US childcare costs are rising significantly, outpacing overall inflation at a rate of 1.5 times faster, with a 5.2% year-over-year increase in September. This trend has led to a decline in the number of households making monthly childcare payments, as the average monthly payment increased by 3.6% YoY, according to Bank of America payments data.
Regional disparities in childcare costs are widening, with New England up 6.6% and the West North Central division surging 8.2% YoY. In the South, Nashville saw a more than 6% increase from 2024 averages. These rising costs are forcing some parents, particularly women, to quit work or reduce hours to become caregivers. Bank of America data shows a drop in households receiving multiple paychecks while making childcare payments, especially among lower-income households, indicating an increasing trend of earners dropping out of the workforce.
Childcare costs remain persistently above historical averages, with the Bureau of Labor Statistics reporting a 5.2% increase in September, more than 1.5 times higher than the inflation rate. The US Department of Health and Human Services considers childcare affordable if it does not exceed 7% of a household’s income, but many families are paying far more, impacting their overall spending. The Department of Labor estimates that full-day care for one child costs between 8.9% and 16.0% of median income, while part-day care for school-aged children comprises 8.1% to 9.4%. A Care.com survey found that parents paying for childcare deplete almost a third of their savings.
Bank of America data reveals that the share of households with multiple income sources making childcare payments has fallen each year, with the sharpest decline among lower-income households. This suggests that high childcare costs are forcing some to leave jobs.
Women are disproportionately affected by these costs, with their labor force participation rate dropping over the past few months, while men’s has slightly increased. Bank of America’s 2025 Workplace Benefits Report shows that nearly 60% of employees are caregivers, with women and younger employees more likely to face caregiving demands. BLS data indicates that women spend an average of an extra hour per day on childcare compared to men, which has significant implications for households where mothers are primary or sole earners. The increasing burden of childcare costs is reshaping workforce participation, particularly for women, as they opt to leave the labor force to manage caregiving responsibilities.
