Child care costs impact parents’ decision to leave work

(CBS) — A recent study says one-third of U.S. families spend more than 20 percent of their income on child care.

The rising cost of child care has prompted parents to reconsider working or staying at home while their children are young.

About 16 million women aged 25 to 54 have dropped out of the labor force altogether. That’s twice the number of men in that situation.

An, a woman taking a break from her law career to raise her 5-month-old daughter, is taking the costs of child care into account.

“If the cost of child care is going to eat up my entire salary, then it might make more sense for me to just continue to stay home with her,” An told CBS Los Angeles.

Michael Madowitz, an economist facing the same problem after having two children, built a calculator to add up the lifetime costs of staying at home.

“It actually affects how fast your wages grow over time and has really significant effects on retirement savings,” he said.

Time spent not making a salary impacts retirement savings and future pay growth. It could also result in lower Social Security benefits.

And “if you’re really high-income, you’re going to lose a lot of money because you are going to make a lot of money,” Madowitz said.

A 30-year-old woman earning $50,000 per year would lose $530,000 over her career in wages, benefits and raises if she takes off four years to care for a child. A man would lose $623,000.

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