The cost of child care now exceeds the price of college tuition in 38 states and the District of Columbia, according to a new analysis conducted by the Economic Policy Institute.

The tally increased five states since the pandemic began. EPI’s last analysis relied on 2020 data, which showed child care costs outstripped college costs in 33 states and Washington, D.C., said EPI spokesperson Nick Kauzlarich.

The organization released a state-by-state guide  showing the escalating cost of child care. Average costs range from $521 per month in Mississippi to as much as $1,893 per month in Washington, D.C., for households with one 4-year-old child, EPI found.

The analysis also found child care costs have exceeded rent prices in 17 states and the District of Columbia.

So what's the cause? 

Elizabeth Warren collaborated with her daughter Amelia Warren Tyagi, a management consultant, on a work of serious nonfiction aimed at a popular audience: The Two-Income Trap: Why Middle-Class Parents Are Going Broke.

The “two-income trap,” as described by Warren, really consists of three partially separate phenomena that have arisen as families have come to rely on two working adults to make ends meet:

The addition of a second earner means, in practice, a big increase in household fixed expenses for things like child care and commuting.

Much of the money that American second earners bring in has been gobbled up, in practice, by zero-sum competition for educational opportunities expressed as either skyrocketed prices for houses in good school districts or escalating tuition at public universities.

Last, while the addition of the second earner has not brought in much gain, it has created an increase in downside risk by eliminating an implicit insurance policy that families used to rely on.

In other words there’s no decision devoid of consequences. Economics always finds a way to play a role in decision making. On one hand we have two parents working so there’s no one at home to raise the kids. This phenomenon increases the need for child care. That market increase raises the prices for child care due to a higher traffic of children. 

Then you couple that with intrinsic lowing of wages once women joined the labor force. During WWI, approximately 1,600,000 women joined the workforce in Britain. In the US, the number of women in paid occupations significantly increased, not only in traditional female roles but also in new, often male-dominated jobs like factory work and agriculture. For example, by 1918, nearly a million women were working in munitions factories in Britain, and in the US, women filled jobs in factories, offices, and on farms. 

During World War II, over six million women entered the workforce. This significantly boosted the female presence in the labor force, with women making up nearly 37% of the workforce by 1945, up from 27% in 1940.

During World War II, an estimated 17 million new civilian jobs were created in the United States. While the exact number of new jobs created during World War I is more difficult to pinpoint, the US labor force significantly increased during the war years. 

Cornell University found that the difference between the occupations and industries in which men and women work has recently become the single largest cause of the gender pay gap, accounting for more than half of it. In fact, another study shows, when women enter fields in greater numbers, pay declines — for the very same jobs that more men were doing before.

From that assertion one could surmise that women are the only ones paid lower once women enter the labor force. But the reality is it is just a matter of supply and demand. When 17 million new jobs were created during WW2 and 6 million women entered the workforce, they instantly competed for those same jobs which lowered the wages for those jobs.

Luckily there was a war! During World War II, approximately 36 million American men registered for the draft, although not all were ultimately inducted into military service. Additionally, around 16 million men served in the US Armed Forces. So due to them exiting the labor markets there was a need for those women laborers. But what about now?

In 1967, 49 percent of mothers were stay-at-home mothers. So there was not much demand for childcare outside of the home. Data shows stay-at-home mothers almost doubled from 15 percent in 2022 to 25 percent in 2023. 

In the 1960s, marriage rates were high compared to today. A large proportion of the population was married, particularly among those 18 years and older. For example, in 1960, 67.4% of people aged 14 and over were married.  

In 2024, 47.1% of households were headed by married couples, the second lowest share since 2022's all-time low of 46.8%. The percentage of households with a married couple peaked 75 years ago: in 1949, it was 78.8%.

In the 1960s, a much smaller percentage of children lived with single parents compared to today. In 1960, only about 9% of children lived with a single parent, whereas today, a much larger percentage, around 28%, live with single parents.

So now child care has increased due to more families needing it. The average wage declines against inflation due to more workers being in the market. And now what was once a way to get ahead by having two incomes has become a necessity.  

One phenomenon that has helped the increase in childcare has been the decline in birth rates. Just check out the chart below.