Across the country, employers are struggling to find workers, families are struggling to make ends meet, and policymakers are asking the same question: Why aren’t more people able to work?
A recent paper by Brittany Birken, Ph.D., and colleagues at the Federal Reserve Bank of Atlanta, “Too Costly to Work?," offers an important—and often overlooked—part of the answer: child care costs are pricing many parents out of the labor force. By closely examining fast-growing communities in Georgia and Florida, the research provides insights that are highly relevant to workforce challenges nationwide.
Linda SmithChild Care Costs Can Cancel Out a Paycheck
The core finding of the paper is simple: in many places, child care costs take up such a large share of earnings that working barely pays off—especially for families with young children.
Using real-world data from growing counties in Georgia and Florida, the researchers compared the typical wages in common occupations (like health care support, service jobs, and construction) with the local cost of full-time child care.
In many cases, child care expenses consumed a substantial portion of household income, particularly for lower- and middle-wage workers and for families with more than one child under age five.
For some parents—especially second earners—the math doesn’t work. After paying for child care, transportation, and other work-related costs, staying home can be the more rational financial choice.
Why the Georgia and Florida Analysis is a Warning Sign for the Nation
Georgia and Florida aren’t outliers. They are leading indicators. These states share characteristics that many other regions now face:
- Rapid population growth
- Strong job demand
- Rising housing and child care costs
- A large share of workers in essential, in-person jobs
The paper shows that even in places with plenty of available jobs, labor supply might be constrained if workers can’t afford the cost of working. This is a critical shift in how we think about labor shortages—not as a lack of willing workers, but as a lack of affordable support systems.
What’s happening in Atlanta suburbs or fast-growing Florida counties today is increasingly happening in metros and rural areas across the country.
Child Care Is an Economic Infrastructure Issue
One of the most important takeaways for national policymakers is that child care is not just a family issue; it’s an economic one. When child care is unaffordable:
- Parents reduce hours or leave the workforce
- Employers struggle to staff key positions
- Local economies grow more slowly
- Workforce shortages persist even when wages rise
The Georgia and Florida examples make clear that wage growth alone often can’t keep up with child care costs, especially in lower-paid—but essential—occupations.
Implications for National Policy
The research points to a broader conclusion. If the United States wants higher labor force participation, stronger economic growth, and a more stable workforce, child care affordability has to be part of the solution.
Policies that reduce child care costs—such as subsidies, tax credits, or investments in child care supply—can make work financially worthwhile for more parents, help employers fill open positions, and strengthen local and regional economies.
In this sense, child care policy functions much like transportation or broadband: it enables people to participate in the economy.
The bottom line is this—the lesson from Georgia and Florida is clear and nationally relevant. In many communities, people aren’t choosing not to work; they’re being priced out of work.
As policymakers look for ways to boost labor force participation and support economic growth, the Federal Reserve’s findings suggest that making child care more affordable isn’t just good social policy—it’s smart economic policy.
Linda Smith is the senior director of policy at the Buffett Institute, with a specific focus on military, rural, and tribal child care, early childhood financing, and engaging the business community in child care initiatives nationwide.