How California's high child-care costs wage war on families

Toddlers walk connected by a cord near a fence

By Jhumpa Bhattacharya and Anne Price

Sept. 6, 2024 3 AM PT

In Los Angeles and elsewhere across the country, your home’s square footage used to be the ultimate reflection of wealth and status. But with soaring energy costs, skyrocketing insurance premiums and other factors moving buyers toward more modest homes, there’s another measure of prosperity: the number of children you can afford.

Since 2018, child-care costs have outpaced housing as the top expense for households in nearly all of California, a trend we are seeing spread nationally as the costs of care for two children outweigh average mortgages. In Los Angeles, child care for a couple with one preschooler and one school-age child is more than 10% greater than the cost of housing. And in a report published last week, we found that child care is the top household expense in all but eight counties in California — and because of systemic racism and sexism in the labor market, the skyrocketing costs are hitting women as well as Latinx and Black families most.

The numbers show that inequities long embedded in our economy have made starting a family a potentially catastrophic financial event for Black and Latinx Californians. The percentage of childless Black households struggling to make ends meet, 42%, is nearly the same as for white households with three children, at 46%. That means having any number of children results in a greater economic burden for Black households than white ones. Meanwhile, white families are the only demographic for whom the percentage of households barely scraping by — meaning they struggle to cover their costs of living — remains generally the same (27%) whether they have zero children, one child or two children. By contrast, 58% of Black households and 65% of Latinx households with two children are not getting paid enough to meet their expenses.

How did California, a state often portrayed as a bastion of progress, end up with such dramatic racial disparities in these outcomes? The data show that the paths toward economic security that work for white people often don’t for other races, especially Black people, making it harder for them to support families.

For example, education does not yield the same economic benefits for Black women as for other Californians. They are the only demographic group in the state for whom a high school diploma has no economic payoff. Among those with bachelor’s degrees, our analysis found that close to a third of Black women face financial instability, while 16% of white men in this group are struggling to make ends meet.

Occupational segregation in California also plays a role. Latinx men are the only demographic group for whom the top five most common jobs all have a median annual wage of less than $90,000. Latinx men and women and Black men are crowded into the lowest-paying occupations, including maids and house cleaners for Latinx women, with a median wage of $50,516; security guards and gambling surveillance officers for Black men with a median wage of $46,951; and driver/sales workers and truck drivers for Latinx men, with a median wage of $86,498. Meanwhile, three of the five most common occupations among Black women are low-paying; personal care aide is the most common job in this demographic, with a median wage of just $33,348.

Low wages of course limit people’s ability to afford child care: A single Black woman who has a preschooler and works as a personal care aide at Alameda County’s median wage, for example, faces an astonishing $6,800 monthly gap between her income and the cost of basic necessities.

Across all races, it’s challenging for single parents to keep their heads above water. A household with one adult working at minimum wage and one preschool-age child in Los Angeles would need the adult to work around 17 hours a day, seven days a week, to afford basic living expenses including child care. Statewide, two in five white divorced households are barely scraping by. For divorced Black, Latinx and Indigenous households, financial instability is greater: 55% of such Native American households, 54% of Latinx households and 48% of Black households are struggling to stay afloat.

And even with two breadwinners, racial divides persist. We found that a higher percentage of Latinx households with two or more workers (42%) struggle to meet their basic needs than white households with one working adult (35%). For Black and Indigenous households, 30% and 28% of those with two working adults still struggle to make ends meet, respectively.

A number of policies could help all families thrive. We’ve seen the federal government take quick and effective action — the now-expired pandemic-era relief programs, including an expanded Child Tax Credit and unemployment insurance, led to the nation’s greatest recorded decline in poverty. Passing an enhanced, permanent Child Tax Credit should be a top priority of California’s congressional leaders.

Officials should also continue to expand guaranteed income pilot programs, such as Los Angeles’ BIG:LEAP initiative, which gave some families experiencing poverty $1,000 a month. The results included increased savings, better living conditions and more resources for children. In addition to the debt relief and minimum wage increases that state and local governments are already pursuing, California could reform the tax code to cover inherited and accumulated wealth and raise the corporate tax rate. That reform would create more revenue to fund economic programs.

California should be a pioneering state. We’ve heard enough hand-wringing from elected officials claiming the world’s fifth-largest economy can’t afford bold policies that would shrink poverty and support families raising children, regardless of their race.

Jhumpa Bhattacharya and Anne Price are co-founders and co-presidents of the Maven Collaborative nonprofit.