(Bloomberg) -- Major US cities including Boston, Atlanta and Chicago have seen child-care costs drop, a sign that state-level policies are helping to bring down the soaring price tag for a necessary service for parents.
As of September, average child care payments in those places decreased the most year-over-year, according to a recent Bank of America Institute report that examined two dozen large cities. Researchers analyzed costs for US parents who are customers of the bank.
There may be multiple reasons for the price declines in those cities, according to interviews with experts at three think tanks and research organizations. But states that have invested money or redirected federal dollars to child care are seeing price reductions and fewer staff shortages, said Julie Kashen, director for women’s economic justice at the Century Foundation, a progressive think tank.
“It does feel like we’re seeing evidence of how when there’s money in the system it really makes a difference,” she said.
Nationwide child care prices continue to rise: the average weekly cost of a nanny for an infant in 2023 was $766, up 4% from a year earlier. For daycare, the average weekly expense is $321, up 13% from 2022 levels, according to online caregiving platform Care.com. As these costs outpace inflation, there’s increased pressure on working women and the financial state of their families, the Bank of America report found.
In September 2023, $24 billion in federal Covid-era funding that had been keeping child care providers afloat ran dry, but some states stepped in to keep those programs in place.
Take Massachusetts, whose capital of Boston saw a 13.5% drop in average child care prices, according to the Bank of America Institute data. The state in 2023 earmarked $475 million in new state funding for its Commonwealth Cares for Children grants that helped child care providers offset their operating costs and boost worker pay. In January, Massachusetts also announced it would invest $65 million to increase payments for providers that accept reimbursements for low-income families using their services.
In a 2023 survey of Massachusetts providers, 21% said they had been able to reduce fees for parents due to stabilization grants. The state has since made the grants permanent.
Chicago, the largest city in Illinois, also saw a drop in expenses for parents. In May, the state set aside $250 million in new funding to expand existing child care, preschool and other early childhood services.
In some instances, parents could also be deciding to reduce the hours that they’re seeking care or moving to lower quality — and cheaper — providers due to rising costs, experts said.
“In places across the country where families are continuing to struggle with these barriers where the tuition is too high, the additional fees just mount to untenable levels,” said Hailey Gibbs, an associate director of early childhood policy at the Center for American Progress, a liberal research and advocacy group.
“They’re making incredibly difficult decisions to make ends meet for their families that may not be optimally what they would want for their kids or for their professional lives,” she said.
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