Washington, D.C. — A new State-by-state analysis conducted by the Center for American Progress shows that in Iowa, the median male worker who takes five years out of the workforce for child care stands to lose more than $600,000 in income. That figure comes from CAP’s new interactive calculator revealing the hidden lifetime costs of the broken U.S. child care system and highlighting the true financial costs—measured in lost income growth and lost retirement assets and benefits—when parents cannot access affordable child care. For many prospective parents, taking time off from work for child care is a financial decision that means weighing the skyrocketing cost of child care against lost income while caregiving—a cost that is difficult to quantify and much larger than many families may guess. CAP’s calculator shows that such financial losses are typically three to four times greater than yearly income loss alone.
The analysis shows that in the state of Iowa, a median female worker who takes five years out of the workforce for child care between the ages 21 and 31 stands to lose $466,571 in income, retirement assets, and benefits over her lifetime—equivalent to 19 percent of her lifetime income. A median male worker taking the same five years out of the workforce at the same age would lose even more: $677,704, which is equivalent to 22 percent of his lifetime income.
“Lack of affordable child care is a serious economic issue for families in Iowa,” said Katie Hamm, Senior Director for Early Childhood Policy at CAP. “Many working parents may feel that they have no choice but to leave the workforce because the upfront cost of child care is astronomically high—and while child care is expensive, leaving the workforce is even more so. There has to be a better solution, and that’s why it’s so critical that policymakers at all levels put forth meaningful policies to bring affordable, high-quality child care within reach for all families that want and need it.”
The calculator, designed by CAP Economist Michael Madowitz, illustrates the true opportunity costs of leaving the workforce because the cost of child care takes up too much of their income. The tool is fully adjustable by gender, current salary, current age, age caregiving leave starts, and years on leave. An example user of the calculator, a 30-year-old woman making $50,000 annually, can use the tool to see that that three years of leave for child care would cost her not only $150,000 in lost income, but an additional $140,000 in lost wage growth over a career and $125,000 in retirement assets and benefits that would have been gained over a lifetime.
“As an economist who recently became a father for the second time, I was frustrated and surprised that there was no tool to help families find the true opportunity costs in choosing child care arrangements,” said Madowitz. “Many American households have both parents in the workforce and are still strained by child care’s high costs. By quantifying the large and largely hidden opportunity costs of our child care crisis, this calculator will help policymakers understand how so-called free child care can be a huge long-term financial burden for families without the means to choose the option that best fits their families. Affordable, high-quality child care is both a great investment in our next generation and an underappreciated tool to raise family incomes and grow the economy.”
In advance of the 2016 elections, the Center for American Progress launched the WithinReach campaign to elevate and create momentum around the need to put quality, affordable child care and pre-K within reach for kids, families, and the economy. Last year, CAP released a new proposal that would provide a High-Quality Child Care Tax Credit to help low-income and middle-class families afford child care. The proposal would expand child care access to roughly 6 million children younger than age 5 in the United States, increasing the current service level more than fourfold while supporting financial security for working families.
Click here to view the interactive.
Click here to read “State Examples of the Hidden Cost of a Failing Child Care System,” which contains state-by-state data on how much income a typical worker who takes time out of the workforce for five years of childcare might lose.
Click here to read “Calculating the Hidden Cost of Interrupting a Career for Child Care,” an explanation of the methodology behind the interactive.
For more information or to speak with an expert, contact Jennifer Molina at or firstname.lastname@example.org at 202.79.9706.