Child Care Reform: An Essential for Economic Recovery

By Meg Dygert    August 1, 2022

All children and families deserve the opportunity to succeed and build generational well-being. However, families across the nation do not have access to a key driver of economic well-being—quality and affordable child care. The COVID-19 public health emergency turned the national spotlight to an issue that millions of American families have felt pressure from for decades. The current child care market cannot adequately meet the demand of parents and leaves them having to travel long distances to find providers who can meet their needs. Child care is essential for a strong economy, yet families in at least 22 states struggle to pay costs that exceed $20,000 annually. Each year the US economy loses billions of dollars in worker productivity due to child care issues, with women bearing the brunt of the burden, leaving the workforce to provide care for young children rather than participate in growing the economy and their careers.

While a robust child care market is key for economic growth and well-being, high quality care is also necessary to support the healthy brain development and early learning of children. Research further exploring high-quality programs found that for every $1 invested in early childhood programs and education, there is a $4 to $9 return to the economy over the child’s life. The first few years of life are foundational to who we are as adults and members of society, and with high quality early childhood programs, children can be given the best opportunities to grow into productive adults who contribute to community and national well-being. Investing in child care will immediately and positively affect the workforce, while building generational stability and well-being within families and local communities.

Building a Workable Child Care Structure

Our nation’s child care market is divided between two types of families: subsidy recipients and private pay families. Subsidy families are eligible for and participate in the Child Care and Development Block Grant (CCDBG) program and receive monthly support toward the cost of child care. Prior to COVID-19, subsidy recipients made up an estimated 30 percent of the total revenue being collected by providers. Only about 1 in 9 CCDBG eligible families receive assistance due to limited funding or availability of providers who will participate in the subsidy program. With the temporary infusion of COVID-19 relief funding, state child care agencies were able to provide subsidies to more families, eliminating waitlists and increasing provider payment rates to match the true cost of care. This allowed more providers to accept subsidy families, creating more competition with private pay families who before had dominated the market and drove prices beyond what states could match. It was only through the unprecedented $52.5 billion total investment in child care though federal COVID-19 relief funding that states were able to make a dent in a market that is not currently built to support a majority of American families. Child care programs in the US have largely been focused on providing assistance to a small population of families with low-incomes and have been unable to make structural changes to a market that is based solely in the private business sector.

Over the last few decades, policymakers have been increasingly focused on building up high-quality programs, which has inadvertently translated into a mindset that quality child care was center-based. Quality child care that supports healthy development can exist in any setting, but intentional investment in center-based child care has left many families without options. Parents working nontraditional hours face limited options, as most child care centers are only open during standard business weekday hours, and provide limited options for parents whose schedules may fluctuate. Options are even more limited for parents of infants or toddlers, where providers struggle to make a profit and parents struggle to pay for the high cost of care, often travelling miles out of their way or leaving children with older siblings or relatives out of necessity. In addition, as policymakers consider expanding universal pre-school programs, it is important to recognize the impact that removing those children from the child care market would have on the price of care for other populations. As mentioned above, infant and toddler care is the most expensive type of care for providers, and often care for 3- and 4-year-olds drives the total cost of care down for providers and brings the tuition payments down for parents.

Investing in the Supply of Child Care

Over fifty percent of Americans live in a child care desert. In child care deserts, the number of children outnumber the available slots by at least three to one. Child care deserts are more likely in low-income or rural areas with large populations of Black or Latinx families. Currently laws and regulations limit state agencies from using funding from CCDBG or other federal child care funding for investing in the physical infrastructure of child care programs. Agencies are unable to issue grants that would aid current providers in expanding capacity or the building of new facilities to support the demands of growing populations and local families. Child care agencies need to be able to invest in the community and existing providers to build up the physical supply of child care. Investments in supply must happen before eligibility for child care subsidies are expanded so that the supply can keep up with the demand and compete with private pay parents until the market is inclusive of families already eligible but unable to access care.

Building Up the Child Care Workforce

In 2021, the average child care professional made just over $20,000 annually, often without benefits or opportunities for growth. If current costs of care remain the same, full-time child care workers with young children would be unable to participate in the workforce and provide proper care for their own children with the cost of care exceeding what they earn annually. In a time when working with children and the public comes with additional obstacles and challenges, many child care workers are choosing to exit the industry in favor of better paying and more flexible career paths. Traditionally, child care professionals are viewed differently than their pre-school or elementary counterparts, serving a function of just being a caretaker and not a foundational developmental education provider. Child care professionals need to be given livable wages and benefits that make it possible for them to pursue their career aspirations and provide for their own families.

Sustaining the Market

With consistent, long-term federal and state investments in early childhood programs and services, state agencies would have the ability to sustain the subsidy market and push for quality and innovation. While the COVID-19 relief funding was essential to ensure access to child care during the public health emergency, the funding was time-limited. It was primarily meant for one-time investments to temporarily support providers and the child care workforce struggling to remain in an industry that is not keeping pace with the competitive job market

To learn more about APHSA’s position on long-term child care investment, read our Call to Action that urges Congress to provide immediate, guaranteed long-term investments in our nation’s child care system. The principles reflected represent a bold, comprehensive, and practical approach that ensures all states have the tools required to transform and strengthen their early childhood systems.

About the Author

Meg Dygert (full bio)

Policy Associate, Child Welfare and Family Well-Being
American Public Human Services Association

Child Care Reform: An Essential for Economic Recovery

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