Child Care Costs Could Cause Higher Unemployment Rate

The unemployment rate for July 2011 was at 9.1% nationwide, according to the Bureau of Labor Statistics. With an increase in the cost of child care, the country may well see a rise in that statistic. Working parents strain to come up with the money to pay child care costs and, in some cases, find that they would be better off not working at all. When you take into account the cost of gas to commute, business attire and other expenses that come with having a job outside the home, most families are not netting enough to cover the rest of their expenses. For some, the cost of child care combined with these expenditures is more than their total wages.

Child care costs are increasing for a number of reasons. Many states require training and licensing for day care programs, even those run out of the home. Child care facilities have the cost of insurance along with the typical overhead costs of running a business. Add to that the increased price of utilities and the rising cost of groceries—day care providers, like many other businesses, must raise their fees in order to stay in business. If the fees are higher than parents can afford, the child care facility will lose money and run the risk of going out of business, further contributing to the unemployment rate.

Parents should not count on state funding to help pay for child care either, as subsidies are on the decline. According to the California Budget Project, “California has repeatedly cut child care … the cumulative impact of these reductions amounts to more than $1.6 billion between 2009-10 and 2011-12, with more than $750 million attributable to cuts passed by the Legislature in March 2011 that are scheduled or assumed to take effect in July 2011.” California is not alone. The National Women’s Law Center lists 18 other states that have either undergone cuts to child care subsidies or in some way limited access to the subsidy programs.