Child-care spending nears pre-COVID levels, Bank of America reports

The number of Bank of America customers making child-care payments neared pre-pandemic levels last month, an encouraging sign for the labor market as parents get back to work.

Those making such payments now total about 94% of the level seen in January 2020, a noticeable jump from the prior month, the Bank of America Institute said in a report Friday. The dollar value of child-care spending per customer was up about 7% from a year ago when adjusting for inflation.

At the same time, the August jobs report from the government showed the labor-force participation rate — the share of the population that is working or looking for work — improved for so-called prime-age Americans, who are 25 to 54. It was especially notable among women, jumping to the highest in 22 years.

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Child care has been one of the biggest hurdles to parents working since the pandemic, as many centers either closed or became too expensive. That's forced many parents, particularly mothers, to step away from the workforce, but the spending and participation data show they're coming back.

"We find very strong correlation between the prime-age women labor-force participation rate and the number of customers paying for child care," economists led by David Tinsley and Anna Zhou said in the report.