Why childcare costs are rising faster than rent and straining family budgets

Costs outpace other essentials

In September, daycare and school-related fees increased faster than rent and medical care compared with the same month a year earlier, according to federal labor data. Childcare costs are also competing with food prices and health care expenses for space in household budgets.

A family spending $24,000 a year on childcare would need to earn roughly $343,000 to keep the expense below 7% of income. Census Bureau data put median household income at $87,460 in 2025.

Wage growth and family support

Workers are facing rising childcare costs alongside slower wage growth, intensifying financial pressure on many families, Economic Policy Institute economist Elise Gould told CBS News. Separate AARP research found families are turning to grandparents, who provide $172 billion a year in direct financial assistance. “Beyond childcare being a household expense, it’s a form of economic enablement,” Bowley said.

Local increases and worker shortage

Childcare costs rose especially quickly in Nashville, Tennessee, followed by Jacksonville, Florida, and Phoenix, Arizona, in September, compared with a year earlier, according to BofA analysis. The article does not provide the size of the increases in those cities.

A shortage of childcare workers also appears to be pushing expenses higher. Employment in the sector fell 0.7% in September from a year earlier, making it harder for providers to deliver services; BofA Institute senior economist David Tinsley described job growth falling and price pressures creeping in as contributing to an availability problem.