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This Is Why Day Care Costs So Much

Image Source: Thinkstock
Image Source: Thinkstock

If there’s one thing we hear constantly about day care, it’s that it’s so darn expensive.

New data from the Economic Policy Institute (EPI) found that the cost of infant day care actually costs more than college tuition at a public institution in 33 states in the United States. Shockingly, the EPI found that the cost for child care for your traditional two-parent, two-child family ranged from just under $50,000 in areas like Tennessee to soaring over $100,000 in Washington, D.C. Overall, the average child care budget that a two-child family needed to maintain a “modest yet adequate standard of living” was $63,741.

Those numbers are staggering but the truth is, there is a lot more that goes into child care than what we see as parents.

“A lot of people think we are glorified, overpaid babysitters,” says Annie Miller*, owner of  licensed day care with 21 enrolled children that she runs from her home. “They don’t realize that we do lesson plans, meal plans, disinfect toys, special diet requirements for some kids, have unannounced state inspections, food program inspections, etc. My day doesn’t end when you pick your child up.”

And because it is one of the most important jobs in the world, let’s take a closer look at what exactly goes into the costs of running a day care:

Licensing is a crazy complicated (and expensive) process.

Getting licensed as a day care provider for an in-home day care involves a state orientation, application fee, home inspection, fingerprinting, State and DHS background clearances, TB test for the provider and all members of the household over 14 years old, Health Department water and sewer inspections, furnace inspections, playground inspections (usually done by licensing consultant), medical clearance by family doctor, CPR and First Aid, Blood Borne Pathogens, Infant Sleep Safe class, Shaken Baby Syndrome class, septic system clearance (to make sure your tank can handle all those extra flushes!), and radon gas testing, all of which are done for a fee.

Insurance is very selective and often difficult to obtain.

“State licensing has no requirements for insurance, but it would be a huge risk to operate without liability insurance,” Miller explains. “Liability insurance can range from 550.00-1500.00 per year. There are a lot of factors that go into the price. Do you have dogs on site? Do you provide care for infants? Do you provide your own food? Do you have employees? The number of children in care?”

Some companies will not even grant insurance to child care providers who care for children under 2 years old due to the risks associated with SIDS, explains Miller. Miller, herself, usually only accepts infants if an older sibling is already in her care, so the siblings don’t get split up.

In addition to personal liability, insurance providers also have to carry home owners insurance, which Miller says is very costly and difficult to obtain.

“Many insurance companies refuse coverage at all, if you provide child care services in your home,” she explains. “Others will insure only family providers and a select few will still provide coverage for group child care providers but at an elevated cost of several hundred dollars.”

“I worry that there will come a day that home providers will not be able to get home owners insurance while caring for children within their home,” Miller confesses, which would lead to the death of in-home day care. “I personally think that would be a huge loss to parents and children.”

Meeting all the license-renewal requirements is a never-ending process.

As a day care provider, Miller is required to meet all the requirements of her license renewal every two years, which includes (but is not limited to) the following:

  • Bringing in loads of sand for the playground to maintain the outdoor play area requirements
  • Renewing inspections
  • Paying for continuing education for herself and her assistants
  • Keeping up with safety updates and recalls
  • Replacing equipment (high chairs, bedding, swings, toys, etc.) as needed
  • Maintaining child-safe locks and fire extinguishers on each floor, sign in/out sheets for each child, a licensing notebook that details all inspections, and any corrective action plans that may be needed

One thing I found surprising is that Miller revealed that child care providers are always assumed guilty until proven innocent, which might make sense in terms of protecting children, but is still very difficult for the day care provider. A simple and anonymous complaint forces a mandatory investigation, which will then show up online under the provider’s license, and unless the reader reads the entire report, they will not know if the investigation was founded or unfounded. “It’s one of the reasons I am very selective about who I take into care,” Miller admits.

Infants are the most expensive to take care of.

It comes as no great surprise that infant care is the No. 1 expense for day care and has come with even more increased requirements for day care providers, such as ensuring that infants can only sleep in a crib or pack ‘n play. Which, if you’ve ever spent any time with an infant, you realize how incredibly difficult that would be to actually maintain all day long.

How many times has your baby fallen asleep in the car seat? The swing? Heck, the floor? But for day care providers, those little naps are illegal, and in Miller’s day care, every infant has to be physically checked on every 15 minutes. “This becomes very taxing while trying to care for other children and is often why extra assistants become necessary [which is also a reason for infant care being more expensive],” she notes.

The actual daily cost per child.

This is Miller’s breakdown from last year’s taxes, based on an average attendance of 10 children. (When her attendance drops below 10 children, the costs go up):

  • Insurances: $0.55/day
  • Curriculum/art supplies: $0.46/day
  • Electricity, gas, garbage/phone: $1.00/day
  • Inspections/Continuing Ed/ CPR/First aid: $0.65/day
  • Groceries: $5.50/day
  • Misc, such as wipes, cleaning supplies, paper products: $0.44/day
  • Repairs/cleaning/ maintenance: $0.25/day
  • Total: $8.85/day

In addition to the actual expenses that the children require every day, there is the actual cost of providers overseeing the children, a cost which varies based on the age of the child and the state the day care is in. In Miller’s state, the licensing requirements are 1 caregiver to 6 children for kids over the age of 18 months and 1 caregiver to 2 children if those children are under 18 months.

Getting paid by the government is unreliable (and could end up costing you).

One aspect of child care that was really eye-opening was how difficult it is for providers to actually get paid from state subsidies. For example, if a parent is using the governmental Child Care and Development fund in order to pay for their child’s day care, the CCD requires that those parents be working — and if the parent isn’t working or takes the day off or gets sick and doesn’t inform the child care provider and the CCD finds out, then the day care provider doesn’t get paid.

And then to add insult to injury, state payments are delayed for an average of 8-12 weeks, meaning that three months later, a day care provider could get a letter informing them that they have to pay back money, not the parents.

There are many, many hidden costs.

And then, there a lot of hidden costs to running a day care. There are no paid holidays or days off or even vacation days for someone who runs a child care out of her own home. And sick days? Forget about it.

As an in-home day care provider, Miller also dealt with some major legal issues recently when the state of Michigan, where she lives, decided to classify all in-home day care providers as a union and without any permission or prompting, collected union dues from them.

In addition, Miller pays to help aide the development of her staff as a sponsor of the T.E.A.C.H scholarship program, where she has elected to pay 10 percent of books/tuition for her eligible employees.

In the end, Miller, who is a mom of four herself, understands the struggles that working parents have to deal with in finding affordable, quality care for their children. But as a daycare provider, she also knows everything that goes into that care.

“There are many great perks to my job,” she says. “I get to love and cuddle kids all day — what better job could you have?”

*Name has been changed for anonymity

Article Posted 3 years Ago

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