Childcare Disruptions Cost U.S. Economy Up to $70 Billion Per Year, Study Finds

The number sounds almost too large to absorb: Childcare disruptions cost the United States economy up to $70 billion a year in lost productivity, absenteeism, and worker turnover, according to a major new report from Moms First, an advocacy nonprofit, with analysis conducted by McKinsey and Company.Yet the crisis it describes plays out in near-silence, buried beneath the daily churn of headlines about tariffs, inflation, and immigration.For the tens of millions of working parents who have missed a shift because a daycare provider called in sick, or quietly scaled back their careers because care costs more than their paycheck, the number is neither abstract nor surprising.“For too long, we’ve treated childcare as a personal problem for moms to solve,” Moms First Founder and Chief Executive Reshma Saujani tells the New York Sun. “The $70 billion figure is proof that it was never personal. Childcare is the linchpin of our economy. Without it, working families can’t work. And without working families, businesses can’t function.”Drawing on a national survey of 1,700 working parents, along with census and labor market data, the report zeroes in on a workforce category it calls “foundational workers”: nurses, teachers, retail employees, factory line workers and hospitality staff. These are roughly 80 percent of the American labor force whose jobs cannot be done remotely, and they account for $35 billion to $45 billion of that annual loss alone.So, as Washington debates whether childcare is a family matter or a national economic emergency, and as federal funding stalls, providers shutter, and costs outpace wages, who is actually paying the price?Spiraling Care CostsThe math, according to the findings, is brutal. Work disruptions resulted in up to 1.44 billion lost potential work hours in 2024, the equivalent of removing roughly one million full-time workers from the economy.Nine in ten parents surveyed by Moms First said scrambling for last-minute care had cost them shifts, jobs, or their foothold in the workforce. A KPMG index report found that between 1.2 and 1.5 million workers, nearly 90 percent of them women, are forced to reduce hours or miss work each month due to inadequate childcare options.The affected workers are concentrated overwhelmingly in their prime earning years, from which careers either consolidate or irreversibly stall.Dr. Chloe Gibbs, Director of the Early Childhood Policy Lab at Notre Dame’s Institute for Educational Initiatives, tells the Sun that when women with young children are forced out of the labor force, often at the early stages of their own career trajectories, “they will likely never recover the earnings path and professional advancement that they forego in those critical years.”Ms. Gibbs notes that women are also more likely to shoulder caregiving responsibilities for aging and disabled relatives, increasingly leaving working-age women squeezed by both types of caregiving simultaneously.The numbers tell a lopsided story. Men whose youngest child is under five have actually increased their labor force participation over this period. Meanwhile, Child Care Aware of America’s latest annual report found the national average price of childcare jumped to $13,128 annually in 2024, up from $11,582 in 2023, a rise that outpaced the overall inflation rate.In 45 states and the District of Columbia, the average annual cost of center-based childcare for two children exceeded annual mortgage payments.Stalled SubsidiesThe crisis is unfolding against a federal funding picture that offers little comfort. Pandemic-era relief funds that temporarily propped up the childcare sector through the American Rescue Plan and CARES Act have long since expired. The Trump administration’s FY2026 budget proposal kept federal funding for the Child Care and Development Block Grant flat, which advocates note is effectively a cut given inflation.Earlier, in 2025, the administration failed to send out an estimated hundreds of millions in discretionary funding to state childcare agencies that should have gone out in early April of that year, with state directors notified that there was no time frame for when the grants might be approved. By April, the administration had laid off an estimated 50 to 60 percent of federal early childhood staff and closed five regional offices. The administration went further in January 2026, freezing federal childcare grants to all 50 states, D.C., and United States territories, demanding additional fraud-verification data before restoring payments. Subsequently, a federal court provisionally blocked the freeze pending adjudication of the case on the merits. The downstream consequences for providers are concrete and worsening. According to the Center for Law and Social Policy (CLASP), stagnant federal funding means 24,000 fewer children will have access to care in 2026. If nothing changes, nearly 50,000 children could lose access within two years. States are buckling under the pressure.On May 11, the administration announced a package it described as cutting red tape and expanding parental choice, rolling back Biden-era Child Care and Development Fund rules that had capped family copayments at 7 percent of income and required that providers be paid prospectively. Advocates at CLASP warned the changes would make care more expensive for families and destabilize the provider workforce. Maryland, for one, has frozen new enrollments in childcare scholarships since May 2025, with no timeline for reopening them. In Oregon, the Legislature slashed the budget for its free preschool program by 10 percent, resulting in an estimated 640 children losing free preschool. In Arkansas, the state created a waitlist for childcare vouchers in early 2025 that continues to grow despite attempts to reduce it.Compliance Costs, Barriers to EntryPolicy Analyst Chelsea Follett of the Cato Institute’s Center for Global Liberty and Prosperity argues the problem is structural, not simply fiscal.“Well-meaning policies focused on subsidies fail to treat the root causes of high prices, such as overly onerous regulations that restrict supply,” Ms. Follett tells the Sun. “Even when funding increases, it often doesn’t translate into more available care — just higher per-child spending.”She contends Congress could reform existing programs by separating federal funding from the credential rules, group-size limits, and age-specific ratios that cap supply and drive up costs.Ms. Follett’s skepticism reflects a broader conservative critique gaining traction in policy circles: that the childcare debate has been captured by advocates whose preferred solution, more federal dollars, has repeatedly failed to produce more affordable care. The argument holds that licensing requirements, staff-to-child ratio mandates, and facility standards, however well-intentioned, function as barriers to entry that keep the supply of providers artificially low and costs artificially high.More subsidy money flowing into a supply-constrained market, critics contend, bids up prices rather than expanding access. From this vantage point, Washington’s instinct to write bigger checks is not a solution to the childcare crisis; it is part of the architecture that sustains it.The Child Care Development Block Grant program, though a lifeline for many, serves only 14 percent of eligible families. The remaining 86 percent navigate an open market where, in 49 states and the District of Columbia, the average annual cost of center-based care for two children exceeds median annual rental payments. For the average single parent, that cost consumes 35 percent of household income.Employers Step Up Into this breach, a growing number of employers are stepping, however unevenly.The Moms First report highlights companies, including Chobani, that offer up to 10 days of backup care per year alongside a $1,200 annual stipend. There is also Hilton, which matches workers with a dedicated care coordinator through its partner Wellthy.A Boston Consulting Group analysis found that employer-offered childcare benefits can deliver returns of up to 425 percent. Only about 15 percent of employers, however, are investing in childcare today. Dr. Gibbs cautions that “employer-led programs will not solve the underlying problems in the market for early childhood care and education,” noting that workplace-based supports do nothing for parents who are not in the labor force or do not work for participating employers.New Mexico became the first state in the nation to offer no-cost universal childcare in November, funding it through a permanent early childhood endowment built on oil revenues, while New York City’s Mayor Zohran Mamdani and Governor Kathy Hochul unveiled a plan to phase in free care for all children under five, backed by a $1.7 billion state commitment, and have since named the first four communities to receive 2,000 free seats for two-year-olds this fall. Ms. Saujani describes the divide plainly.“Companies can’t control global supply chains or tariffs,” Ms. Saujani tells the Sun. “They can control child care.”The economy, many underscore, is paying for the shortfall one missed shift at a time.“We spend $800 billion a year on defense, and no one asks how we pay for it,” Ms. Saujani adds. “But the moment we talk about children and the women holding the economy together, suddenly everyone wants a line item. This isn’t a spending problem. It’s a priorities problem.”

Childcare Disruptions Cost U.S. Economy Up to $70 Billion Per Year, Study Finds

Childcare Disruptions Cost U.S. Economy Up to $70 Billion Per Year, Study Finds

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