Childcare costs keep US mums from working

WASHINGTON - Mrs April McCormick wants to find a full-time job but the high cost of childcare is holding her back.

The mother of a two-year-old boy says a full day of childcare in Louisville, Kentucky, where she lives, would cost around US$1,000 (S$1,250) a month. If she finds a full-time job that pays US$2,000, after taxes, more than half her salary would go to paying for childcare.

"Going back to work full time would mean paying more for childcare than what I'm bringing home," says Mrs McCormick, 35, who now does some part-time copy-editing from home. Her husband is an IT director.

After years of seeing more women enter the workforce, a recent study saw a U-turn for one group: mothers.

About 29 per cent of mothers now stay at home, up from 23 per cent in 2009, according to a study by Pew Research Centre. Part of the reason is the spiralling childcare costs in the United States - where it is often cheaper for a parent to send a child to university for a year than it is to send one to day care.

In New York, for example, full-day childcare averages US$12,355 a year, but in-state college tuition averages just US$6,560 annually, according to a report by non-profit group Child Care Aware of America.

In Singapore, average full-day childcare would cost $11,280 as of March this year, while a Singaporean arts and social science student at the National University of Singapore would pay $28,600 per annum without a grant, and $7,850 with a grant. Varying amounts of grants are offered to all admitted students.

There are basic subsidies for Singaporean children enrolled in day-care centres licensed by the Early Childhood Development Agency (ECDA) and additional childcare subsidies for working mothers from low-income households.

Subsidies in the United States are awarded only to low- and middle-income families.

With childcare costs on the rise worldwide, the US experience is showing the impact such increases can have on the broader economy.

"There is a ripple effect," says Mrs Michelle Noth McCready, policy director at Child Care Aware of America. "If you don't want to spend the money on childcare, you are likely to leave your job. The employer has to find and train someone new, and the cost of professional development of the parent also takes a hit."

A 2009 study showed that employees leaving their jobs for childcare-related reasons represented a potential loss of US$6 million to employers in California state's downtown Santa Barbara, which has fewer than 91,000 residents - a fraction of the US population which is above 300 million.

Mrs Noth McCready says parents often cite childcare as "one of the most unexpected sticker shocks when raising a child".

According to the Child Care Aware's report, the state of Oregon has the least affordable childcare in relation to family income - amounting to about 14 per cent of the median income of a married couple, which is US$72,226.

And it does not help that over the years, while salaries nationwide have remained somewhat stagnant - real average hourly earnings rose 0.3 per cent from December 2011 to December 2012 - the cost of childcare increased 2.6 per cent from 2011 to 2012.

Mrs Noth McCready explains that some of the largest costs for childcare centres include rent, supplies and the cost of the workforce.

And while there are subsidies available, she notes that there are more people waiting for these subsidies than there is money to go around.

Even if they qualify for a subsidy, they have only a one in six chance to get it because there may not be enough funds available, says Mrs Noth McCready,

As for improving the quality of childcare, the administration of President Barack Obama has created the Race To The Top: Early Learning Challenge fund, making more than US$500 million available to encourage states to improve the standards of early childhood care and programmes.

But many believe that more can be done. "We need to invest in childcare as a nation," says Mrs Noth McCready.

As for those who do not qualify for subsidies, it is a matter of doing a cost-benefit analysis.

Mrs Noth McCready says a family recently told her that with three kids under the age of five in childcare, and both parents working, their profit margin would be just US$1.50 an hour. This works out to US$405 a month, if they worked a nine-hour day.

This is precisely why mothers like Mrs McCormick are making the choice to stay at home. "If I were to have a second child, paying US$500 a week (for childcare) would just be ridiculous... It wouldn't make any sense to go back to work," she says.

This article was published on May 12 in The Straits Times.

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