The Trump administration's proposal to pay parents to stay at home with their kids may not cause many Americans to quit their jobs, pull their kids from day care or fire their nannies. After housing, child care is often the biggest expense families with two working parents have, making it one of the top sources of stress. Still, many parents can't afford to leave employment because even after paying the high costs of child care, their income, employer-provided health insurance and perks that come with their jobs are too valuable.
The Trump administration wants to give parents more options when it comes to child care and has proposed paying eligible parents $9,000 per year. Parents would have to be married, and the plan may come with income limits. Rebekka Grun von Jolk, a lead economist at World Bank, told Newsweek that the proposal is similar to one that Germany had in place.
She said the funds seemed to go to families who would not have used formal child care anyway. So parents who were going to stay at home or were already staying at home benefited most. For many parents, $9,000 isn't enough to quit their jobs.
Employed mothers working full time earn a median salary of about $65,000 per year, according to the U.S. Depending on the state they live in and their tax situation, that person could bring home $52,000 after taxes. With the average cost of care being about $13,000 per child per year, that parent would be left with $39,000.
So the $9,000 benefit would unlikely be enough for them to leave the workforce. However, the Trump administration's plan could be a more enticing proposition for larger families. Brendan Cushing-Daniels, an associate professor of economics at Gettysburg College, told Newsweek that it's possible the proposal could persuade working parents to quit their jobs if they have multiple young children.
For example, if a Mississippi couple has three kids and one parent earns $85,000, the potential income cap, and another parent earns $50,000, they could spend $30,000 in child care costs each year. Between the tax savings of one parent staying at home and the $27,000 from the program, that family could see a net increase in disposable income, Cushing-Daniels said. The United States would not be the first country to pay parents who don't use child care.
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