Child care for this baby costs more than the University of Michigan

By the time Brady walks into a classroom, his parents likely will have spent over $50,000 on his child care. The net cost for four years of  tuition, fees, books and room and board at the University of Michigan for a middle class family is currently about $40,000. (Courtesy photo)

Kathleen O’Reilly Farhat looks forward to the day she can pay for college for her two young sons.

That will be cheaper than child care.

Kathleen and husband Dustin Farhat pay $464 per week for child care for 5-month-old son Brady and 3-year-old Jack while the couple works full-time jobs.

That’s $1,856 a month, about $500 more per month than their mortgage payment on their home in Bath, in Ingham County.

For baby Brady’s care alone, the Farhats pay $250 per week. That’s $12,500 a year, more than the average net cost for tuition, room and board for a middle class ($48,000-75,000 income) family at the University of Michigan. O’Reilly Farhat said the family’s income is around the top of that income range.

Over the course of 50 weeks of child care in a calendar year, the Farhats will pay $23,200 for their two children. The total by the time both leave for public school will likely be close to $100,000.  

“It’s a choice you make as a parent,” said O’Reilly Farhat, who is chief of staff for State Sen. Curtis Hertel Jr. “I have a career that I love, and I am fortunate enough to take in more than the cost of my child care. (But) the direct cost is the cost of a lake house on any Michigan lake, and it would be a pretty decent house. And a boat.”

Child Care Blues

This is the first in an occasional series of articles on child care in Michigan. If you have suggestions for stories or would like to share your struggles with child care as a parent, child care worker or provider, or as a business owner, please contact Ron French, at rfrench@bridgemi.com

The staggering cost of child care is one of the biggest economic burdens facing Michigan families. Its cost can delay home ownership, force children into cheaper, lower-quality child care, and keep some parents out of the workforce, according to Jeff Guilfoyle, vice president of Public Sector Consultants, who helped prepare a 2016 report for the Michigan Department of Education on child care access and affordability.

Child care costs

In some counties in Michigan, average child care costs for two kids can be as much as half the median household incomes, according to a state study.

Source: Study done for Michigan Department of Education

At the same time, many parents are realizing there is a cost to not getting their children into high-quality childcare programs, which research shows can significantly improve educational outcomes.

"The high cost of child care has parents doing math all the time and asking questions like, ‘Can we afford to send our child to a center?’” Guilfoyle said. “‘Can we piece together more affordable care with friends, family, and neighbors? Does one of us have to take a different work shift to reduce our need for care? Does it make sense to work at all?’”

A separate child care market study conducted by Public Policy Associates in Lansing for the Michigan Department of Education found large variance in rates across the state and gaps between child care costs for low-income families and state subsidies for care.

The Farhat family, from left, Dustin, Brady, Jack and Kathleen, spend more than $1,800 a month on child care. “That’s a house on a lake,” Kathleen says. (Courtesy photo)

Child care providers charge families in different ways (hourly, weekly or monthly) and not all providers responded to the survey on which the study is based. Hourly rate figures for each county derived in the study are approximations intended for policy analysis at the education department. The study provides data on 63 of the state’s 83 counties.

Wild disparities in costs

Even with those caveats, the data offers a sobering look into the high costs families pay for quality child care.

For example:

  • For many middle class families, with household incomes between $48,000 and $75,000, infant child care is more expensive than the net cost of college at some public universities.
  • In two of Michigan’s most populous counties, Wayne (Detroit) and Genesee (Flint), child care from infancy to kindergarten for two children costs more than the median-priced home, by 32 percent in Wayne and 5 percent in Genesee.
  • The annual cost of childcare for two children (an infant and preschooler) is over 30 percent of the median household income in at least 52 Michigan counties. The U.S. Department of Health and Human Services considers child care costs above 7 percent of household income to be unaffordable.
  • Costs vary wildly, from $71,000 for care from birth to kindergarten in Washtenaw County, to $29,000 for the same years of care in nearby Hillsdale County.
  • In Washtenaw, where Ann Arbor is located, a worker would need to earn $14.11 an hour just to cover care for an infant and preschooler. The minimum wage in Michigan is $9.25 an hour.

Another study, this one by Childcare Aware of America, an advocacy group focused on affordability and access to quality child care, found that the average annual cost of care for an infant and a preschooler in a child care center in Michigan was $17,563 in 2016, a figure similar to or lower than in other Midwestern states. Child care is the largest family expense in the Midwest and Northeast, and is second to housing in the southern and western U.S., according to that study.

“When we thought about having a second child, there was a conversation with my husband that we can’t afford another now,” O’Reilly Farhat recalled. “My husband got a second job (part-time, on top of his full-time job as a firefighter) … so we could afford the daycare costs (for a second child).”

Little help from state

Despite child care costs that overwhelm low-income and middle-class families alike, policymakers have done little to address the issue.

Michigan does less to help low-income families afford child care than almost any state. Michigan has the third-lowest income threshold for child care subsidies, at 130 percent of the federal poverty line. That’s about $32,630 for a family of four. Two parents earning minimum wage would earn $38,480 and not qualify.

And for those who do qualify, the state’s reimbursement rate is lower than the cost of child care at most centers ($3.25 an hour for 3-year-olds, a rate that covers the average cost in only eight counties, according to the state’s child care market study.)

Michigan’s child care services for low-income families was so erratic in 2016 that the state was forced to return federal money for child care assistance it failed to spend.

This spring, Sen. Goeff Hansen, R-Hart, proposed raising the income eligibility threshold for families to receive child care assistance to 150 percent of the federal poverty level (currently $37,650 for a family of four), a level that would still leave Michigan among the stingiest half of states. The effort failed.

Efforts to help middle class families have been similarly unsuccessful.

Sen. Curtis Hertel Jr., D-East Lansing, introduced a bill in January 2017 that offered refundable state tax credits for child care expenses. Families would get a state tax credit based on their income and the federal child care credit they qualified for, with some credit for families with incomes up to $100,000.

Such a bill is vital to businesses as well as families, Hertel said, because the high cost of child care is putting the brakes on Michigan’s economy.

“When you talk about all these job openings (that Michigan businesses are not able to fill), one of the things that is hindering employment is the high cost of child care,” Hertel said. “When you think about minimum wage (or low-pay jobs in general), the math doesn’t work for a lot of people. Is it really possible to put yourself in a situation where you can take advantage of the jobs that are out there?”

Hertel’s bill has yet to receive a hearing in Michigan’s Republican-controlled House of Representatives, and will die if not passed by the end of the term in December.

“In this Legislature, we see a lot about tax credits benefitting business, but few to help working families,” said Hertel, who is running for reelection to the Senate. “I’m hoping that in the next (Legislative) cycle, after the election, we’ll have more people interested in the issue.”

Bill Schuette, Republican candidate for governor, doesn’t address child care costs on his campaign website. An email to his campaign asking for his position on the issue was not answered.

On her campaign website, Gretchen Whitmer, Democratic candidate for governor, calls for an increase in eligibility and reimbursements for child care subsidies to “a competitive level that will remain year after year so parents can make long-term plans for their children. High quality, affordable, safe, clean and reliable child care starting from birth will improve the readiness of Michigan three-year-olds about to enter preschool. It will also give parents the time and peace of mind they need to get a job, pursue a promotion or go back to school themselves.”

Whitmer also advocates for full-day, universal pre-K available for all 4-year-olds by expanding the state’s Great Start Readiness Program that now serves low- and middle-income children.

Whitmer’s education plan does not lay out how those plans would be paid for, though for a start, there is $63 million in new federal funds for child care for the 2019 budget year that is available for use at the state’s discretion.

Guilfoyle, the Lansing policy consultant, argues that Michigan needs to do something to ease the burden of child care on working families. “We've been talking about a talent shortage in Michigan,” Guilfoyle said. “If we want to find more talent in Michigan right now for the workforce a great strategy would be to help families access affordable quality child care."

Meanwhile, the Farhat family is looking forward to the day five years from now when both boys are in public school, and the more than $1,800 they now spend every month on child care can be applied to other needs.

“Then we’ll have to turn around and start saving for college,” O’Reilly Farhat said. “Because honestly, there just isn’t the money to do that now.”

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Comments

Jeremy
Tue, 08/28/2018 - 8:57am

And they wonder why birth rates are so low. The financial burden has become so insurmountable that it becomes impossible to afford children. Who gets squeezed? The middle class of course who don't qualify for any subsidies. If one parent can afford to stay home, great...but in many locations living expenses depend on 2 incomes.

Pat Nelson
Tue, 08/28/2018 - 9:14am

So valuable to raise peoples' awareness of this.
The first thing I would look at is a more progressive income tax for the state. A lot of public expenditures benefit the wealthy and they should be paying a fairer share.
And, while I do not want to go back to the 'old days' of starving seniors, it is clear that there has been a general wealth transfer from the young to the old. Seniors most need security in our long-term health care, and we would not have to be hoarding cash in hopes of being able to access a decent nursing home when/if needed. All public assistance should be rationally distributed, on the basis of need.

Arjay
Tue, 08/28/2018 - 1:12pm

And what is a fairer (sic) share? The top 20% of earners paying 90% of the costs? Everyone paying the same percentage of their income? Everyone paying the same amount of dollars (the required revenue divided by the population)? And what causes the belief that the majority of public expenditures benefit the wealthy? The bulk of the state budget is welfare, Medicaid, and prisons, none of which wealthy people seem to partake in.

Matt
Tue, 08/28/2018 - 8:11pm

What??? The over 65 demographic is the wealthiest age group out there while receiving the biggest benefit!! Let me guess you're over 65? Also remember wealthy people have a bad habit of moving out of high tax locals.

sam melvin
Wed, 08/29/2018 - 8:54pm

seniors healthcare "COST" ever stop to think>>>why>old people have health needs.
at age 65 MEDICARE ........so your healthcare .....is spend on the healthcare givers.pills . etc etc
just think after age 65 senior have no teeth....but medicare only pays for ALL removal.....not one on one......

Amy Zaagman
Tue, 08/28/2018 - 10:10am

Thank you, Bridge -- a timely story as employers struggle to find employees. EVERY family regardless of income does the "child care math" and weighs the pros and cons of their child care options so they can go to work. There are a lot of highly qualified and motivated people who choose jobs based on flexibility and schedule because their options are limited. If we want to keep our economy humming in Michigan, it's time for us to get serious about investing in safe, high quality, affordable child care options.

Jerry
Tue, 08/28/2018 - 11:22am

The story is a bit misleading on the UofM cost side. Bridge assumes the family will get a UofM Grant, a Pell Grant and a Work-Study Grant. The family would still be required to take out $3,558 in federal student loans. According to the UofM web page the actual total cost without the grants and loan is $31,358. See for yourself: https://finaid.umich.edu/family-profiles/ Family#4

Jerry
Tue, 08/28/2018 - 11:40am

On the child care provider side it's expensive to provide child care due to the staggering amount of regulations and rules that must be complied with to be licensed. The most recent regulations and rules, including a fingerprint background check for $62.00, has driven many low cost home child care providers out of business. The cost of compliance is unbelievable. Personally, I think the intention is to drive private enterprise out of the child care business and force everyone into a public school provided system.

Arjay
Tue, 08/28/2018 - 12:27pm

Whatever happened to the idea of 1) not having children until you could afford them, and 2) living a lifestyle so you could afford your child with only a single income. For the generation prior to the baby boomers, this was a way of life.

Karen
Tue, 08/28/2018 - 2:09pm

Before the baby boomers ? You are asking a comparison between those having children now and those who had children before 1945?

John
Tue, 08/28/2018 - 2:18pm

So only the wealthy should reproduce?

Most jobs in MI do not pay sufficiently to do everything right. ( save for healthcare, childcare, college, retirement not to mention living expenses)

Ryan
Tue, 08/28/2018 - 12:31pm

I think one of the things this article misses is the fact that childcare costs are high because of the high level of regulation limiting competition. When you shop around you mostly have daycares run by a couple corporations that can "manage" the regulatory burden to choose from. The neighborhood mom isn't allowed to watch nonrelated children anymore. If you made the regulations more realistic, it would make the subsidies cheaper that the article does advocate for.

Clark
Tue, 08/28/2018 - 1:00pm

Cradle to Grave. Govt should just provide everything including child care. Is that what Bridge is supporting? Then can they limit you to 1.3 children? Somewhere we can gone amiss on govt expectations.

sam melvin
Wed, 08/29/2018 - 8:58pm

NO children from LBG community live love be free no cost ...

Jerry
Wed, 08/29/2018 - 10:33am

Exactly, Ryan. See my comments above. Yesterday Kindercare Corporation announced they bought Rainbow Child Care. Less competition.

David
Tue, 08/28/2018 - 3:12pm

That seems like a bargain. Here in Minneapolis we have a two year old and a newborn in February. Two year old is 285/week and newborn will be 350/week. That's over 32,000.00. I'm an RN and have better benefits than my wife, so I have to keep working and she makes slightly more so she has to keep working. Most of my disposable income goes to childcare, and we don't qualify for any subsidy. This is insane. We also don't have family to rely on. In-home is cheaper but very hard to find.

David
Tue, 08/28/2018 - 3:12pm

That seems like a bargain. Here in Minneapolis we have a two year old and a newborn in February. Two year old is 285/week and newborn will be 350/week. That's over 32,000.00. I'm an RN and have better benefits than my wife, so I have to keep working and she makes slightly more so she has to keep working. Most of my disposable income goes to childcare, and we don't qualify for any subsidy. This is insane. We also don't have family to rely on. In-home is cheaper but very hard to find.

John Q. Public
Tue, 08/28/2018 - 4:05pm

So they pay for children instead of a lake house. I'll bet you can count on one hand--with fingers to spare--the number of readers who find this problematic.

You can have anything you want, but not everything you want. And remember: one family's expense is another's revenue.

Concerned for kids
Tue, 08/28/2018 - 10:15pm

What happened to the idea from child development that an infant needs one loving care giver for the first three years of their life to provide a sense of life long security to that child? Perhaps there are many parents out there who could pass on an iPhone, expensive cable, costly vacations, etc. to provide their child with the kind of at home care children so desperately need and are owed. Perhaps if parents made personal rearing of their own children a priority, there would be enough money available for those families who, no mater what they cut from their budgets, could not pay for care and are single parents or minimum wage workers. And we wonder why we have a generation of anxious, depressed kids. I would like to see a study examining how many of these children were put into institutional daycare at 6 weeks.

J Hendricks
Thu, 08/30/2018 - 7:02am

Agree completely! Get your priorities straight and that doesn’t include your first house of the same size as mommy and daddy’s, brand new iPhones every year, new BMW in the driveway, etc.
At the same time, companies need to vastly expand part-time and remote working possibilities so one parent can spend more time at home thus relieving need for outsourcing parenting responsibilities.

Karen
Sat, 09/01/2018 - 9:15pm

There are lots of studies that show that young children flourish with high quality child care. My husband and I paid $1,500 a month for each of our infants full time, but they had people caring for them who had obtained Master’s in Early Childhood Education and received continuing training. During the day, unlike stay at home parents, they received breaks. They had no distractions or other responsibilities. Our children were cared for in a center which was designed specifically and only for children. Meanwhile, we used our educations and talents to help others in our community (perhaps, you and your children). When our days were done, we came together as a family, and enjoyed one another. Was it expensive, particularly while paying off high student loan debt? Absolutely! Did our children suffer from their failure to have one dedicated caregiver from birth to five? Not one bit. That is “truthy,” but no longer supported by reliable social science. In fact, studies show high quality child care to be a benefit to young children, and I believe ours are better off for it.
https://www.nichd.nih.gov/sites/default/files/publications/pubs/document...

R.L.
Wed, 08/29/2018 - 11:58am

Quality child care is almost unaffordable for most people. I placed 600 childcare providers, all over the United states between 1979 and 1999. Most families could afford it but for many it was a struggle. Our priority needs to be our children. . My daughter for child care for two children in southern mi. would cost $2100 a month 6 years ago and 1150 for rent. You do the math. Thank God for free child care with the help of grand parents. R.L>

Ben W Washburn
Sat, 09/01/2018 - 9:13am

Connecting some of the dots: Do these evolving pressures and changes in early child care explain why school outcomes seem to keep getting worse and worse. Maybe schools are just inheriting a more and more troubled and unready cohort of kids each year.