How COVID-19 has impacted child care for working parents
Ted Rossman Bankrate.com senior industry analyst breaks down Bankrate's latest surveys on working parents struggling to pay for child care.
Video Transcript
SEANA SMITH: Bankrate is out with a new study looking at childcare as more workers return to the office. And a couple of things stuck out to me in this report. But one thing was that more than half of parents had said that they had to have changed their work schedules or leave the workforce altogether because of childcare issues over the past year during the pandemic. So let's talk about some of the findings in this report.
And we have Ted Rossman. He's bankrate.com's senior industry analyst. And Ted, it's great to have you back here on the show. A big part of returning to work is making sure that parents have the appropriate childcare that they need. What did you find in this report? And I guess, what more can employers or should employers do to ensure that this is no longer as big of an issue as it has been over the last several months?
TED ROSSMAN: Yeah, this is a big limitation for people. We found that 56% of parents said that either they or their spouse had to change their work schedule at some point since the pandemic erupted. 17% said that they or their spouse had left the workforce entirely. This is a burden that has really fallen disproportionately on women. We've seen women's labor force participation rate fall to a level really not seen since the 1980s. So I think this is still one of the big things that's holding people back from going back to work.
Childcare is super expensive. We found that over the summer, the average expense per child is $834. During the school year, it's almost that much every single month. So that's 7,500 bucks over the course of the school year. These are big costs. And remember, that's just average for one kid. More kids or if you live in an expensive area, it goes up from there.
ADAM SHAPIRO: When you talk about these costs, though, once schools, public schools, open back up, won't that ease the burden on the people you were speaking with, the parents who are having to incur these costs right now?
TED ROSSMAN: It will, to some extent. We're definitely seeing people are getting very creative. Less than half are paying for childcare, which I found really surprising. But what I think is happening here is they're calling in favors from grandma and grandpa, friends, neighbors, older siblings. You know, a lot of people are cobbling things together. Or maybe they and their spouse are trading off. Somebody's working part-time. Or you're staggering hours and working from home.
I think a lot of people are forced to get creative here. Because even when the kids are in school, quote unquote, "full-time," they may still get out at 2 o'clock in the afternoon. And then what do you do the rest of the day? Or what do you do with that morning shift? Or the summer is a whole other conundrum for people. Bottom line, I think it's very stressful for a lot of parents. And I do think that this is weighing especially on millennial parents, because they're the ones typically, nowadays, that have the young kids that are wrestling with all these issues.
SEANA SMITH: Yeah, Ted, there's people I know that I talk to often that are wrestling with these types of issues. But one thing that I wanted to point out-- we just had it up on our screen-- 45% of parents said that they plan to pay for summer childcare, that they are going to incur credit card debt from the expenses. Has that gone up significantly from what it was a year ago, or I guess, a year and a half ago, pre-pandemic?
TED ROSSMAN: It's pretty similar, but it's a persistent problem. Because credit card rates remain very high. As much as we talked about record low mortgage rates, record lows from the Fed, credit card rates have actually crept up a bit. The average now is a little over 16% on the low end, so people with better credit. And it's pushing 24% on the higher end-- people with lesser credit. So this really takes a big bite out of your budget. The good news is that 0% offers are starting to return, so 0% balance transfer, 0% intro APR cards. It's still debt. You still have to pay it back. But it gives people a little bit of breathing room, especially if you have good credit. These offers are more attainable now than they were six or 12 months ago.
ADAM SHAPIRO: Why are the credit card rates high? I mean, if we've had record savings, record paying down of debt-- interest rates are very low. It seems like the banks are taking advantage of people with these higher rates. Or am I wrong?
TED ROSSMAN: They have built more margin into these rates. And the banks would tell you, well, it's unsecured debt. They're still worried about risk--
ADAM SHAPIRO: They've got their loan loss reserves.
TED ROSSMAN: They have set aside more loan loss reserves. They've started to release some of those. The way I would sum up the credit card market right now is that it's certainly better than it was for most of last year, but it's not normal yet. In terms of approvals, credit limits, it's still down from 2019. And there was actually a "Wall Street Journal" story recently, expressing some displeasure on the part of the banks. They're worried that people are paying down credit card debt. Credit card debt is down 17% since the pandemic started. Great for households. It's something that banks are starting to worry about. And one of the levers they're pulling is higher rates, especially for those with lesser credit.
