According to a new study by Care.com, the cost of childcare has gone up for the fifth year in a row. In fact, a division of real estate site Zillow analyzed the study and found that at $1,385 a month, the average cost of child care in the U.S. only slightly less than the median rent payment in America, which comes out at $1,500 a month. For families with young children who need childcare services, this is a huge financial burden.
The key reason childcare is so expensive is that the barriers to entry are high. To open a childcare center, you have to deal with a number of regulations that are in place designed to ensure the safety and health of the children. For example, many states require a certain adult-to-children ratio, so once a center does open, labor costs are significant. In addition, some states require as certain number of square feet per child, which can drive up rental costs. Liability insurance can be expensive too. All of this means that it is difficult for supply to keep up with demand. And, as fewer families are able to turn to family members for care, demand is very high.