Most U.S. families don't earn nearly enough to afford child care, study finds
The typical American family earns far too little to comfortably afford child care, according to a new analysis.
The Department of Health and Human Services (HHS) considers child care affordable when households spend no more than 7% of their total annual income on such services. By that measure, households need an income of nearly $403,000 to cover the cost of care for two children, LendingTree, an online loan marketplace, estimates.
As of 2024 (the last year for which data is available), the median annual family income in the U.S. was $105,800, according to the Federal Reserve Bank of St. Louis.
Families with two children spend an average of $2,252 per month for full-time child care — more than the cost of rent in dozens of the country's largest cities, according to other LendingTree figures.
"Child care costs are just incredibly daunting for all but the wealthiest Americans," Matt Schulz, a chief consumer finance analyst at LendingTree, told CBS News. "It forces parents into some really tough choices, including whether to have kids or not."
Schulz said the report makes clear that limiting child care costs to 7% of your income "just isn't realistic anymore." Federal labor data shows that families spend between 8.9% and 16% of their median income on full-time care for one child in 2022 (the latest data available).
The rising cost of child care has become a focal point for lawmakers and policymakers amid public concerns about affordability, while some leaders are taking action. In New York City, Mayor Zohran Mamdani and New York Gov. Kathy Hochul earlier this month announced a plan for free child care for 2-year-olds, part of Mamdani's broader push to bring universal child care to New York City.
Other states, including Kentucky, have also made a push for universal Pre-K, with officials framing it as a boon for education and for families.
Given spiraling child care costs, Schulz said it's crucial for parents to start putting away money for these expenses as soon as possible.
"It has always been expensive to raise kids, but today's costs are just so huge that it takes things to another level," he said.
