Increasing numbers of parents are quitting their jobs because they cannot afford childcare.
According to a recent report released by the Korea Trade-Investment Promotion Agency (KOTRA) Atlanta Trade Center, the lack of childcare facilities and rising childcare costs are causing parents of infants and toddlers aged 3 to 5 to cut back on working hours, forgo promotions, and even quit their jobs.
The strain on childcare comes after the end of the $40 billion Child Care Stabilization Fund (CCSF), which the federal government had provided to childcare centers under the third round of the American Rescue Plan (ARP) during the pandemic, on Sept. 30, subsequently leading to an increase in the number of childcare service providers closing.
Adding to the cost burden is the childcare costs rising by 1.7% in September, surpassing the overall inflation rate, according to the federal Bureau of Labor Statistics.
The national average cost of child care exceeded $10,800 last year, accounting for roughly 10 percent of middle-income families’ household earnings and 33 percent of single-parent families’ earnings, according to a report by Childcare Aware of America.
Average monthly childcare costs have steadily increased over the past three years, reaching an average of more than $700 per household per month as of September, a 32% spike from 2019, according to Bank of America Institute data. Those in the upper-middle class, those earning $100,000 to $250,000 a year, saw the largest increase in childcare costs during this period.
In a survey of working parents with children under the age of 3 by ReadyNation, a nonprofit led by a group of business leaders, nearly three-quarters said they had cut back on hours due to a lack of childcare, resulting in lower income. Forty-one percent had turned down a new job offer because of childcare, and about one in four had been laid off or quit their jobs, each increasing to a two- to three-fold from the 2018 survey.
ReadyNation found that parents leaving the workforce will cost the economy $122 billion annually, a 114% spike from $57 billion in 2018.
The annual economic burden of caring for infants and toddlers under the age of three averages $5,520 per parent, meaning that if 14.1 million parents left the workforce, the estimated total economic loss to families would reach $78 billion.
The economic loss for corporates due to childcare is also estimated to be $23 billion per year and taxpayers are expected to pay $21 billion.
“Job loss due to childcare reduces household income and consumption, potentially resulting in a cooling effect on economic growth in the U.S. economy, which relies on national consumption expenditures for 70 percent of economic growth,” KOTRA said in the report. “Businesses are encouraged to monitor their state and city’s child care support policies and consider how they can provide support at the corporate level to address labor market changes and disruptions to the workforce.”
The federal government, for its part, has called on Congress to extend for another year of the suspended CCSF to more than 220,000 child care providers across the country requesting $16 billion, but reportedly hasn’t gained approval.
BY NAKI PARK, HOONSIK WOO [naki@koreadaily.com]
