Rising Cost of Child Care Services a Challenge for Working Parents

Estimated Revenue for Child Day Care Services Climbed as Child Care Options Declined in 2021

January 09, 2024

Written by:

Adam Grundy

The rising cost of child care services in the United States has created a challenge for many working parents: Should they keep paying for child care, adjust their work schedules to reduce expenses, or leave the workforce?

The Census Bureau’s County Business Patterns (CBP) shows the number of child care services businesses dropped from 2020 to 2021.

Government subsidies like the Credit for Child and Dependent Care are designed to assist parents with increased costs but in recent years prices continued to rise, while the number of day care providers dropped amid the pandemic.

Between 2014 and 2021, estimated revenue of employer firms classified as Child Day Care Services increased all but one year – 2020, according to the U.S. Census Bureau’s Service Annual Survey.

Estimated Revenue by Tax Status of Employer Firms for Child Day Care Services: 2014-2021

The Census Bureau’s County Business Patterns (CBP) shows the number of child care services businesses dropped from 2020 to 2021.

There were 77,383 U.S. employer establishments with 875,114 paid employees during the pay period of March 12, 2021 — down from 77,629 employer establishments and 1,015,242 paid employees in 2020.

The Nonemployer Statistics (NES) shows that from 2019 to 2020, the number of child care services with no paid employees also went down.

According to the 2020 NES, there were 517,983 U.S. nonemployer firms with a total revenue of $8.5 billion in 2020, down from 564,700 nonemployer firms with total revenue of $9.4 billion in 2019.

Rising Cost of Child Care

The National Database of Childcare Prices, which reports child care costs in 2,360 U.S. counties, shows that child care expenses are untenable for families throughout the country and highlights the urgent need for greater federal investments, according to the U.S. Department of Labor.

The database — which uses economic and demographic data from the Census Bureau’s American Community Survey along with data collected by the Department of Labor — is the most comprehensive public federal source of child care prices at the county level.

The Labor Department’s Women’s Bureau also created interactive county-by-county maps of child care prices and costs as a share of family income.

A brief drawing of available data across 47 states show child care prices for a single child ranged from $4,810 a year for school-age home-based care in small counties to $15,417 for infant center-based care in very large counties. When adjusted for inflation, this equals between $5,357 and $17,171 in 2022 dollars. These price ranges were equivalent to between 8% and 19.3% of median family income per child in paid care.

The Economic Policy Institute ranked the top 10 states or state equivalents with the highest child care expenses for preschool, infant care, and day care:

Washington, D.C. ($24,243)
Massachusetts ($20,913)
California ($16,945)
Minnesota ($16,087)
Connecticut ($15,501)
New York ($15,394)
Maryland ($15,335)
Colorado ($15,325)
Washington ($14,554)
Virginia ($14,063)

Given the rising cost of child care, many parents are looking for ways to make ends meet without leaving the workforce. Data on Child Day Care Services help monitor economic trends in that industry.

Adam Grundy is a supervisory statistician in the Census Bureau’s Economic Management Division.