U.S. Households Spending Over $2,000 Monthly on Childcare Doubles to 7.7%
Bank of America data shows that the proportion of households spending over $2,000 per month on childcare has more than doubled since 2023, reaching 7.7% as of 2026.
At the same time, the proportion of households paying $1,000 or less per month has decreased from about 73% to 68%, indicating a rise in the concentration of high-spending families. In September, the average childcare cost accounted for 8% of household income, exceeding the 7% affordability threshold set by the U.S. Department of Health and Human Services.
The growth in median payments has slowed, but pressure at the high spending end has intensified. Cities like Nashville and Jacksonville are leading in year-on-year growth rates, while median payment growth has declined in New York and Washington, D.C. The number of childcare jobs decreased by 0.7% year-on-year in September, indicating continued constraints on the supply side.
The data is based on internal payment records from the bank, covering actual monthly childcare payments. Lower and middle-income households have a higher proportion of childcare spending relative to their income, which, although slightly eased compared to 2025, still represents a greater burden.
The market views this as a signal of changing household expenditure structures, with funds shifting from other consumption categories to high-cost childcare, benefiting high-fee childcare providers while putting pressure on dual-income families and labor force participation rates.
Supply constraints and concentrated costs may lead some families to reduce paid childcare or adjust work arrangements, impacting consumption and employment data in the long term.
Source: Public Information
ABAB AI Insight
Bank of America Institute continues to track childcare costs through internal payment data, with previous reports showing cost growth outpacing inflation, a decline in the number of households making payments while average payments rise. This further confirms that high spending at the tail end has accelerated since 2023, continuing the path of supply constraints and rising labor costs post-pandemic.
On the capital side, household payment funds are concentrated towards a few high-fee providers, with resources shifting from low spending to high spending areas. Strategically constrained by the decline in childcare supply employment, there is no way to offset prices through expansion, leading some families to cope by reducing payments or exiting the labor market.
This is analogous to the rising housing costs in certain cities, where median rents remain stable but the proportion of high-spending families increases. Currently, childcare is in a phase of concentrated costs rather than widespread inflation, with pressure shifting from the national median to regional and high-spending tails.
Essentially, this represents a transfer of pricing power: supply constraints allow providers to gain higher pricing power over high-demand families, with the mechanism being the decline in employment numbers and rigid demand jointly pushing up tail payments. Families are allocating more income to childcare, squeezing other expenditures and affecting labor supply.
ABAB News · Cognitive Law
- High spending proportion doubles, median masks concentrated pressure.
- Decline in supply employment shifts pricing power to providers.
- Exceeding the 7% threshold becomes the norm, with household funds being reallocated.