I can’t wait for my kid to go back to school: Rising child care costs make summer a killer

The U.S. is the third-most expensive in terms of child care out of 34 countries after adjusting for gov. support

Published August 29, 2016 8:58AM (EDT)

  (Daniel Hurst)
(Daniel Hurst)

This piece originally appeared on BillMoyers.com.

I used to love the long days of summer — hanging on the stoop, taking trips to the pool, enjoying a drink on an outdoor terrace. Then we had a child.

I still like summer, but now it’s a time to tighten the belt — no more terraces — and watch my disposable income plummet. While we’ve broken free from the year-round costs of child care since school started, the sting of summer still hurts. While we work, someone needs to look after our daughter, so off she goes to day camp.

With 10 weeks out of school, summer is a killer, especially in New York City, where we live. With few low-cost camp options available, we are forced to suck it up and fork it out. On average, day camp costs about $314 a week, according to the American Camp Association, but we pay almost twice that. I’m not talking about anything fancy either; it’s sprinklers at the park, drawing and dancing for the most part.

For so many working parents, it’s tough to watch such a high percentage of earnings hemorrhage away, although we can take advantage of the Child and Dependent Care Credit.

It’s no wonder parents who can, opt to stay at home with their children. But dropping out of the workforce has long-term impacts on earnings, which the Center for American Progress (CAP) estimates will result in $467,000 on average in lost income, retirement and other benefits over a lifetime. (They assume a 26-year-old woman who drops out for five years of her career). For men the figure is $596,000, due to their higher incomes. CAP has a handy calculator where parents can plug in their own details to help figure out how much income they will lose by staying home.

The United States is the third-most expensive in terms of child care out of 34 countries after adjusting for government support, according to a Bloomberg analysis of data by the Organization for Economic Cooperation and Development. In parts of the country, families spend more on child care than they do on rent — included in that number: babysitting, nannies and out-of-home day care centers — according to the Economic Policy Institute (EPI).

The situation is especially dire for minimum-wage workers, whose average child care costs eat up at least 30 percent of their earnings in every state. To be considered “affordable,” child care should account for no more than 10 percent of a family’s budget, according to the U.S. Department of Health and Human Services. But for the most part only upper-income families fit into that category.

Citing Bureau of Labor statistics, Bloomberg reports that nationally, the costs of child care and nursery school have risen 168 percent since 1990. By comparison, total consumer prices have increased 76 percent over the same time period.

Clinton and Trump plans

Both Hillary Clinton and Donald Trump have announced plans to help families pay for the rising cost of child care.

Under Hillary Clinton’s plan, families would not pay more than 10 percent of their income in child care costs, which would be financed through government subsidies and various forms of tax relief, but specific details have not yet been released.

“This is something that seems to take into account the actual scale of the affordability problem and targets the families that need help with child care,” Hunter Blair, EPI’s budget analyst, said of Clinton’s plan. That 10-percent cap would lead to savings ranging from $350 in Mississippi on the low end to around $8,300 in savings in Massachusetts on the high end, Blair says.

For his part, Donald Trump announced earlier this month he would allow families to “fully deduct” the “average care costs in state of residence for age of child.” The deduction would be “above the line,” meaning it would be deducted from a person’s income before calculating adjusted gross income.

“The problem with deductions is that it won’t help any of the low-income households that don’t have taxable income,” Blair says. About 45 percent of Americans pay no federal income tax.

To address this, the Trump campaign told CNN that “the plan also allows parents to exclude child care expenses from half of their payroll taxes.” The benefit would therefore equal 7.65 percent of the amount deducted (6.2 percent for Social Security, 1.45 percent for Medicare).

Blair says the plan “doesn’t deal with the problem that the value of tax deduction increases as you get into higher and higher tax brackets.”

For a low-income family who does not pay federal income taxes, the value of Trump’s plan is $76.50 for every $1,000 of child care costs deducted. For a taxpayer in a higher-income tax bracket, say the 35-percent tax bracket, the value of that $1,000 deduction on their income taxes is $350, although it could be higher depending on whether the Trump plan allows them to take advantage of the payroll reduction as well.

Since it pays out more money to people with higher incomes, Trump’s plan is “not targeted at the people who actually need help affording child care,” Blair says.

No matter who wins the election, affordable child care makes sense for so many reasons, as the EPI points out. “American productivity would improve with a better-educated and healthier future workforce,” and “inequality would be immediately reduced.” Blair adds that more money in consumers’ pockets could also help our economy. “In the current economic climate, you would certainly get a boost to the economy from extra disposable income available to these families.”

The EPI says that the only thing that is missing is the “political will to provide these resources to all American families.” Let’s hope that changes, because I’m ready to love summer again.


By Karin Kamp

MORE FROM Karin Kamp


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