Study shows two child household must earn $400k/year to afford childcare

Hacker News · Feb 23, 2026 · Collected from RSS

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How Does LendingTree Get Paid? Published Jan 20, 2026 We are committed to providing accurate content that helps you make informed money decisions. Our partners have not commissioned or endorsed this content. Read our editorial guidelines here. Child care has long been one of the most significant expenses for families — and LendingTree research shows just how out of reach it has become. Under federal guidelines, child care is considered affordable when it accounts for no more than 7% of household income. With average annual costs for care of an infant and a 4-year-old reaching $28,190, a family would need to earn $402,708 a year to stay within that benchmark. However, typical two-child households earn just $145,656, falling far short of what affordability standards suggest. Key findings Families don’t make enough on average to afford child care for two children, according to government benchmarks. The average annual cost of child care for an infant and a 4-year-old across the U.S. is $28,190. For a household to spend only 7% of its income on child care (based on an affordability threshold set by the U.S. Department of Health and Human Services), it would need to earn an average of $402,708 a year. That’s 176.5% higher than the average income among households with two kids of $145,656. By race, American Indian and Black families are furthest from earning the incomes needed for affordable child care. American Indian households with two kids earn an average of $94,094, while Black families earn $98,019, meaning they’d need to earn at least 328.0% and 310.8% more, respectively, to meet the affordability benchmark. In 20 states, the incomes needed for affordable child care are at least triple the average income among households with two kids. In Hawaii, child care costs an average of $38,107 for an infant and a 4-year-old. Families would need to earn $544,386 to spend 7% of their income on child care — 269.7% more than the average income of $147,249 among households with two kids in that state. Nebraska (263.0%) and Montana (257.8%) follow close behind. South Dakota families come closest to comfortably affording child care, but the average income there is still well below recommendations. In South Dakota, average annual child care costs are $16,702. To meet government thresholds, families would need to earn $238,600— 95.4% more than the average income of $122,100. Mississippi and Alabama follow, both at 109.5%. Households with 2 kids need to earn average of $402,708 to afford child care Child care is a major financial pressure for today’s families — and for most households with young children, it’s nowhere near affordable by federal standards. Across the U.S., the average annual cost of care for an infant and a 4-year-old is $28,190, according to Child Care Aware of America. The U.S. Department of Health and Human Services (HHS) considers child care affordable when it accounts for no more than 7% of a household’s income. But to keep costs at that level, a family with two kids would need to earn a staggering $402,708 a year. That income target is far beyond the earnings of a typical household. Families with two children earn an average of $145,656, meaning they fall short of what’s needed to meet the affordability benchmark, which is 176.5% higher. Even many middle- and upper-middle-income households end up spending far more than the recommended share of their income on child care. National average cost of child care for 2 children vs. average household income Source: LendingTree analysis of U.S. Census Bureau and Child Care Aware of America data. “Most parents could tell you that child care costs are astronomical these days and can cause a major financial burden, even for high-income families,” says Matt Schulz, LendingTree chief consumer finance analyst and author of “Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life.” Devoting such an outsized portion of household income means there’s less available for saving, paying off debt, investing and meeting other financial needs. “The unfortunate reality is that these costs are so high that they’re forcing families to make major sacrifices to handle them. That’s not how it should be,” Schulz says. American Indian, Black families earn least for affordable child care The financial strain of child care isn’t felt equally. By race, American Indian and Black households face the largest gaps between what they earn and what’s required to meet federal affordability guidelines. American Indian households with two children earn an average of $94,094 per year, while Black families earn about $98,019. To comfortably afford care for an infant and a 4-year-old at the 7% threshold, these families would need to earn 328.0% and 310.8% more, respectively. Biggest discrepancies between average incomes, amount needed to afford child care (by race) RaceAvg. income, households with 2 kids% difference between avg. income and the $402,708 needed to afford child care American Indian alone$94,094328.0% Black or African American alone$98,019310.8% Some other race alone$98,891307.2% American Indian and Alaska Native tribes specified; or American Indian or Alaska Native, not specified and no other races$105,704281.0% Alaska Native alone$106,442278.3% Native Hawaiian and other Pacific Islander alone$106,797277.1% 2 or more races$135,515197.2% White alone$162,885147.2% Asian alone$206,88394.7% Source: LendingTree analysis of U.S. Census Bureau and Child Care Aware of America data. “The fact that no group is even remotely near meeting these affordability thresholds tells you an awful lot about the cost of child care — and a lot about these government benchmarks, which clearly need to adjust to the realities of today’s child care costs,” Schulz says. The fact that no group is even remotely near meeting these affordability thresholds tells you an awful lot about the cost of child care — and a lot about these government benchmarks, which clearly need to adjust to the realities of today’s child care costs. Matt Schulz LendingTree chief consumer finance analyst The data also underscores the monumental financial burden faced by lower-income households and families of color, Schulz adds. Historical and systemic factors have kept average earnings lower for some racial groups, forcing many parents to devote a far larger share of their income to child care. Racial wealth gaps persist despite overall wealth increases Even as overall wealth has increased across all racial groups in recent years, income and wealth gaps remain significant — and in some cases have grown. For example, between 2019 and 2022, Black wealth increased by 60%, yet the wealth gap between median white and median Black households widened by $49,950 — for a total difference of $240,120, according to the Federal Reserve’s most recent Survey of Consumer Finances. Much of the wealth growth among white households was driven by salary and investment gains, while Black households experienced growth in home and business equity rather than in liquid assets. While all racial groups fall short of the income needed to meet the 7% affordability threshold, Asian households come the closest to meeting it. With an average income of $206,883 for families with two children, they would need to earn 94.7% more to reach the $402,708 benchmark. White families follow, with an average two-child household income of $162,885; they need 147.2% more income to comfortably afford care. Incomes needed are at least triple average incomes in 20 states The income gap widens even further at the state level. In 20 states, the income required to meet the federal 7% threshold is at least three times the national average for households with two children. Hawaii has the widest gap: Families pay an average of $38,107 annually for an infant and a 4-year-old, so to keep child care expenses within 7% of income, a household would need to earn $544,386. That’s 269.7% more than Hawaii’s average two-child household income of $147,249. Nebraska (263.0%) and Montana (257.8%) have similar gaps, illustrating how families across many regions face financial pressure to cover child care costs. In Hawaii, high child care costs — and the wide gap in what families can afford — reflect the state’s notoriously high cost of living. The state’s cost-of-living index is 179.7 (with 100 indicating average affordability), according to the most recent data from the Missouri Economic Research and Information Center. Montana isn’t as extreme, but its cost of living is still above average — 109.8. Nebraska is more of an outlier. Despite having the 13th-lowest cost-of-living index (91.6), infant child care costs exceed the average rent there, and only 14% of families meet HHS affordability guidelines, according to the Economic Policy Institute. “With numbers like these, it’s easy to see why birth rates are falling. Many Americans are saying that having kids doesn’t make financial sense,” Schulz says. “It’s going to require concerted effort on the part of our political and business leaders to change the state of child care costs here in our country, but that change isn’t coming anytime soon.” South Dakota families come closest to affording child care While most families struggle to afford child care, households in some states are closer to meeting federal affordability guidelines. South Dakota leads the way, with average annual child care costs of $16,702 for an infant and a 4-year-old. To keep spending within 7% of income, families would need to earn $238,600, which is 95.4% more than the state’s average two-child household income of $122,100. Other states with comparatively smaller gaps include Mississippi and Alabama, where families would need to earn 109.5% more than the average income to meet the 7% benchmark. South Dakota’s smaller gap can be attributed to its overall affordability, with a recent cost-of-living index of 91.8, the 14th-lowest nationally. Similarly, Mississippi a