Rising childcare costs are putting fresh pressure on US household budgets, with nearly 8% of families now spending more than $2,000 (£1,500) a month on daycare, nanny services and other programmes.
That proportion is more than twice the level recorded three years ago, according to research by the Bank of America Institute. Families spent an average of 8% of their monthly income on childcare services in September, above the 7% threshold used by federal guidelines to define affordability.
The cost of daycare and school-related fees also rose faster than rent and medical care over the year to September, based on federal labour data. The increases come as wage growth has slowed, adding to pressure on household finances, according to Elise Gould, an economist at the Economic Policy Institute.
A family spending $24,000 a year on childcare would need an income of about $343,000 to remain below the federal affordability threshold. Median household income stood at $87,460 in 2025, according to Census Bureau data.
The burden is particularly heavy for lower- and middle-income households, which spend almost 9% of their annual income on childcare payments. Higher-income families spend 7.3%, the Bank of America Institute found.
Where childcare costs are rising fastest
Childcare costs have climbed most rapidly in Nashville, Tennessee, followed by Jacksonville, Florida, and Phoenix, Arizona, compared with the same month a year earlier.
Taylor Bowley, an economist at the Bank of America Institute, said increased domestic migration to those areas was boosting demand for childcare and putting pressure on prices.
The supply of childcare workers has also fallen. Employment in the sector was down 0.7% in September from a year earlier, making it more difficult for providers to offer services.
“You see job growth falling and price pressures creeping in, leading to a bit of an availability problem,” said David Tinsley, a senior economist at the Bank of America Institute.
Families are increasingly relying on grandparents for financial help, with separate research indicating that they provide $172 billion a year in direct assistance.
The shortage of affordable childcare is also affecting women’s employment opportunities disproportionately, researchers said. Women are more likely than men to take on childcare responsibilities, according to data from the American Time Use Survey.
“Beyond childcare being a household expense, it’s a form of economic enablement,” Bowley said.
