she may have to re-evaluate if an unexpected expense comes her way, she said.

“I’m just gonna do what I can do,” she said.

Write to Christian Robles at christian.robles@wsj.com