Berliner Boersenzeitung - High childcare costs in US weigh on women's employment

Childcare is among American households' largest expenses, and ahead of the November presidential election, voters are hoping politicians will take notice.

- Spike in costs -

Official data shows day care and preschool costs -- already frustratingly high for many families -- rose more quickly than the overall inflation rate over the past year.

Day care costs rose 6.2 percent from August 2023 to the same month in 2024, according to the Consumer Price Index (CPI) report.

Overall CPI inflation for the month was 2.5 percent.

Childcare competes with rent as the most expensive budget item for families, said Elise Gould, senior economist with the Economic Policy Institute.

About 60 percent of households spend 20 percent or more of their income on childcare, according to a survey by online marketplace Care.com.

The US Department of Health and Human Services considers childcare affordable when it costs no more than seven percent of household income.

In a 2023 report, the Department of Labor noted that even though childcare prices vary across the country, they are "untenable for families even in lower-priced areas."

- Women pay the price -

"Many parents are not able to work because they can't afford childcare," Gould said.

And such "responsibilities have traditionally fallen disproportionately on moms," noted Bank of America economist Taylor Bowley.

"The rising cost of childcare really does spark concern about the progress of women's participation in the workforce going forward," she told AFP.

She added that affordability likely hits lower-income families harder.

ZipRecruiter chief economist Julia Pollak added that "there's a very real risk that this will stall the progress being made by women."

The costs women face include foregone income, "retirement insecurity" and lower chances of promotion at the workplace after taking time off to help with childcare, Gould added.

- Fewer return to work -

While the labor force participation rate for women aged 25-54 has returned to 2019 levels after plunging during the Covid-19 crisis, government data show this is still lower than the rate for men.

Women's participation reached a high of 78.4 percent in August, markedly below the 89.5 percent figure for men.

"The lack of a robust care infrastructure may continue to prevent mothers from achieving their full potential in the labor force," the Department of Labor said in May.

Meanwhile, "one factor that may have contributed to the growth in employment for some US mothers is the increasing prevalence of telework," it added.

- Trailing other countries -

The United States' workforce participation for women trails that of other Organization for Economic Co-operation and Development (OECD) countries.

The country has the second-highest childcare costs, behind New Zealand, according to the Bank of America.

While US women's labor participation was rising alongside peers like Canada and France, these other countries have seen relatively steady increases while growth for the United States has somewhat "plateaued," said Pollak.

There are studies suggesting a major factor is the cost of childcare, she added.

(A.Lehmann--BBZ)