Child Care Costs Soar, Outpacing Inflation

Families now spend far more than the recommended 7% of household income on child care, as providers face rising operating expenses

Mar. 5, 2026 at 11:19am

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Child care costs have risen significantly in recent years, far outpacing general inflation. Nationally, the cost of child care has increased 8% since June 2024, compared to a 4% rise in overall inflation. This is putting a major strain on family budgets, with the average cost of child care now exceeding in-state college tuition in most states. Providers cite rising wages, supplies, and food costs as driving the price hikes, which they are largely passing on to parents due to the labor-intensive nature of the industry and slim profit margins.

Why it matters

Affordable child care is a key economic issue for many American families, and the recent surge in costs is weighing heavily on household budgets and the overall economic outlook. The high costs make it difficult for many parents, especially those with lower incomes, to afford quality care, which can impact workforce participation and child development. Policymakers have made child care affordability a priority, but solutions to offset the burden on parents remain elusive.

The details

The rising costs are driven by a variety of factors, including higher operating expenses for child care providers. Wages, which make up the largest expense, have risen as providers compete with other industries like fast food that are paying higher hourly rates. Inflation has also driven up the prices of supplies and food. Additionally, some policies aimed at improving quality, like requiring facility upgrades or more educated caregivers, have had the unintended consequence of further increasing costs. Government subsidies and support for child care have also declined in many states, leaving providers and parents to shoulder more of the burden.

  • In June 2024, child care costs had risen 8% nationally compared to a 4% increase in overall inflation.
  • In January 2026, the Trump administration said it planned to freeze $10 billion in funding for child care and other family services in five Democratic states, though a judge has temporarily blocked the move.

The players

Erica Phillips

The executive director of the National Association for Family Child Care, who said the cost of care for her own children is nearly as much as her mortgage.

Wanda Crawford

The owner of Ms. Wanda's Daycare in Nashville, who said she has had to choose between raising prices to unaffordable levels or taking a pay cut herself in order to give her workers raises.

Sherry Picha

The co-owner of a child care center in La Crosse, Wisconsin, who is unsure how she will make up the $13,000 monthly payments from the state that are set to expire this summer.

RB Fast

A child care provider in Denver who has reluctantly raised fees each year and is now considering closing her program due to significant losses.

Nina Buthee

The executive director of EveryChild California, an industry group, who said the high cost of quality child care "should cost even more than that" but the burden shouldn't fall solely on parents.

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What they’re saying

“Every winter we have to carefully go over our budget and adjust around child care expenses.”

— Erica Phillips, executive director, National Association for Family Child Care

“I could either raise the prices to where the parents probably couldn't afford it or not give the workers raises or me take a cut, and I chose myself to take the cut. Being rich is not a part of it. I continue to do it because of my love of working with kids.”

— Wanda Crawford, owner, Ms. Wanda's Daycare

“You look at those numbers, and you see this is not getting better, this is only getting worse.”

— Sherry Picha, co-owner, child care center

“I can't just not pay myself forever.”

— RB Fast, child care provider

“It is a lot of money, but it's because of the quality, the skilled professionals. It should cost that money — it should cost even more than that — but all that burden shouldn't be placed on the individual parents.”

— Nina Buthee, executive director, EveryChild California

What’s next

A judge has temporarily blocked the Trump administration's plan to freeze $10 billion in child care and family services funding in five Democratic states. The outcome of this legal challenge could have significant implications for the future availability of government support for child care providers and families.

The takeaway

The skyrocketing costs of child care, which now exceed the recommended 7% of household income in every U.S. state, are putting a major strain on family budgets and the broader economy. While policymakers have made this issue a priority, finding sustainable solutions to make quality child care more affordable for working families remains an elusive challenge.