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The American child care system is marked by high costs, low access, and uneven quality due to a low-wage workforce that turns over at rates in some states.

The economics of child care are what former U.S. Treasury Secretary Janet Yellen has referred to as a “broken market,” meaning that . Instead, the for a toddler varies between $7,500 and $13,500 in 2022 dollars depending on setting and geography, with high cost-of-living areas having median costs that exceed $20,000 per year. As a percentage of median household income, average costs can range from 10 percent to 15 percent, with single parents often facing burdens of more than 30 percent. Infants are more expensive still. In recent years, prices have been rising at .

However, these high parent fees do not generally cover the true cost of care, meaning what child care providers need to bring in as revenue in order to operate a sustainable program and pay staff well. Labor costs due to the need for low child-to-adult ratios. As a result, programs have little choice but to offer low wages (with the 2024 ) and few, if any, benefits to employees. Turnover in the field can be as high as (with wide variations by program type and state), leading both to programmatic disruptions and damaging the stability of caregiver-child relationships .

The fragile finances of child care programs also contributes to supply scarcity. Many child care programs operate on razor-thin margins, , and closures are increasingly common. According to the Center for American Progress, nearly half of America’s young children live in a “,” a term for census tracts where there are three or more children per every licensed slot. Licensed family child care programs (those where a provider serves a small number of children in their home) have seen : Between 2005 and 2017, the United States went from having nearly 200,000 individual small family child care homes to around 100,000, and evidence suggests the decline has continued since at a slower pace.

A great deal of child care is provided by “family, friends, and neighbor” caregivers, which as the name implies can include grandparents, aunts, uncles, family friends, or neighbors. These caregivers, however, are more often than not . When they are paid as part of public systems the compensation can be as low as $15 or $20 a day. Families with stay-at-home parents, meanwhile, are categorically ineligible for almost all public child care assistance despite the fact that in order to attend doctor’s appointments, care for ill or aged loved ones, and maintain their own mental health.

All told, America’s lack of affordable child care causes families to make decisions about care, work, and family life that may be at odds with their preferences. Between December 2023 and August 2025, mothers with children under the age of five of over 2 percent for mothers with bachelor’s degrees or higher and over 1 percent for mothers without bachelor’s degrees; both rates of declines were higher than for all other women and for all categories of men. this trendline is continuing. Without adequate public funding, the child care system is continuing to cause parents, children, and child care educators to struggle.

The United States is aging and becoming older than it’s ever been. The number of Americans aged 65 and older is projected to increase 42 percent, from 58 million in 2022 to 82 million, by 2050. Older Americans will make up of the population by mid-century. 

Americans are also living longer, with more chronic illnesses that require more intensive care. Nearly to need caregiving help, some for five years or more. And because most people would rather than live out their final years in an , home care work to help people manage the tasks of daily living, like dressing, bathing, toileting, meal prep, and the like, is projected to become the fastest-growing occupation in the economy over the next decade. The home care workforce grew rapidly from 2008 to 2018, expanding from 898,000 to more than 2.2 million. Surging demand will add .

A by AARP and the National Alliance for Caregiving finds that 63 million Americans, one in four adults, are caring for older adults or those with serious illness or disabilities on a regular basis, an increase of 20 million caregivers in the last decade. A 61 percent–majority of family caregivers are women, though the number of family caregivers has increased across all genders, education levels, and ages and nearly all races and ethnicities.

That care is expensive. And, as our survey shows, many Americans underestimate just how expensive, especially for 24-hour care. While a majority of survey respondents see some role for the government in helping families pay for home care, right now, most families have to find a way to pay for it on their own.

Since Medicare, the public health insurance program for those over age 65, , most American families will have to find a way to cover the cost of long-term home care out of pocket, which on average runs more than $80,000 a year for 44 hours of home care a week. More intensive, 24-hour care could run a family well over $300,000 a year.

The Department of Health and Human Services estimates that the average American turning 65 today with families paying more than one-third of that out of pocket.

Although families pay, on average, $35 an hour for home care, home care workers earn $16 an hour. The rest goes to home care agency administrative costs, insurance, marketing, and about a . Home care workers’ low pay, often with no benefits, contributes to a . That constant churn, in turn, impacts the continuity and quality of home care.

Medicaid, the public means-tested health insurance program for those living on low incomes, does cover home care, known as Home and Community-Based Services. Currently, about who are disabled or older and live on limited incomes use home care, and another 600,000 sit on waiting lists. The Trump administration’s cuts to Medicaid of nearly $1 trillion over 10 years are likely to significantly

For families who don’t qualify for Medicaid and can’t afford private home care or long-term insurance, family members, a majority of them women, are often forced to reduce work hours or drop out of the workforce entirely to provide the needed care. That has a steep cost, too—especially for the many “sandwich generation” caregivers who simultaneously care for children and aging parents.