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Des Moines Register: Child care is now more expensive than housing for many Iowa families

By Kevin Hardy

Many Iowans spend a higher proportion of their income on child care than they do on housing, according to a new study by United Ways of Iowa.

The 2018 ALICE report shows 457,044 households — 37 percent of the state’s total — can't afford the basic costs of living. ALICE stands for Asset-Limited, Income-Constrained, Employed.

Advocates say the findings underscore a widespread reality across Iowa: many working families can't afford to pay rent, buy food or purchase medicine at a time when the state's economy is expanding and unemployment remains low.

The study also highlights the rising costs of child care, which can be so burdensome as to lead some parents to choose to stay at home rather than work. On average, a family of four — including one infant and one toddler — is estimated to need $659 to cover basic housing costs. That same family would need $1,031 for child care expenses, according to the United Way's household survival budget.

Across the state, United Way projects families need to spend between 19.5 percent of their budget on child care in Adair County to to 24.2 percent in Mills County.

Even as many Iowans struggle to find affordable housing, child care costs have jumped the most since United Way issued a similar study two years ago, said Deann Cook, executive director of United Ways of Iowa.

"If you have a kid under five who’s not in school, it’s really tough to work," she said. "It's hard to be able to afford it first of all and to find it is rare."

The Iowa Women's Foundation estimates the state is short some 359,000 child care spaces for children 12 and younger.

Aside from basic cost and access issues, many low-wage workers face the prospect of the so-called cliff effect: Even a minor increase in wages can cost some people hundreds in state and federal child care assistance, complicating an individual's calculation of whether and how much to work.

"You have to make that decision on whether or not wages can support that," said Renée Miller, chief community impact officer of United Way of Central Iowa. "When people hit that cliff, in some cases they’re making the decision that I'm not going to make more money, I'm not going to take the raise because I'm actually going to lose more in benefits."

Miller noted that child care costs aren't the only challenge for ALICE households: "All costs are outpacing what people are making across the board," she said.

For example, rising home prices and a low inventory of low-income housing units has left many with few options for affordable housing.

"Its a compounding effect. It's not one or the other," Miller said. "People have to make a lot of tough decisions."