A living wage for an individual is very different than a living wage for a family. Medical costs, food costs, and health care insurance are higher; additional bedrooms add to housing costs; and childcare is necessary usually to work.
Childcare comes in many forms and is dependent upon family, community, government and paid resources. The age of the child influences the amount of coverage the parent needs to coordinate. A parent’s ability to pay influences the choices the parent has access to. If the child is attending school there will be less of an expense. If the child is junior high and high school age there will be a lesser childcare expense. Employees with children under the age of 5 will most likely need to incur the highest level of childcare expenses; with the next tier being those parents with children 6-13 years of age.
Due to the nature of a parent’s support system and to generate equal access to childcare I find the governments approach probably the fairest way to compensate for the cost. The federal government allows for every person to set up a dependent care Flexible Spending Account to cover childcare expenses up to $5,000. However, $5,000 only buys $416.66 a month, which averages out to $20.88 a day for 20 days a month. I do not know of any childcare service provided at that rate.
The advocacy that organizations should be providing to its employees is the tax benefit of using the accounts to lower their tax burden.
The second advocacy role for organizations to take is to have the amount increased. The $5,000 ceiling has not kept pace with the increase in the mandated minimum wage. In some states the minimum wage is higher. In Massachusetts the minimum wage is $8 an hour.
If an employee hires an individual at minimum wage for 8 hours that is $64 a day and an average of 20 days a month is $1,280 a month, which is $15,360 a year. If an employee uses a family day care providing paying a flat $850 a month that is $10,200 a year. If an employee uses a centered base childcare at a government set rate of $33 a day, that is $660 per month for $7,920 per year. Due to the provision that the employee must spend the money or lose it I would advocate that the maximum amount of the Dependent Care be increased to $15,360. It is up to the employee to set the amount each year.
An appropriate level for Dependent Care Account set by an employee to adequately address their childcare needs, resources and equal access is the best way to support families and their access to economic independence.