Child care costs are now rising at twice the rate of inflation, report finds

Biden highlights what spending bill would mean for child care costs

President Joe Biden spoke at a Connecticut child care center on Oct. 15, explaining the impact his massive spending bill would have on child care costs.

A new report reveals that child care costs are now rising at twice the rate of inflation, highlighting a problem that child care costs pose for many parents.

The company KPMG, which provides audit, tax and advisory services, said its new report provides a "deep dive into the childcare crisis."

Published last week, the report found that between 1991 and 2024, the costs for daycare and preschool rose at nearly twice the pace of overall inflation.

"The child care crisis, which was simmering prior to the pandemic, has come to a boil," KPMG wrote in its report on May 28.

FILE: Family looks at finances. (Credit: ArtistGNDphotography / stock / Getty Images)

According to KPMG, a baseline estimate of child care affordability is when the cost comprises up to 7% of family household income. The study found that child care costs now are often in the 10-20% range.

Child care costs more than mortgage

The data lines up with other recent studies showing that child care costs are now outpacing inflation.

A recent Zillow’s analysis found a mortgage payment and child care now take up at least 66% of an average household’s monthly income in 31 of the 50 cities analyzed.

According to the data, the average American family can expect to spend $1,984 per month on child care and $1,973 on a monthly mortgage payment (based on a 10% down payment, interest rate of 6.61%, and the typical home price in each metro).

The cost burden was even more pronounced in the most expensive markets.

In Los Angeles, prospective buyers would need to spend 121% of their income on a new mortgage and child care. In San Diego, families would need to spend 113%.

Another recent survey found that more than half of U.S. adults (57%) spend at least a quarter of their monthly income on childcare.

Child care costs amid labor market conditions

The company said these figures are even more discouraging given the context of the tightest labor market conditions the country has seen in decades.

In April, the unemployment rate remained below 4% for 27 straight months – the longest streak since the 1960s.

KPMG also found that the number of full-time workers who had to cut work hours to fewer than 35 per week due to child care problems spiked in response to initial COVID-19 lockdowns. The ranks of those workers have abated slightly but remain well above pre-pandemic levels, the report revealed.

This story was reported from Los Angeles.