Childcare Costs Outpacing Inflation

Are you feeling crunched more than ever with your household expenses? You are not alone. In March of 2024, childcare costs rose faster than inflation, adding pressure on families seeking quality care for their children across the United States. Data from the Bureau of Labor Statistics showed the cost of childcare rose 4.4% year-over-year in March while the overall inflation index rose 3.5%.

In recent years, high inflation, with its increased costs to consumers for everyday necessities, has made it even harder for most families to stretch their household budgets. While many families may feel the impact of these rising costs, communities that are historically underserved, such as black, indigenous, and communities of color, are disproportionately affected. This trend extends across various industries, including childcare. 

The challenge is a classic conundrum of supply versus demand. With increased costs, many preschools are closing, and fewer preschools and childcare centers make childcare more expensive. This happens because there aren’t as many places for kids, and parents want good care for their children while they work. This can also result in childcare deserts where some communities do not even have access to childcare.

How did we get here?

Prior to the pandemic, the childcare sector struggled with a worker shortage. And the COVID-19 crisis only worsened this issue. According to data from the Bureau of Labor Statistics, the industry now faces a staggering shortfall of nearly 40,000 workers compared to pre-pandemic levels as of September 2023. This shortage has led to a decrease in the availability of childcare services, further driving up the costs for families.

Emergency funds were made available during the pandemic to support childcare providers and families facing financial hardships. However, these funds were not permanent, and with the end of these benefits, the financial strain on both childcare facilities and families has intensified. As a result, many preschools and childcare centers have been closing at a quickening pace. This makes the childcare crisis even worse and leaves many families struggling to find affordable and accessible care for their children.

Childcare costs can vary greatly depending on location and the child’s age. According to Brightwheel, the average monthly cost of childcare in Denver is $1,575, or $18,900 per year for one child. The Economic Policy Institute notes that childcare expenses exceed the cost of in-state college tuition in over half of U.S. states, including Colorado.

This is why programs like the Denver Preschool Program (DPP) and Colorado Universal Preschool (UPK) are so essential to Colorado families. The average monthly tuition credit to families from DPP is $788 per child. This can be combined with up to 15 hours of additional support from UPK Colorado for even more savings. DPP and UPK Colorado are working hard together to make the cost of childcare more affordable for Denver families.