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Why Child Care Cost Relief Could Be Around The Corner

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Women’s Money Decisions Will Shape the Future for the U.S.

December 13, 2020

Why Child Care Cost Relief Could Be Around The Corner

The percentage of dual-income households with children under age 18 has been on the rise since the 1960s and rising squarely parallel with it has been child care costs. In 2019 almost 65% of married-couple families with children had dual incomes, according to the Bureau of Labor Statistics.

From a recommendation by the Department of Health and Human Services, families shouldn't spend more than 7% of their income on child care. Unfortunately, there isn't one state in the US where parents can follow that recommendation. A married couple making the national median income ($87,757) will have to devote 10.6% of their money to child care, which is a cost that is rising faster than the median income is.

2020 will see that number rise astronomically as working parents scrambled to find access to child care for their kids who didn't previously need it. But as 2020 closes and people across the country try to find any silver linings from the COVID-19 pandemic, there may be one to be found in the form of child care cost relief.

Federal lawmakers from both parties have proposed additional funding packages to help the industry. A record 47 Republican lawmakers called for child care and early education funding increases in next year's federal budget. None of these proposals have been made into law just yet but the fact that both parties are in favor of the relief makes it appear that there is bipartisan common ground on the subject.

President-elect Joe Biden has a $775 billion caregiving proposal on the table, with $335 billion allocated to new child care money. Key pieces of the proposal would include free universal pre-kindergarten for 3- and 4-year-old's tax credits to help low-income and middle-class families pay for child care, and improvements in pay and benefits for child care workers.

Like any other massive budget proposal, this will have to be paid for by taxpayers. At the early stages of the proposal, the taxes seem to come from a change in tax breaks for real-estate investors with incomes over $400,000 but that will be debated upon in Congress. What there doesn't seem to be a debate for is the need for a rise in relief funding.

I am not sure how this will all shake out but if there is one concern I have had personally, with a young child of my own in daycare, is the turnover in the workers and staff at child care facilities. Caring for and teaching multiple children at once is an extremely difficult and very important job but the median hourly wage for child care workers was only $11.65 as of May 2019, according to the Bureau of Labor Statistics. Many of these teachers and caregivers struggle to make ends meet doing a job that is extremely important to all parents around the country. Improving pay and benefits for these folks should improve the quality of care, a good step in the right direction.

This is a large chunk of change to put towards one area in a budget but its an area that deserves the attention. Time will tell how much money will ultimately be provided and where those funds will come from, but one thing seems inevitable: help is on the way.

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About the author

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Tyler Huck

Vice President, Private CFO®

Tyler Huck is a Chartered Retirement Planning CounselorSM. He is a Vice President and Private CFO® at oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/tylerhuck or on Twitter @tylerhuck.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual.

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