Many new parents realize they should start saving for college as soon as possible. But there’s an expense that can cost as much as college and starts much sooner: child care.
Shocking but true: In the U.S, the cost of child care at a day care center, full-time, is about as much as annual tuition and fees at a public college in the same state.
The day care costs range from a state average of $5,547 for an infant in Alabama to $16,549 for one in Massachusetts. A full-time nanny can cost as much as or more than tuition and fees at an Ivy League institution. Yet unlike college, for which almost all students can get subsidies and loans, child care is usually paid out of parents’ pockets.
Average cost of child care
Child care costs can vary widely by type and by geographic location. And families may need different amounts depending on parents’ work schedules and other factors such as the child’s age and time spent in school. When parents can’t care for their children themselves, most patch together a variety of solutions from among the following:
Type of child care
Average cost (full-time annually for an infant)
Extended family members or friends
|$0 and up|
Care in a day care center
Care in a home-based day care center
Baby nurse (helps with newborns, especially overnight)
|$11 to $30 per hour (not typically employed on an annual basis)|
For families who must pay someone to watch their little ones at least some of the time, the annual average cost of child care in the U.S. is $3,863 for a middle-income, two-parent family with an infant. This figure includes a broad array of child care arrangements, from occasional babysitting to nanny care. Single parents with lower incomes pay about $1,948 on average, while high-earning couples pay about $11,000 per year on average. Unsurprisingly, families with more than one child pay higher costs for their care.
Why is child care so expensive? In a word: labor. While technology has helped workers in other industries to be more productive in recent years, it hasn’t changed child care much. We still need human hands to pick up, feed and diaper babies; and human eyes to keep toddlers from eating sand or wandering off.
Child care workers in the U.S. earn relatively low salaries. In 2012, the typical child care worker earned $9.38 per hour, or $19,510 per year. While the cost of child care is typically borne in full by the parents who need the care, low-income families are eligible for child care subsidies in many states.
How much does day care cost?
The average cost across all states in the U.S. for an infant in full-time child care is $9,991 annually.
Most states require child care providers to meet certain standards, like specific staff-to-child ratios. For example, Maryland day care centers must have one staffer for every three infants, while in Georgia that ratio is 1:6. As much as 80% of a day care center’s expenses cover employee salaries and payroll-related expenditures, like taxes and benefits.
Day care providers might also have to pay for space, equipment, utilities, facilities maintenance, food, insurance, training and background checks for staff and other general safety and administrative costs.
About 35% of children under the age of five who need child care go to a day care center. An additional 8% of young children go to a home-based day care. In these, caretakers tend to earn less, and may not have benefits like health care or retirement savings plans. They often have lower expenses for things like rent or mortgage, and so cost less for parents.
The average annual cost for an infant in full-time care in a home-based day care center is $7,431.
How much does a nanny cost?
An in-home babysitter, or nanny, may be a better solution for some families, especially those with multiple children. About 5% of young children with a child care arrangement are cared for in their home by a babysitter or nanny.
The nanny market is competitive, with more experienced workers demanding higher pay. Families also try to woo nannies with good benefits, like health insurance, paid vacation and guaranteed pay on days or weeks when he or she isn’t needed, like when the family goes on vacation or a grandparent is visiting.
The average salary for a nanny is $19.14 per hour (that’s $39,811 annually for 40-hour weeks), according to a 2017 survey of mostly U.S.-based nannies done by the International Nanny Association. It ranges from an average of $14.08 per hour for a nanny with less than one year of experience to $21.98 per hour, on average, for those with 20-25 years of experience.
About 62% of nannies are compensated for overtime at time and a half, and 60% receive an annual bonus from their employer. More than 70% also get paid vacation and paid holidays. Only 17% of nannies get their health insurance costs paid either fully or partially.
U.S. families who pay a nanny (or any other domestic help) more than $2,300 per year are responsible for paying social security and Medicare taxes of 15.3% of the cash wages, according to the IRS. This amount can be split between the employer and the employee.
If your child’s caregiver earns more than $1,000 from you in any one quarter, you must also pay federal unemployment tax of 6% on the first $7,000 of their earnings. And depending on your state, you might also have to pay state unemployment taxes, workers’ compensation insurance and disability benefits.
How much does a babysitter cost?
Parents who don’t work full time, or who have nontraditional schedules, can sometimes provide more child care themselves and use babysitters to fill in the gaps. Parents in U.S. cities generally pay babysitters between $15 and $23 per hour, averaging $17.50 per hour (or $36,400 for one year of full-time care), according to SitterCity. The rate is highest in expensive cities like San Francisco.
Families with more children typically pay more per hour. And nannies or sitters with special qualifications, like a second language, many years of experience, CPR or First Aid certification, or who do some housework, such as laundry, might also charge more for their services. Most families provide food for the caregiver when he or she is in the home or offer a ride or taxi fare for travel to or from the home late at night.
Babysitter wages are also subject to the tax laws for domestic employees, as outlined above.
How much does a baby nurse cost?
New parents without access to maternity or paternity leave benefits might have to go back to work when their newborn is still waking up every three hours. Others, with cash to spare, might also appreciate the assistance of an experienced newborn caregiver. Enter the baby nurse, who can come to your home for 12-hour shifts or even round-the-clock help during those early weeks of your baby’s life. Some stay for just a week or two, while others for up to six weeks or longer.
New mothers report paying a baby nurse, or night nurse, rates that start at about $11 per hour in lower-cost-of-living parts of the U.S. Baby nurses hired through agencies tend to cost more. In some expensive cities, families pay up to $30 per hour.
How much does an au pair cost?
If you have a spare room in your home for a live-in caregiver for your child, you might consider hosting an au pair. Several agencies can help you connect with a young person from another country as well as coordinate their visa, travel, insurance and orientation. Several of these agencies include Cultural Care Au Pair and Au Pair in America, to name a few.
The average cost for an au pair for a full year is about $18,000, plus room and board. In return for this expense, you get about 45 hours of child care per week. It breaks down to less than $8 per hour, alongside your extra costs for groceries and other family activities, like going out to restaurants or traveling for a ski trips or summer vacation, since au pairs are generally treated as members of the family.
How much families pay for child care
The percentage of income paid for child care by a family with a working mother has ranged between 6% and 8% in the U.S. since 1985. In 2011, such families, including many who only require part-time or even occasional paid child care, paid an average of 7.2% of their income.
Those who require full-time child care tend to pay a much larger share of their income for the service. The U.S. Department of Health and Human Services considers child care to be affordable when it is 10% or less of a family’s income. However, in 38 states, the average annual cost of full-time care for an infant at a day care center is above this threshold.
The cost of full-time child care can be a huge burden for low income and single parent families, as well as those who live in high-cost-of-living parts of the country.
Throughout the country, the cost of full-time care at a day care center eats up 40% of the state median income for single mothers. And in New York State, where child care is least affordable as a percentage of income, the typical married couple must pay 16% of their income (on average, $14,500) for full-time care of an infant at a day care center.
The IRS allows families a tax credit for up to 35% of qualifying expenses up to $3,000 for one child under the age of 13, and up to $6,000 for two or more children. This translates to a maximum of $1,050 in tax savings for one child (i.e., 35% of $3,000) or $2,100 for two children. The actual credit depends on your adjusted gross income (AGI) and decreases to 20% of allowable expenses for parents with an AGI of more than $43,000 per year.
The cost of child care may be as challenging to many families as sleep deprivation is during their child’s early years. Fortunately, it’s necessary for a limited time, until the children go to school and become more self-sufficient. If it allows both parents to work, they can reap benefits both in terms of salary and experience, which might pay off in higher wages down the line.
Methodology and sources
To find the average cost of childcare, we analyzed data provided by Childcare Aware of America, a nonprofit that provides childcare resources to parents. We also consulted other sources, including SitterCity and the IRS.
Child Care Aware® of America, Parents and the High Cost of Child Care