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Child-care payments have surged

Child-care payments have surged 32% since pre-pandemic levels, reports the Bank of America Institute.

As of September 2023, the average household spent over $700 a month on child care, but this figure can vary widely depending on where the family lives. In New York City, for instance, sending an infant to daycare full-time could cost as much as $2,854, according to child-care platform Care.com.

To keep up with the rising costs, some parents are taking up additional jobs and side hustles, while others have left the workforce entirely. A 2023 report by ReadyNation even says the country’s child care “crisis” costs the economy $122 billion in lost earnings, productivity and revenue every year.

In this context, Ramsey’s caller doesn’t seem unreasonable. “Dave owes this guy an apology,” says one commenter.

Parenting and career influencer Paige Turner reacted to Ramsey’s video in her own TikTok video.

“It never ceases to amaze me how out of touch some people are with the lived experiences of parents here in the United States,” Turner says.“Dave is supposed to be an expert in his field so you would think he would know that child care is the number one rising cost for families here in our country.”

Turner goes as far as saying Ramsey shouldn’t be giving financial advice if he doesn’t recognize this key piece of the current financial reality for many Americans. She believes the government needs to step in and help subsidize the cost.

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Subsidized child care could be the answer

American child care costs are substantially higher than the rest of the developed world.

Net child care costs are about 32% of the average wage in the U.S., while countries that belong to the Organisation for Economic Co-operation and Development (OECD) average out closer to 11%, according to the latest data.

Canada is working toward lowering child-care costs to CA$10 ($7.44) a day, while in some parts of Europe early child care is free.

The 2021 American Rescue Plan Act (ARPA) directed nearly $40 billion to child care centers across the U.S., but that program ended in September 2023. Experts warned the country was headed for a “child care cliff” and recommended another subsidy program to ease the burden on parents and the economy.

There may be other options

While many Americans must make the difficult choice between expensive daycare centers or unpaid labor at home, there may be a few other options that parents can look into as well.

Some employers may include child care subsidies as part of their benefits package, or offer discounted on-site daycare centers. They could also offer a flexible spending account (FSA) to help cover services like preschool, daycare and before or after school programs.

Depending on your income, you could be eligible for certain tax credits as well. The child and dependent care tax credit helps parents cover care for children under 13 while they work, or look for work. You could also qualify for the child tax credit even if you haven’t paid for care services.

Or, consider reaching out to people in your community. You can talk to other parents about sharing a nanny or starting a child care co-op, in which parents take turns watching each other’s children.

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About the Author

Vishesh Raisinghani

Vishesh Raisinghani

Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

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