- The Federal Reserve released its Household Economics and Decision-Making Survey this week.
- The percentage of parents with children under the age of 18 who feel they are “financially secure” has decreased.
- This is the lowest rate since 2015, likely due to rising childcare costs.
The economic situation of American parents with young children has worsened sharply, highlighting just how expensive child care has become.
The Federal Reserve released its annual Household Economics and Decision-Making Survey on May 21. The survey, which collected responses from 11,000 people in October 2023, examines the economic well-being and potential financial risks of U.S. households.
The report said people's overall financial well-being will be “broadly stable” from 2022 to 2023, but that some groups “continue to experience financial stress at higher rates than others.”
This included parents with children under the age of 18.
The percentage of parents with children under the age of 18 who feel they are “financially comfortable” decreased from 69% in 2022 to 64% in 2023.
The 2023 data point is a significant decrease from 2021, when 75% of parents said they felt financially secure. The last time parents felt this financially insecure was in 2015, when the figure hit 65%, according to Federal Reserve data.
By comparison, the percentage of adults who do not have children under the age of 18 and who feel “financially comfortable” has not fallen below 70% in the past eight years.
The report did not provide specific reasons for the growing financial concerns, but the rising cost of child care has been a national concern for years.
Child care costs in the United States are skyrocketing, making it difficult for families to make ends meet in the current economic climate.
“Child care costs can be a significant burden for parents,” the Federal Reserve report states. “Parents who paid for child care paid an average of $800 per month for child care. For parents who paid for more than 20 hours of child care per week, the average was $1,100.”
Business Insider estimated that it could cost parents about $26,000 a year to raise one child in 2024. That's a 41.5% increase from 2016. Bank of America's 2024 analysis also found that the US has the second-highest child care costs among developed countries.
The analysis, which ranked New Zealand number one, found that the average couple with two children spends more than 30% of their combined wages on childcare.
