Child care is complex for many families, and this analysis touches only on the expenses that families are paying out of pocket, whether the arrangement is adequate or not. Many of these families might prefer to spend more, if they could afford it, to gain higher-quality care or more hours of care. This analysis also does not touch on families who obtain child care through non-cash means, such as reliance on relatives; trading of child care; split-shift parenting, where work schedules are staggered so that child care is less necessary; or publicly supported programs such as Head Start and public preschool. Nonetheless, our findings suggest that lowering out-of-pocket child care expenses for families with young children would serve to reduce poverty. Additionally, things like increased subsidies may expand access to higher quality child care or open the door to increased labor force participation.
Data and Methods
To analyze the effects of child care expenses on the poverty rate, we assembled a data file consisting of the five most recent years, 2012–2016 (capturing poverty from 2011–2015) of the Current Population Survey’s Annual Social and Economic Supplement, downloaded from IPUMS.2 Because child care expenses are combined with other work-related expenses in the SPM, we first create a somewhat different version of the SPM to look specifically at child care expenses. We add back in combined work and child care expenses and then subtract from resources total uncapped out-of-pocket child care expenses. The measure thus deviates from the SPM by the fact that other work-related expenses are not subtracted from resources, and subtracted child care expenses are not capped at the level of the lowest-earning spouse or partner. Once these changes are made, we simply recalculate poverty rates and related statistics using this alternative definition of resources, with and without the subtraction of out-of-pocket child care expenses.
1. Note that for the purposes of this brief, we depart from U.S. Census Bureau methodology and use uncapped child care expenses to capture cases even where these expenses exceed secondary earner income. Throughout this brief, we use the term “family” to refer to a Supplemental Poverty Measure unit, as defined by the U.S. Census Bureau. All analyses are restricted to families with at least one child under age 6 who report any child care expenses.
2. Sarah Flood, Miriam King, Steven Ruggles, and J. Robert Warren, Integrated Public Use Microdata Series, Current Population Survey: Version 4.0 [dataset] (Minneapolis: University of Minnesota, 2015), http://doi.org/10.18128/D030.V4.0.