The Desperate Need for Affordable Child Care: The Numbers Tell The Story
The state-wide average cost of care for one infant in a center is about $12,000 per year, which is far beyond what most families can afford.
by Micere Keels | North Carolina Early Childhood Foundation | March 17, 2025
INTRODUCTION
The affordability of high-quality childcare is a crucial factor influencing family economic security and the broader economy. As parents with young children attempt to balance workforce participation and caregiving responsibilities, child care costs emerge as a major financial hurdle. It’s a mistake to let this problem continue without an effective solution because as NC’s Department of Commerce finds, “affordable, accessible child care could add up to 68,000 jobs in the state, increase annual economic input by up to $13.3 billion, and boost GDP by up to $7.5 billion.”
The county-level variation is huge, but nowhere is the average cost affordable. Considering all the household and family expenses that parents must cover, many are priced out of child care.
In Mecklenburg county, the state's most populous county, the average monthly cost of four-star care for a two-year-old child is $1,200. This expense alone consumes a substantial 39% of the average family's gross monthly income.
For lower-income families, especially female-headed single-parent families, high-quality affordable child care is a lifeline that can immediately reduce poverty in the current generation and increase the likelihood that their children will escape poverty as adults.
We often discuss the gender wage gap—women working full-time, year-round, getting paid an average of 82 cents for every dollar paid to their male counterparts. However, when considering the vital importance of affordable child care, the gendered working parent wage gap is the number worth considering—mothers working full-time, year-round are paid just 70 cents for every dollar earned by comparable fathers. The consequence of this is that “men and women enter adulthood with roughly equal rates of poverty, but women begin experiencing significantly higher rates of poverty and economic insecurity during their childbearing years.”
- 31% of single mothers are in poverty compared to 18% of single fathers.
- 39% of children under age 6 with single mothers lived in poverty, compared to 23% of those living with single fathers.
Racial inequities are a significant factor in our understanding of these issues because Black, Latina, and American Indian mothers are paid much less, earning only 50 cents, 45 cents, and 47 cents respectively of every dollar paid to White fathers. These gendered and racialized working parent income disparities have a significant effect on which families experience poverty because over 70% of Black, 40% of Latina, and 24% of White mothers are the primary economic support for their families.
PROBLEM: Overwhelming Majority Of Families Need Help Paying for High Quality Child Care
It’s important to remember that it’s not just low-income families that need help paying for child care; working and middle-class families have to devote a large proportion of their income to child care. The cost of child care across the country and in NC remains too high for most families and keeps many out of the workforce. NC’s average infant child care cost of $12,000 surpasses NC’s average in-state college tuition. This burden is multiplied for families who have to meet costs for multiple children.
Because women are the ones most likely to leave the workforce when child care is unaffordable, mothers who are unable to find child care are significantly less likely to be employed than those who found care, whereas there is no impact on fathers’ employment.
North Carolina ranks last in affordability of care. Here are the average prices of care in a range of settings:
|
4-Year-Old in family care |
$9,160 per year |
|
Infant in family care |
$9,617 per year |
|
4-Year-Old in center-based care |
$10,216 per year |
|
Infant in center-based care |
$12,251 per year |
To put these costs in perspective, in-state tuition at UNC-Chapel Hill (the most expensive state university) is approximately $7,000.
Federal recommendations state that for child care to be considered affordable it should consume 7% or less of the household budget. However, in North Carolina, the median income for a married couple is $102,101, which means center-based child care for one infant would consume 12% of family income. For a single parent family, whose median income is $29,897, center-based child care for one infant would consume 40% of family income. For both types of families, child care costs would be above the 7% of household income level that is considered affordable.
Photo by Xavier Mouton Photographie on Unsplash
Photo by Xavier Mouton Photographie on Unsplash
The income of a single parent with two children would be completely consumed by the cost of child care. These high costs mean that low-income parents, in particular, have to make tradeoffs between cost and quality when deciding where to place their children for care while they are at work.
Many parents with young children choose to stay home and care for their children, but with over 75% of women ages 25 to 54 are in the workforce it is long past time for the United States to develop an early care and education system that would enable all parents access to high quality care at a cost that consumes 7% or less of household income.
SOLUTION: Child Care Subsidies as Part of Solving the Affordability Puzzle
Subsidizing child care is not a handout, it is a handup. To be eligible to receive a subsidy, a parent must work, attend school, or engage in training. Subsidized care is especially beneficial for low-income single-parent households who often walk a tight line between supporting their household through their efforts in the labor force versus being forced into unemployment and relying on government support programs.
We have long known that subsidizing child care increases mothers' employment, particularly among the lowest income mothers whose incomes are under fifty percent of a given state’s median income. A 2016 examination of 10 years of Child Care and Development Fund spending found that increased funding increased the likelihood that eligible mothers would be employed. They concluded that investing in expanding access to child care subsidies to more low-income working families would “likely have immediate economic benefits for families, which improve child development, and also help society through increased tax revenues in addition to the long-term human capital benefits of investments in young children.”
An important enhancement to child care subsidies endorsed by many advocates and NC's Department of Commerce is setting a statewide floor for subsidy reimbursements. This includes ensuring that child care providers across the state receive reimbursement at a rate closer to the actual cost of providing care. This would enable providers to afford to retain qualified teachers, prevent the need to close classrooms or programs, and stabilize tuition costs for families who pay full price. This can also help providers afford to serve more children from households that qualify for child care subsidies. A statewide floor would also eliminate drastic disparities in reimbursement rates between counties, which disproportionately impact rural providers. See our policy brief on improving child care subsidies for more details.
The challenge is that the Child Care and Development Block Grant, the largest source of federal funding for child care assistance, covers just 15% of eligible families, and in most cases, the subsidy amount is too low to support the cost of high-quality care. Even with child care subsidies, the out-of-pocket cost is unaffordable for the average working family. For example, in North Carolina, a two-parent family with two children can earn a maximum of $5,200 per month and would need to pay 15% of their income ($520 per child) for child care.
CHANGE AGENTS: Business Leaders’ Recognition of Their Role in Child Care Advocacy
NC’s Department of Commerce now has a child care business liaison, a new position created under the state’s economic development plan to facilitate addressing the insufficient supply of affordable, high-quality child care. The core of the lison’s work includes helping everyone understand the crucial role of child care access in economic development, identifying community driven solutions, and supporting NC’s tri-share pilot program, where employers, families, and the state share child care costs. This position reflects that parents, employers, or philanthropic organizations cannot solve the child care crisis alone, but only when they look for shared public and private policy solutions.
In response to the economic impact of the child care crisis, NC’s Chamber of Commerce created the Coalition on Child Care, which is committed to identifying and advancing child care funding structures, policy reforms, and innovations that address the growing workforce demands from the business community. A recent report from the NC Chamber Foundation outlines eleven potential strategies to expand the supply of accessible, affordable, high-quality child care in North Carolina.
Photo by Jimmy Dean on Unsplash
Photo by Jimmy Dean on Unsplash
There is increasing recognition that everyone is harmed when the out-of-pocket cost of child care pushes parents out of the workforce or causes them to delay paying housing, food, medical, and utility bills because child care consumes too much of their household budget.
Samantha Cole, the first person to hold this position, stated that “employers are increasingly aware that child care challenges can limit their ability to attract and retain top talent. Samantha explains that many companies are now recognizing that child care access is not just a family issue; it’s a business issue. They need more child care resources to achieve their growth goals and are eager to explore innovative solutions.”
The strategies detailed in the Chamber Foundation's report include:
- Institute employer child care tax credits.
- Facilitate and fund subsidized child care for child care workers.
- Ensure that reimbursement rates for providers serving low-income working families who qualify for child care subsidies cover the costs of program mandates and do not penalize rural or low-income communities.
- Develop association health plan(s) to offer child care providers, most of which are small businesses, more affordable options for offering an employer health insurance benefit for employees to help recruit staff and reduce turnover.
- Lower property costs for licensed child care providers.
ACTION: Taking a Stand for Early Care and Education
While this brief focuses on the issue of affordability of care, there is much more to understand about creating a sustainable solution to this many-tentacled systemic problem. Join us for “Taking a Stand for Early Care and Education: North Carolina’s Fight for Access, Equity, and Fairness,” a ten-part series exploring a selected set of complex challenges plaguing North Carolina's child care and early education system.
Each month, we'll detail the interconnected threads that contribute to the persistence of the child care and early learning crisis. Through a detailed examination of data, expert insights, and advocacy perspectives, we will highlight systemic challenges and present actionable policy solutions to drive the transformation needed for a stable and equitable system. Join us as we delve into critical topics, laying the groundwork for a robust dialogue on achieving universal pre-K, enhancing economic health through child care availability, and much more.
JOIN OUR EMAIL LIST to ensure you receive the next installment in this critical series to fix our early care and learning system.
In the next brief, we will discuss the child care needs of families in rural communities.
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