Because lower-middle-class families are less likely to pay out of pocket for child care, more families would be affected by accounting for simulated expenses: 27.6 percent would fall into a lower-class status. For families with children under age 3, paying child care expenses similar to their peers would push an additional 21.2 percent of them below the middle class threshold. 5percent of families out of the middle class (specifically, about 20.1 percent from middle class to lower middle, and another 0.4 percent from middle class to lower class). In this simulation, if all middle-class working families with children under age 6 paid the same child care expenses as similar families who are at least as well off (middle and upper-middle class) and paying for child care, then child care expenses would push an additional 20.
#UPPER MIDDLE CLASS INCOME FULL#
In order to estimate the full cost of child care, we use a statistical matching technique for comparable families (see Data and Methods). These families may face implicit costs of care (exchanging services or foregoing work opportunities), and they may also be paying for lower-quality care than they might purchase if cost were not an issue.
#UPPER MIDDLE CLASS INCOME FREE#
The findings do not describe the quality of child care arrangements or alternative options, but the simulated estimates illustrate the extent to which typical child care costs affect measures of economic well-being for families that are paying below market rates or relying on unpaid care.Īs noted above, many working families with young children in the middle class and below (generally, families with less than $90,000 in annual income) do not pay any out-of-pocket child care expenses, or they rely on free or low-cost care from friends and family. Lastly, we estimate the number who would be pushed out of the middle class after simulating expenses for families paying nothing (and using informal care) and for families paying less than families of comparable size and with similar employment patterns. Then, we estimate the number that are pushed below the middle-class threshold by actual child care expenses. Our approach to making these comparisons is, first, to estimate the number of families that are in the middle class without taking away child care expenses.
To illustrate the impact of child care expenses on middle-class families, we consider a family’s total economic resources before and after accounting for out-of-pocket child care expenses. Family Income and the Impact of Child Care Expenses
If we want to make a middle-class quality of life attainable for working families with young children, then public policies-including expanded public funding for child care, income maintenance programs, and refundable tax credits-could play an important role in supporting families with their child care needs. An even greater share of middle-class families would be pushed out if they incurred typical child care costs. We find that, indeed, many working families cannot attain middle-income status because of child care expenses, while many additional families maintain this status by relying on unpaid child care, informal arrangements with family or friends, or below-market-rate services, potentially from unlicensed care providers. In this brief, we present estimates of the number of families that cannot maintain a middle-class income as a result of child care expenses. 1 But for many working families, the high price of child care makes this goal extremely challenging. Most Americans believe that through hard work and saving they can secure an economically sound, middle-class lifestyle. If all middle-class working families with young children were to pay what typical upper-middle and middle-class families pay for child care, roughly $6,900 per year on average, an additional 21 percent would be pushed below the middle-class threshold.
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