Banking and Payments Intelligence Report

Parents Struggling to Pay for Childcare; Ripple Effects are Significant

As Americans wrestle with persistent inflation and skyrocketing gas prices, parents say they are feeling the squeeze when it comes to childcare.

J.D. Power finds that rising costs have become the leading reason that nearly three-fourths of American parents say they are experiencing some degree of interruption to their childcare.

No Child Left Behind

Overall, 73% of American primary caregivers experienced some degree of interruption to their childcare in the past three months. Two reasons for the disruption included a care provider closing or canceling service due to staff shortages (28%) or sickness (24%). But the most common reason given for interrupted childcare was rising costs (33%).

As a result, ripple effects have been felt in the workplace. One in five (20%) of Americans left their job because childcare was not affordable, while 28% say they worked less than normal. Nearly one-third (28%) of American parents say they called in sick to care for a child. 

Inflation Nation

Meanwhile, while Americans might not necessarily be citing worsening inflation, it seems clear that the prolonged period of higher costs of consumer goods is starting to affect family finances. Across the board, Americans say they are spending extra money on everything from clothing, pet care, travel and gifts. The most common increase, however, is for necessities (73%).

Because of these trends on consumer spending, Americans say they have tightened their purse strings. The rising cost of necessities ranks as the biggest reason (48%), while worries about inflation (37%), loss of income (33%) and the pandemic (30%) are also significant factors. 

That said, some Americans—particularly those in better financial health—have gotten proactive about paying down existing debts and increased their savings or investments. Twenty-eight percent of Americans whose financial situation was classified as healthy say they’ve begun reducing their debt, which is 5% higher than the general response rate.

A Lifeline Unanswered

Meanwhile, banks have tried to head off some of the pressure on customers by eliminating or reducing overdraft fees, but it seems to be for naught, as many Americans are still unaware of this development. 

Nearly half (44%) of consumers have no idea if their bank made a change to their overdraft fees, while another 17% say they had heard something to that effect but are unsure if it applies to their account.

Particularly troubling is the demographic breakdown of this awareness. More than half (55%) of Americans whose financial health is stressed did not know if their bank had made a change to their account, by far the highest rate of the four financial health classifications. 

Americans are undoubtedly feeling a price crunch, from the cost of childcare to the price of necessities, the lack of awareness of the elimination of fees show that banks have room for improvement in how they communicate their new initiatives. Global unrest seems poised to remain the status quo, at least for the foreseeable future. If banks want to be part of the solution, they’ll have to find a way to get their message out to a broader audience.

Find out More

To learn more about the underlying research behind this industry briefing or schedule an interview with Jennifer White, please contact the numbers below.

Media Contacts
Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, J.D. Power; West Coast; 714-621-6224; [email protected]