St. Louis Fed Analyzes Costs of Child Care Nationally and by State

ST. LOUIS, May 09, 2025 (GLOBE NEWSWIRE) — A new state-by-state analysis of the costs of child care by the Federal Reserve Bank of St. Louis finds that day care is expensive and worker compensation is below the median wage in all states.

The new analysis by senior researcher Ana Hernández Kent and economist and research officer Charles S. Gascon looks at the cost, users and providers of day care in each state and nationally.

“Child care is essential to parents who want and need to work. The shortage of care, especially high quality child care, has a decided impact on the nation’s economy since so many workers are parents,” Kent said.

Gascon added, “Simply put, child care is a key support for the U.S. workforce. Our research shows that a lack of care keeps some workers out of the labor force, particularly mothers.”

The authors also found:

• More than 16% of mothers who wanted to work and with children under age 6 indicated they weren’t looking for work because they couldn’t arrange for child care.
• Cost of care is a factor. The average cost of center-based care per child annually was $9,200. That’s 10% of median income for U.S. households with a young child, which is above the 7% that the Department of Health and Human Services determined is affordable.
• Affordability is more difficult for lower-wage households. In Florida, for example, such families would have to spend between 16% and 77% of their earnings for child care, depending on family size and age of children.
• Child-care providers nationally earn $14.60 an hour, far less than the typical median worker’s wage of $23.11.
• Increasing child-care workers’ wages could result in higher tuition fees for parents.

Lack of affordable child care has ripple effects across the U.S. economy, the authors found.

“Across all states, center-based care is expensive, difficult to access and may impede parents’ ability to work, particularly mothers–who typically carry the larger share of child-rearing duties,” Gascon said.

Beyond the issue of affordability, the quality of day care is important to parents and the nation’s economy.

“Research demonstrates that high quality early childhood education can break the cycle of poverty and provides a strong return on investment,” Kent said.

Gascon and Kent’s analysis can be viewed on the St. Louis Fed’s On The Economy blog. Fact sheets for each state and the District of Columbia are available as well.

[Editors: Child care cost graphic is attached for your use at will.]

• Child Care Cost Fact Sheet

Shera Dalin
Federal Reserve Bank of St. Louis
314-444-3911
shera.dalin@stls.frb.org