Not only are child-care costs going up, but perhaps not coincidentally fewer families are paying for it, according to a new report from the U.S. Census Bureau. These trends not only suggest shifts in child care, but suggest the strained ability of a new generation of Americans to save.

“The numbers and ages of children and the rise in mother’s labor force participation throughout the 1980s and 1990s helped to increase the demand and need for child care,” says the report, called Who’s Minding The Kids? Child Care Arrangements: Spring 2011. But with child-care costs almost doubling since 1985, that means families are looking at a patchwork of child-care options.

In 1985, families whose mothers were employed spent about $84 a week on child care (in inflation-adjusted dollars). That rose to $143 a week in 2011. The average cost spiked from $124 to $142 between 2005 and 2010.

At the same time, fewer mothers are shelling out for child care. Only 6 million (32 percent) of 20 million moms who worked for an employer made a cash payment for child care for at least one child. In 1997, about 42 percent of families made some kind of cash payout for it.

But even though the costs are higher, the percentage of monthly household income going to child care has stayed the same since 1997, hovering around 7 percent since the mid-1980s.

Client Concerns

So what effect is this having on financial advisor clients?

“It definitely affects younger clients and it doesn't seem to be going down in cost anytime soon,” says Samantha Fraelich, the vice president of Bernard R. Wolfe & Associates in Chevy Chase, Md., a firm that has about 30 to 40 clients with younger children. “With more families having more than one parent working, child care seems to be in great demand. Many are choosing to use dependent care programs some employers offer.”  

Fraelich says she even has one client who runs an online business in addition to working so that she can pay for the cost of child care.

Cue Grandma And Grandpa