Households with 2 kids need to earn over 400K to comfortably afford child care in US
Watch: Trump's answer on fixing child care crisis
At an Economic Club of New York forum, Donald Trump was asked what he would do about the child care crisis. Economists and activists later called his answer an "incoherent word salad" and "incomprehensible at best.'
Child care has long been one of the most significant expenses for families — and new LendingTree research shows just how out of reach it has become.
Households with 2 kids must earn more than 400K to comfortably afford child care
By the numbers:
Under federal guidelines, child care is considered affordable when it accounts for no more than 7% of household income.
According to Child Care Aware of America, the average annual cost of child care for an infant and a 4-year-old across the U.S. was $28,190.
FILE: Couple appears stressed out doing bills. (Credit: Getty Images)
For a household to spend only 7% of its income on child care (based on an affordability threshold set by the U.S. Department of Health and Human Services), it would need to earn an average of $402,708 a year, the data found.
That’s 176.5% higher than the average income among households with two kids of $145,656.
What they're saying:
"Most parents could tell you that child care costs are astronomical these days and can cause a major financial burden, even for high-income families," Matt Schulz, LendingTree chief consumer finance analyst, said.
Incomes needed to afford child care
Dig deeper:
By race, American Indian and Black families were furthest from earning the incomes needed for affordable child care. American Indian households with two kids earned an average of $94,094, while Black families earned $98,019, meaning they’d need to earn at least 328.0% and 310.8% more, respectively, to meet the affordability benchmark.
What they're saying:
"The fact that no group is even remotely near meeting these affordability thresholds tells you an awful lot about the cost of child care — and a lot about these government benchmarks, which clearly need to adjust to the realities of today’s child care costs," Schulz continued.
Incomes needed are at least triple average incomes in 20 states
Dig deeper:
The data found that the income gap widened even further at the state level. In 20 states, the income required to meet the federal 7% threshold was at least three times the national average for households with two children.
Hawaii had the widest gap: Families paid an average of $38,107 annually for an infant and a 4-year-old, so to keep child care expenses within 7% of income, a household would need to earn $544,386.
That’s 269.7% more than Hawaii’s average two-child household income of $147,249. Nebraska (263.0%) and Montana (257.8%) had similar gaps, illustrating how families across many regions face financial pressure to cover child care costs.
The other side:
Meanwhile, South Dakota families came closest to comfortably affording child care, but the average income there was still well below recommendations. In South Dakota, average annual child care costs were $16,702. To meet government thresholds, families would need to earn $238,600 – 95.4% more than the average income of $122,100. Mississippi and Alabama follow, both at 109.5%.
States with biggest discrepancies between average incomes, amount needed to afford child care
- Hawaii: 269.7%
- Nebraska: 263%
- Montana: 257.8%
- Maryland: 247.9%
- Massachusetts: 246.8%
See the full report here.
Child care for 2 kids exceeds monthly rent in most metros
By the numbers:
Last year, another report by LendingTree found that child care, on average, for an infant and a 4-year-old was 31.5% more than rent.
RELATED: Child care costs more than rent in these US cities; here’s where it’s the worst
In fact, the data found that child care for two children exceeded monthly rent in the majority of U.S. metros — 85 of the 100 analyzed. And for five cities, child care costs were at least twice the average rent.
The Source: To identify the states where families would need the greatest increase in earnings to comfortably afford child care, LendingTree researchers compared the average cost of child care in each state with the average income of households with two children. Their analysis estimated the income required to afford full-time, center-based care for an infant and a 4-year-old, based on the 7% affordability threshold from the U.S. Department of Health and Human Services (HHS). Family income data came from the U.S. Census Bureau 2023 American Community Survey microdata with one-year estimates. The 2024 child care cost data comes from Child Care Aware of America. New Mexico was excluded due to a lack of available child care cost data. This story was reported from Los Angeles. Previous FOX Local reporting contributed.