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CHILD CARE COSTS AND POVERTY AMONG FAMILIES WITH YOUNG CHILDREN.

Introduction

How often are low-income families pushed into poverty by their child care expenses? In this paper, we use the Supplemental Poverty Measure (SPM) to assess the extent to which child care expenses are pushing families with young children into poverty.

Nearly one-third (30.4%) of families with young children are poor. To fall under the SPM poverty line means that a family's income would be less than $26,000 a year on average, with variations by family composition and geographic location. Accessing affordable child care is a struggle for most families, but is particularly challenging for families in poverty. On average, families with children under age six, who incur child care costs, spend 8.8% of their income on child care, and families living below the federal poverty line spend 20% of their income on child care (Mattingly and Schaefer, 2016). And the costs of child care do not vary dramatically across high-poverty and low-poverty communities. The 2015 National Survey of Early Child Care and Education found that the yearly cost of childcare is approximately $7,082 in a low-poverty area, $5,532 in a moderate-poverty area, and $5,818.5 in a high poverty area (NSECE, 2016). (1) The costs are also elevated for families with younger children. The median hourly cost for center-based care is $4.40 for infants, $4.10 for two-year olds, $3.70 for three-year-olds, and $3.60 for four-year-olds (NSECE, 2015) (2). Overall, poor families struggle to find affordable child care, and when they do access care, it consumes a great deal of their family budget. Using the SPM, we are able to determine how many families are pushed into poverty due to these costs.

Data and Methods

To analyze the effects of child care expenses on the poverty rate, we assembled a data file consisting of the five most recent years, 2012-2016 (capturing poverty from 2011-2015) of the Current Population Survey's Annual Social and Economic Supplement, downloaded from IPUMS. (3) Because child care expenses are combined with other work-related expenses in the SPM, we first create a somewhat different version of the SPM to look specifically at child care expenses. We add back in combined work and child care expenses and then subtract from resources total uncapped out-of-pocket child care expenses. The measure thus deviates from the SPM by the fact that other work-related expenses are not subtracted from resources, and subtracted child care expenses are not capped at the level of the lowest-earning spouse or partner. Once these changes are made, we simply recalculate poverty rates and related statistics using this alternative definition of resources, with and without the subtraction of out-of-pocket child care expenses.

Findings

Among poor families with young children, 12.3% incur out-of-pocket child care expenses according to our analyses of the SPM. For families earning this little income, child care expense can be a burden. Of those who pay for child care, nearly one in ten (9.4%) are poor (Figure 1). Roughly one third of these poor families are pushed into poverty by child care expenses. This represents an estimated 207,000 families. (4)

Among families with young children who pay for child care (approximately 30% of such families), those with three or more children, those headed by a single parent, those with black or Hispanic household heads, and those headed by someone with less than a high school degree or by someone who does not work full time are most often pushed into poverty by child care expenses. On average, child care costs push 3.2% of families who pay for child care into poverty. But 5.8% of families with three or more children and 6.8% of single parent families are pushed into poverty due to child care costs (Figure 1).
Figure 1. Percentage of Families Pushed into Poverty due to Child Care
Costs by Number of Children in family and Parent's Marital Status

                   Percentage Poor Absent  Percentage Pushed into
                   Child Care Expenses     Poverty by Child Care Expend

All Families (*)          6.2%                       3.2%
1 Child                   5.9%                       3.1%
2 Children                6.7%                       3.3%
3+ Children               8.2%                       5.8%
Youngest Chid 0-3         6.5%                       3.3%
Youngest Chid 4-5         5.6%                       3.2%
Married                   2.8%                       1.9%
Formerly Married         11.8%                       5.5%
Nevei Maiiied            15.8%                       6.8%

Note: (*) Among families with children under 6 who reported child care
expenses in the past year.

Note: Table made from bar graph.


Child care costs also push 4.8% of families with a Black household head and 6.1% of families with a Hispanic household head into poverty (Figure 2). These costs also push a higher percentage of families headed by individuals that did not attend college into poverty (5.9% of families headed by high school graduates, and 10.1% of families whose head did not graduate from high school) (see Figure 2). In terms of employment, a greater percentage of families headed by a non full-time worker were pushed into poverty (4.9%) than those headed by a full-time worker (2.3%). However, over half of poor families headed by a full-time worker would not be classified as poor if not for their child care expenses.
Figure 2. Percentage of Families Pushed into Poverty due to Child Care
Costs by Race and Ethnicity, Educational Attainment, and Household
Head's Employment Status

                             Percentage Poor Absent  Percentage Pushed
                             child care txpenses     into Poverty by
                                                     Child care
                                                     Expenses

All Families                         6.2%                 3.2%
White, Non-Hispanic                  3.4%                 2.2%
Black, Non-Hispanic                 12.1%                 4.8%
Hispanic                            12.2%                 6.1%
Other, Non-Hispanic                  5.3%                 2.4%
LTHS                                27.1%                10.1%
HS                                  14.3%                 5.9%
Some College                         9.6%                 4.8%
BA or More                           2.4%                 1.9%
Head Employed Full-Time              2.3%                 2.5%
Head Not Employed Full-Time         15.2%                 4.9%

Note: Table made from bar graph.


The impact of child care costs on poverty also varies across regions. The percentage of families that pay child care costs is almost equal in metropolitan and non-metropolitan areas before child care costs are accounted for. The cost of care, however, pushes 3.4% of those families in metropolitan areas into poverty and 2.4% of families in non-metropolitan areas into poverty, so the poverty rate is higher in metropolitan areas when child care costs are accounted for (see Figure 3). There is also variation in the impact of child care cost on poverty across different states. Over 5% of families that pay for child care in Alabama, Arizona, Florida, and New Jersey are pushed into poverty due to child care costs.
Figure 3. Percentage of Families Pushed into Poverty due to Child Care
Costs by Metro/Non-Metro Area

                  Percentage Poor Absent  Percentage Pushed into
                  Child Care Expenses     Poverty by Child Care
                                          Expenses
All Families (*)          6.2%                   3.2%
Non-Metro                 6.3%                   2.4%
Metro                     6.2%                   3.4%

Note: Table made from bar graph.


Child care is complex for many families, and this analysis touches only on the expenses that families are paying out of pocket, whether the arrangement is adequate or not. Many of these families might prefer to spend more, if they could afford it, to gain higher-quality care or more hours of care. This analysis also does not touch on families who obtain child care through noncash means, such as reliance on relatives; trading of child care; split-shift parenting, where work schedules are staggered so that child care is less necessary; or publicly supported programs such as Head Start and public pre-school. Nonetheless, our findings suggest that lowering out-of-pocket child care expenses for families with young children would serve to reduce poverty. Additionally, things like increased subsidies may expand access to higher quality child care or open the door to increased labor force participation.

Acknowledgments

This article is a modified reprint of a research brief published by the Carsey School of Public Policy: Mattingly, Marybeth J and, Christopher T. Wimer. 2017. Child Care Expenses Push Many Families into Poverty. National Fact Sheet Issue Brief No. 36(Winter). Durham, NH: Carsey School of Public Policy. Retrieved from: https://carsey.unh.edu/publication/child-care-expenses. The authors thank Jessica Carson, Michele Dillon, Michael Ettlinger, Andrew Schaefer, and Kristin Smith of the Carsey School of Public Policy for comments on an earlier draft; Patrick Watson for his editorial assistance; and Laurel Lloyd and Bianca Nicolosi at the Carsey School for their layout assistance. This research was funded by a gift from Jay Robert Pritzker and Mary Kathryn Pritzker.

NOTES

(1.) The NCECE uses the following definitions for low poverty, moderate poverty, and high poverty communities: in a low poverty density community, less than 13.9% of their population in poverty; moderate density poverty rates fall between 13.9 and 20%; communities with more than 20% of residents in poverty are considered as high poverty density (NCECE, 2016).

(2.) https://www.acf.hhs.gov/sites/default/files/opre/es_price_of_care_toopre_041715_2.pdf

(3.) Note that for the purposes of this fact sheet, we depart from U.S. Census Bureau methodology and use uncapped child care expenses to capture cases even where these expenses exceed secondary earner income. Throughout this brief, we use the term "family" to refer to a Supplemental Poverty Measure unit, as defined by the U.S. Census Bureau. All analyses are restricted to families with at least one child under age 6 who report any child care expenses.

(4.) Sarah Flood, Miriam King, Steven Ruggles, and J. Robert Warren, Integrated Public Use Microdata Series, Current Population Survey: Version 4.0 [dataset] (Minneapolis: University of Minnesota, 2015), http://doi.org/10.18128/D030.V4.0.

REFERENCES

Mattingly, Marybeth J., Andrew Schaefer, and Jessica A. Carson (2016). "Child Care Costs Exceed 10 Percent of Family Income for One in Four Families." Issue Brief No. 109 (Fall), Carsey School of Public Policy, University of New Hampshire, Durham, NH.

National Survey of Early Care and Education Project Team. (2016). Early Child and Education Usage and Households' Out-of-Pocket Costs: Tabulations from the National Survey of Early Care and Education. OPRE Report 09, Washington, DC: Office of Planning, Research and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services.

National Survey of Early Care and Education Project Team. (2015). Prices Charged in Early Care and Education: Initial Findings from the National Survey of Early Care and Education. OPRE Report 45, Washington, DC: Office of Planning, Research and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services.

MARYBETH J. MATTINGLY

Beth.Mattingly@unh.edu Carsey School of Public Policy, The University of New Hampshire

CHRISTOPHER T. WEMER

cwimer@gmail.com The Center on Poverty and Social Policy, Columbia University

SOPHIE M. COLLYER

smc2246@gmail.com The Center on Poverty and Social Policy, Columbia University

How to cite: Mattingly, Marybeth J., Christopher T. Wimer, and Sophie M. Collyer (2017). "Child Care Costs and Poverty among Families with Young Children," American Journal of Medical Research 4(2): 162-167.

Received 19 July 2017 * Received in revised form 20 September 2017

Accepted 21 September 2017 * Available online 15 October 2017

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Author:Mattingly, Marybeth J.; Wemer, Christopher T.; Collyer, Sophie M.
Publication:American Journal of Medical Research
Date:Oct 1, 2017
Words:1865
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