Outsized Increase
Just about everything costs more these days — but some things cost more than others. Inflation has had a lumpy distribution and some products and services have seen outsized increases. Childcare is one such category.
One survey found that babysitting rates increased nationally by 9.7% in 2022. This came on the heels of an 11% pop in 2021, outpacing inflation for two consecutive years.
The national average cost to hire a babysitter now sits at around $23 for one child and $27 for three. And over half of American parents currently spend more than 20% of their income on childcare.
21% Pop in Childcare Costs
Even with the inrush of inflation over the past two years, the 21% spike in childcare costs is an outlier. Inflationary pressures are only one factor in the rise.
The pandemic softened childcare demand, with many parents working from home. As such, they were able to pay babysitters for only a handful of hours, or forego childcare altogether. But as pandemic restrictions lifted, this trend reversed. Not only must parents pay for more hours, but, with a related shortage of sitters, they must also pay higher rates.
This has forced many working parents into an unenviable position: either make sacrifices to afford childcare, or sacrifice work to care for their children themselves.
Creative Solutions
There may be a shortage of babysitters, but there’s no shortage of ways to save on childcare.
One such option is “share cares” — combining forces with other families to hire a single sitter for all your children. Trading babysitting services with another family can also help bring down costs. And the classic practice of taking in an au pair to provide childcare in exchange for room and board has recently regained popularity as a cost-effective solution.
Meanwhile, an increasing number of states offer childcare subsidies — New York, New Jersey, and Maine among them. And as more employees stay home to watch their kids, some employers, especially those in blue-collar fields, are beginning to subsidize childcare themselves in a bid to keep workers.
On the flipside, the shortage and consequent high pay is attracting workers from other fields, such as teachers and nurses. In the short term, this has contributed to increased rates. But in time, supply-demand dynamics may shift back into parents’ favor as the babysitter pool grows — in quantity as well as quality.
Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS23021402