Childcare Costs Outpace Inflation—Forcing More Women Out of the Workforce

Forget the stock ticker—here's the real economic indicator: childcare expenses are climbing faster than inflation, and women are paying the price by exiting the labor market.

The Squeeze Play

It's a simple, brutal equation. When the cost of care outruns wage growth, something has to give. For a growing number of families, that 'something' is a second income—disproportionately held by mothers. The math just doesn't work anymore.

The Ripple Effect

This isn't just a household budget crisis. It's a macroeconomic headwind. Every skilled professional pushed out shrinks the talent pool, dampens consumer spending, and puts long-term pressure on everything from GDP to pension funds. Talk about an inefficient market.

A Systemic Glitch

Call it a structural flaw. The system assumes affordable care, but the data shows that assumption is broken. The result? Forced early retirements from careers, stalled promotions, and a giant, unpaid opportunity cost dragging on the economy. It's like a hidden tax on productivity.

The Bottom Line

So we're left with a paradox: in an economy screaming for workers, we're designing one that pushes them out. Maybe the finance bros are too busy chasing the next ATH to notice the foundation cracking. Until that changes, the drain continues—one resignation letter at a time.

KEY TAKEAWAYS

• The rate of price increases for daycare in September 2025 was 1.5 times higher than the overall inflation rate.
• Rather than paying for pricy childcare, more parents, specifically women, are dropping out of the labor force to save money and care for their children.

With the price of childcare escalating even faster than rent and college tuition for some families, more mothers are opting to leave their jobs and becoming full-time caregivers for their children.

The cost of daycare increased by 5.2% in September 2025 compared to a year before, according to a report from Bank of America. That's almost twice as fast as overall inflation, which ROSE 3% annually in September, according to the Bureau of Labor Statistics.

In 2025, for the first time since 2021, there was an increase in the number of women who said their family is the reason they are not in the labor force, according to the report.

Childcare costs are rising so fast that the price for one child is more than a month's rent for some families, according to a 2024 report from the Department of Labor. Average costs also surpassed the average annual tuition and fees at a four-year public college by nearly $1,800, according to a report from The Conference Board.

Why This Matters

With childcare costs rising, many parents are leaving the labor market to care for their children, creating gaps that are not being filled by older generations. As fewer young Americans plan to have children due to high costs, the future labor force could also be at risk, potentially slowing economic growth and business competition.

More Women Are Quitting Their Jobs To Care for Their Children

As women are more likely to bear the brunt of caregiving responsibilities, the majority of parents dropping out of the labor market to care for their children are mothers.

There are now fewer families with two or more incomes who are paying for childcare, which means more parents are likely leaving their jobs to save money and care for their kids, according to Bank of America researchers.

Women's participation in the labor market has declined recently. This is in contrast to men's participation, which has generally increased.

Additionally, from 2022 to 2024, approximately seven in 10 mothers with a child aged six and under who were not seeking employment reported being unable to work because they couldn't arrange childcare or had other family responsibilities, according to a survey from the Federal Reserve Bank of St. Louis.

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