As parents brace for another year of steep bills, a growing number now ask a stark question: is childcare the second rent payment in the household budget? Across many cities and suburbs, the yearly price of daycare is approaching, and sometimes exceeding, a year of rent. The squeeze has renewed calls for stronger public support, and fresh attention from researchers and policy analysts.
On a recent program, host Brittany Luse raised the issue with University of Wisconsin–Madison sociologist Jessica Calarco and Capita senior fellow Elliot Haspel. Their discussion centered on how childcare costs climbed so high, and what could change if public funding played a larger role.
A System Families Say Feels Like “Two Rents”
“Can you afford to pay two rents?”
That question, posed by Luse, captures the strain on household budgets. Parents often face tuition for infant care topping $15,000 a year in high-cost regions. Nationally, center-based infant care averages five figures, and is higher than in-state college tuition in many states, according to state and federal surveys. The U.S. Department of Health and Human Services suggests childcare is affordable when it costs no more than 7% of a family’s income, a benchmark few meet.
The pandemic deepened instability. Congress sent $24 billion in stabilization grants to providers in 2021, but those funds expired in 2023, a moment many advocates called the “child care cliff.” Providers reported raising prices, cutting hours, or closing classrooms as aid vanished. Meanwhile, wages for early educators remain low, often near $13 to $15 an hour, making hiring and retention difficult.
Why Prices Are Rising
Calarco has documented how parents juggle unpaid care, paid care, and work demands. More families with two earners now rely on formal care, especially for infants and toddlers, whose care is labor-intensive and costly to deliver. Staff-to-child ratios are strict for safety, and space, licensing, and insurance costs are high. Those inputs leave little room to cut without affecting quality.
Haspel has described childcare as a market that struggles to function on its own. A 2021 U.S. Treasury analysis reached a similar conclusion, calling the sector a “textbook” case of a market failure: parents cannot afford the true cost of quality care, and providers cannot pay staff well while staying open. The result is a system that is expensive for families yet fragile for businesses and workers.
Economic Stakes for Parents and Employers
The price of care shapes who works, where, and how much. When care is unaffordable or unavailable, parents—most often mothers—reduce hours or exit jobs. Researchers have linked lower childcare costs to higher labor force participation among mothers with young children. Employers feel the impact through higher turnover and more absenteeism.
States that expanded public options offer clues. Washington, D.C.’s universal pre-K for three- and four-year-olds boosted maternal employment. Quebec’s low-fee model increased mothers’ labor participation, though it also sparked debates about program quality and workforce pay. These cases suggest that public funding can shift family budgets and labor markets, while design choices affect classroom quality and staff stability.
What More Public Support Could Deliver
During the conversation, Luse asked how families—and the broader economy—might benefit if government stepped in more. Policy ideas on the table include:
- Sliding-scale subsidies so families pay a capped share of income.
- Grants to providers tied to quality and staff pay standards.
- Expanding public pre-K and aligning it with infant and toddler care.
- Tax credits that reach low- and middle-income families monthly.
New Mexico created a permanent fund to stabilize early education and capped childcare costs for many families. Vermont adopted a payroll tax to help finance expanded subsidies and higher wages. Early evidence suggests such moves can reduce waitlists, slow tuition hikes, and cut turnover among teachers.
What Families Say They Need Now
“Families across the country are asking that same question”
Parents want safe, stable care in the neighborhood, with hours that match work schedules. Providers want to pay educators a living wage and keep classrooms open. Calarco and Haspel point to the same bottleneck: quality care requires skilled staff, and skilled staff require better pay and training. Without public dollars, these goals collide with what families can afford.
Childcare costs that rival rent are not a passing problem. They stem from a model that asks families to pay most of the bill while providers carry high fixed costs. The latest data and state experiments suggest that steady public funding can ease prices for parents and raise pay for teachers, while helping more parents stay in the workforce. The next test will be whether lawmakers scale pilot programs into durable systems that cover infants through pre-K, fund quality, and keep care within reach. Watch for measures that cap family payments, set fair wages, and provide stable support to providers—the details likely decide whether the second “rent” finally disappears.
