The American Dream’s Biggest Threat: Childcare Affordability

Thank you for joining us this Saturday morning.

The childcare challenge – often referred to as a crisis – facing North Carolina and the nation has attracted considerable attention in recent years, including in the TRC Nexus newsletter.

Specific attitudes vary, but the general sentiment goes something like this: Sending a child to regular day care (not an elite facility) can cost as much as $2,000 per month. That’s on par with a mortgage payment for an average home. 

The financial squeeze this places on families prompts some otherwise working-age parents – especially mothers – to abandon the workforce altogether. I went to college and started a career, but I can’t continue because it costs almost as much to put a child in day care as I take home after other expenses. 

Given the attention to that perspective, today’s column looks at an alternative assessment of the landscape. Isn’t there another side of this equation – one that can’t be quantified on an accounting ledger?

This is a dilemma currently facing many young American families, and it hasn’t escaped the attention of the C-suite. The passion for this dilemma, and how to approach it, was revealed in a recent meeting with Jason Sandner, Chief Executive Officer of Curi, a Raleigh-based financial services firm specializing in the healthcare sector, who sees this dynamic play out both in his employees with young families and in his own family of five children, several of whom will graduate from college in the coming years and face this very real dilemma.

Sandner’s interest in the topic stems from a concern over the future of the American dream. He observes that childcare costs, along with a whole host of other economic factors, are making it harder than ever for Americans to achieve things like homeownership, relief from debt, and retirement savings, a reality that is fundamentally impacting our culture as it shapes people’s definition of prosperity. 

It’s perspectives like these that shape the topics covered by TRC Nexus. When business leaders bring attention to the pressing issues of our day, whether through their actions or their words, our state is made better because of it. 

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The debate is often framed as an economic problem with an economic solution: subsidize childcare so parents don’t have to sacrifice their careers to care for young children. That framing isn’t inherently wrong, but it is incomplete. It treats child-rearing as a logistical obstacle to productivity rather than, in the words of many parents themselves, the central purpose of their lives.

According to a 2023 Pew Research survey, roughly three in four American adults place family time among their highest priorities – and that sentiment holds regardless of party affiliation. Republicans and Democrats agree on almost nothing these days. They agree on this.

Yet that consensus is set against a striking shift in how Americans actually live – and how they think about the prioritization of work vis-à-vis their other priorities, including their family. Those shifts have been decades in the making.

In 1974, a majority of women – about 60 percent – said they would prefer taking care of their house and family to holding down a job outside the home, according to a Roper Organization poll. The women’s movement was already reshaping the national conversation, but the numbers at that time reflected a broadly shared cultural expectation: raising children was a primary vocation rather than a detour from one.

By 2019, the numbers had flipped: A record 56% of women told Gallup they would prefer to work outside the home if they were free to choose. That preference is driving the attention to our country’s childcare challenge, and understandably so.

But what about the other 44%? Precious little ink is spilled on them, and that seems an oversight. Close to four-in-five women aged 25-54 participate in the labor force, but data shows many of them would actually prefer not to. That same Gallup survey reported that half of all women with children under 18 would rather stay home.

This is a mirror image of the sentiment we described in the introduction. Yes, many women who want to work can’t do so because of childcare costs. But it’s also true that many women who do work don’t want to continue. There’s nothing wrong with either of those preferences. But the latter hasn’t gotten nearly as much attention as the former. 

So why is it that so many parents, especially mothers, want to exit the workforce but can’t? First, dual-income couples comprise many more households today than in decades past, which itself can drive up the cost of all sorts of necessities, including housing and childcare. It’s irrefutable that many couples cannot both save for retirement and pay for services that maybe aren’t essential, but that come awfully close.

But perceptions of what constitutes the “American Dream” have also changed markedly over the decades. Younger generations today define the American dream as more luxurious than older generations did. A 2024 survey by financial services company Empower showed that Gen Z believes they need an average salary of $587,000 to be “financially successful.” Compare that to Boomers at $100,000 and Millennials at $180,000. 

No wonder, then, the American dream feels increasingly out of reach. A 2024 Axios survey showed that “Boomers and Gen Xers who feel financially squeezed are more likely to blame higher prices of basic goods. Younger consumers more often blame their own choices.” Half of young respondents said they know they spend excessively on non-essential items, but continue to do so for fear of missing out or trying to keep up with others. With that mindset, a dual-income household seems almost mandatory.

These attitudes come as more people than ever earn enough to qualify as “upper middle class.” A seminal American Enterprise Institute study found that 31% of Americans are now in the upper middle class, compared to just 10% in 1979. Still, research shows that the more people earn, the more money they feel they need to be happy.

Where does all this lead? One can draw any number of legitimate conclusions. But one under-appreciated, if provocative, conclusion is this: The families who feel most squeezed may not always be the ones with the least. They may simply be the ones whose definition of enough keeps moving.

There is a long-running line of research suggesting that beyond a certain threshold, additional income contributes surprisingly little to human happiness. People adapt quickly to nicer homes, newer cars, and better restaurants – and then recalibrate their expectations upward. Economists call it the hedonic treadmill. You walk faster, but you don’t get anywhere.

None of that is to minimize genuine hardship. For families living paycheck to paycheck, the childcare math is brutal, and no amount of philosophical perspective changes that. But for others – perhaps more than would care to admit it – the squeeze is at least partly self-imposed. The second income that feels mandatory is, in part, funding a lifestyle that social media insists is normal and Instagram presents as a minimum standard.

Consider a different calculus. The house that’s a little smaller, a little farther from the trendy part of town, the one that doesn’t photograph as well – that house might also be the one where a parent can be home when the school bus arrives. The vacation that doesn’t make anyone jealous might be the one the kids remember longest. The family that looks, from the outside, like it “settled” might be the one that figured something out the rest of us are still chasing.

This is not an argument against ambition, or careers, or the legitimate desire of men and women to build professional lives that matter to them. It is simply a suggestion that the cultural machinery pushing Americans toward bigger and “better” may have a cost. And that cost is sometimes paid in the very currency that three-in-four Americans say they value most: time with the people they love, their family.

The childcare crisis is real. But so is the quieter crisis of families who have optimized for everything except the things they truly care about. The ledger that can’t be balanced with dollars might be the most important one of all. 

Failure to solve the childcare “crisis” is often framed as a short-term economic risk. The math likely supports this. Over the long term, however, what might we stand to lose, culturally speaking, by not considering alternative framing? As Henry David Thoreau wrote during his time in the woods, “A man is rich in proportion to the number of things which he can afford to let alone.”