Sat 11 Feb 2012
We’re about to have both our kids in child-care, for at least some of the week. This means they’re joining around a million other kids across Australia using the child-care system, according to the government. For various reasons, all of the families represented by that statistic are using professional child-care instead of completely looking after their kids themselves.
Professional child-care isn’t free, of course, so it is open to only those families who can afford it. Specifically, they need to be able to afford the child-care even after accounting for the additional income that might be brought in through allowing a care-giver such as a parent to enter the paid workforce. I wondered exactly how much income would need to be brought in to offset the paid care, so I’ve thrown together a quick spreadsheet on the economics of child-care.
To put two children into care, five days a week, for all but four weeks of the year, at a child-care centre that charges $87/day, the now-employed parent would need to earn at least $30,970.06 full-time to offset the costs. At a centre charging a higher rate of $120/day (but less than a reported maximum of $135/day), the salary would be $52,773.72. If there were three kids, then the salary would need to be $84,308.94.
Instead of looking at this as the amount that would need to be earned to go into the workforce, it can also be viewed as the amount that is being effectively earned by not going into the workforce. A stay-at-home parent is “worth” at least a salary of $30,970.06 from that perspective. I recognise that other costs avoided or reduced could also be included, reflecting domestic chores also performed by the stay-at-home parent, from cleaning to cooking, however these might also be shared with others depending on the household situation, so I will leave them out of my simple analysis.
To put this in context, $30,970.06 per year is $595.58 per week, and the Australian minimum wage is $589.30 per week. Taking a minimum wage job to put two kids into child-care doesn’t make much sense if you just look at the numbers. On the other hand, according to the ABS, the average full-time adult earns $1,322.60 per week (or $68,775.20 per year), and if we look at women only, it’s $1,165.00 per week ($60,580 per year). So, assuming the stay-at-home parent can leave home for an average wage, it is probably economically positive.
Knowing this is one thing, but it doesn’t do anything for the twin challenges of finding child-care places and finding a decent paying job.