Estimating Family Child Care Needs
The Family Resource Simulator estimates family child care needs in order to calculate child care expenses. This requires making the following assumptions and simplifications:
1. Preschool-aged children (under age 6) need care while their parents are:
- At work,
- Commuting between the child care setting and the workplace (up to 1 hour per day), and
- Engaged in unpaid work activities required by TANF cash assistance (if applicable).
2. If children need less than full-time care, child care expenses are adjusted accordingly. (Note that when the family is receiving child care subsidies, family copayments do not necessarily vary based on the amount of care received, depending on state CCDF program rules.)
The Simulator assumes that a school-aged child (ages 6 through 12) needs half the amount of care of a preschool-aged child. School-aged children are assumed to be in school (not on summer break or other holiday).
(Note that in Step 5, when the user selects or enters child care rates for school-aged children, these rates reflect school-age care, taking into account the assumption that a school-aged child needs half the amount of care of a preschool-aged child.)
3. Children ages 13 and older do not need paid child care.
4. In a two-parent family, child care needs are based on the work hours of the parent who earns less (the “second parent”). The Simulator assumes that parents' work hours overlap, i.e., when the parent who earns less is working, the other parent is not available to care for the children. When one parent is not employed, the family does not need child care.
Note that for a two-parent family, the user selects the maximum work status of the second parent: “full-time employment,” “part-time employment,” or “not employed.” If the user selects “not employed,” then all family earnings are attributed to the first parent, and the Simulator assumes that the family does not need child care. Otherwise, the Simulator assumes that the second parent enters the workforce after the first parent reaches full-time employment (40 hours per week, 52 weeks per year). At this point, all additional family earnings are attributed to the second parent until that parent reaches maximum work status.
5. To determine a parent’s work hours at a given earnings level, the Simulator uses the parents' "starting wage rate," as entered on Step 3. The default starting wage rate is equal to the 20th percentile wage rate in the state—i.e., the wage rate at which 80 percent of the state’s workers earn a higher wage, and 20 percent earn a lower wage. For states beginning in 2010, the starting wage rate is equal to the 25th percentile wage rate in the state.
This wage rate is only a "starting" rate because once the parent is working enough hours to require full-time child care, the Simulator no longer needs to “know” the parent’s wage rate (i.e., any additional increases in earnings may be attributed to increases in either hours or hourly wages).
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