"According to new survey data from the Federal Reserve’s 2023 Survey of Household Economics and Decisionmaking (“SHED”), low-income families are more likely to reduce work to care for young children while high income families are more likely to pay for care.[i] These differing decisions have financial consequences, as families who reduce work are less well off financially than those who are not reducing work. Although families who pay for care are better off overall, child care costs are still a notable expense. On average, families who pay for care pay about half as much for that care as for housing each month. This analysis suggests how government and private sector support for child care might vary by income
Families handle care responsibilities differently across income levels
As shown in Figure 1, families at different income levels make different decisions about how to care for their children. Households with young children and that make less than $75,000 per year are more likely to provide care themselves, with about 35 percent of these households reducing work to care for children. As income rises, the share of households using paid child care rises – from 17 percent for those making less than $24,000 to 41 percent for those making more than $150,000. The highest earners are unlikely to reduce work to care for children, without only about 14 percent of households doing so.."
Childcare Costs
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