Childcare Costs Skyrocket—Pushing Women Out of the Workforce at Record Rates

Inflation’s gnawing at wallets—but childcare prices are outright devouring paychecks.

The breaking point

Women are exiting the labor market not by choice, but by financial chokehold. While economists obsess over CPI prints, the real inflation story’s playing out in daycare centers and bank accounts.

The hidden tax on working parents

Forget the Fed’s 2% target—try explaining that to mothers paying 30% more for nursery slots than last year. Wall Street shrugs; Main Street can’t afford to.

Bonus jab

Meanwhile, private equity’s busy turning daycare centers into ‘recession-proof investments.’ Because nothing says ‘efficient market’ like profiting from broken systems.

KEY TAKEAWAYS

• The rate of price increases for daycare in September was 1.5 times higher than the overall inflation rate.
• Rather than paying for pricy childcare, more parents, specifically women, are dropping out of the labor force to save money and care for their children.

With the price of childcare escalating, even faster than rent and college tuition for some families, more mothers are opting out of a job and becoming full-time caregivers for their children.

The cost of daycare increased by 5.2% in September compared to the same period last year, according to a report from Bank of America. That is almost twice as fast as overall inflation, which ROSE 3% annually in September, according to the Bureau of Labor Statistics.

This year, for the first time since 2021, there was an increase in the number of women who said their family is the reason they are not in the labor force, according to the bank.

Childcare costs are rising so fast that the price for one child is more than a month's rent for some families, according to a 2024 report from the Department of Labor. Average costs also surpassed the average annual tuition and fees at a four-year public college by nearly $1,800, according to a report from The Conference Board.

Why This Matters

With childcare costs rising, many parents are leaving the labor market to care for their children, creating gaps that are not being filled by older generations. As fewer young Americans plan to have children due to high costs, the future labor force could also be at risk, potentially slowing economic growth and business competition.

More Women Are Quitting Their Jobs To Care For Their Children

As women are more likely to bear the brunt of caregiving responsibilities, the majority of parents dropping out of the labor market to care for their children are mothers.

There are now fewer families with two or more incomes who are paying for childcare, which means more parents, rather than paying for expensive childcare, are likely leaving their jobs to save money and care for their kids, according to Bank of America researchers.

Women's participation in the labor market has declined over the past few months, in contrast to men's participation, which has generally increased.

Additionally, from 2022 to 2024, approximately seven in 10 mothers with a child aged six and under who were not seeking employment reported being unable to work because they couldn't arrange childcare or had other family responsibilities, according to a survey from the Federal Reserve Bank of St. Louis.

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