Tag Archives: child care cliff

The child care cliff that wasn’t

Originally published in Vox on May 14, 2024.
—-

“The writing is on the wall right now, in big, bold letters: the child care crisis is only going to get worse unless we take action — and soon!” said Democratic Sen. Patty Murray in November, following the expiration of federal Covid-19 subsidies for child care. Democrats and other child care advocates were pushing for a $16 billion bill they said was essential to save the industry.

“Our nation’s child care system is on the verge of collapse,” stressed AFL-CIO President Liz Shuler. “Over 3 million kids are in danger of losing their child care slots, over 230,000 child care workers could lose their jobs,” added Senator Bernie Sanders.

Sanders was citing numbers from The Century Foundation, a liberal think tank that warned the US was headed for a disastrous “child care cliff” due to the expiring pandemic aid. Nearly every major national news organization — including the Washington Post, CNN, Bloomberg, NBC, the Wall Street Journal, and the New York Times — reported on this coming cliff, and its prediction that 70,000 programs “will likely close.”

The warnings echoed another set of doomsday predictions during the pandemic when advocates stressed that without significant new investment in child care and paid family leave, women would be forced to leave the labor market en masse, leading to what some described as a coming “she-cession.”

The “she-cession” failed to materialize beyond the first initial months of Covid-19, with female labor force participation ticking steadily upwards thereafter, especially among moms. So advocates updated their messaging, emphasizing that such workforce gains could crater if major new federal investments were not made soon. The Century Foundation predicted $9 billion annually in lost family earnings, and tax and business revenue loss for states at $10.6 billion per year.

But Congress did not pass big new spending in paid leave or child care. Republicans rebuffed Democrats’ $400 billion child care proposal during the Build Back Better fight, and the $16 billion child care stabilization bill Democrats rallied around last fall.

Still, labor force participation among women ages 25-54 has continued to rise, with larger shares of moms of both preschool and school-age children working now than at any time in history. Most of the labor market gains have been driven by moms with young kids under the age of 5, with roughly 70 percent of them holding down some formal job.

Jobs in the child care sector, too, have continued to expand, with more people working in the sector as of April than in any time on record.

The lesson to take from all of this is not that people should stop advocating for policies that would improve the lives of parents, kids, and those who care for children.

We know that paid leave boosts the health of mothers and babies and that many families struggle to find accessible and affordable child care. We know that child care workers are among the lowest paid, which can result in high turnover, and we also know that some parents wish they could stay home with their children, rather than work a formal job. We know that even among families that do cobble together child care arrangements, there is more we could be doing to lower household stress.

But advocates don’t need to rely on cataclysmic economic predictions to make the case for better and more humane family policy, and continually warning of a disaster that never comes undermines their case and credibility.

The fact is that not everyone agrees on what specific policies are necessary to improve child care and conditions for parents — some people would prefer direct cash support to families over funding for daycare centers, for example — but these are the real debates that the public should be having.

A strong economy does a lot

More women — including child care workers who are disproportionately female — are working today, and for the most part, that’s for positive reasons.

The US economy is strong and growing, and workers’ wages have risen faster than prices for more than a year now. Even in child care there’s been an increase in wages, with the average wage standing at $13.31 per hour in 2021, $14.22 in 2022, and $15.42 in 2023. Average preschool teacher wages also reached $19.91 per hour last year.

“As Nobel Laureate Claudia Goldin taught us, one of the most important drivers of women’s labor force participation is higher wages, so we shouldn’t be too surprised that childcare workforce participation and prime-age female labor force participation are both trending upward,” said Josh McCabe, the director of social policy at the Niskanen Center, a centrist think tank.

Tight labor markets can cure a lot of economic ills, added Patrick Brown, a child care policy analyst at the Ethics and Public Policy Center, a conservative think tank. “The fact that low-wage workers have seen the strongest wage growth post-pandemic means that a lot of moms have seen pay increases, switched to better jobs, or work from home at higher levels — all of which make reliable child care more achievable,” he told Vox.

The expansion of remote work since the pandemic is most certainly a factor in boosting female labor force participation, especially among college-educated moms and married women. Federal labor statistics show that 23 percent of women workers teleworked last month, compared to 19 percent of men. Nearly a quarter of teleworkers had children under 18.

“The current tight labor market leads many employers to offer benefits like paid leave or flexible work hours and location,” said Adrienne Schweer, a fellow at the Bipartisan Policy Center, a centrist think tank. “These are the kinds of benefits that women consistently rate as important factors in their employment decisions.”

More women working also leads to more demand for child care, especially as the number of children in the US continues to grow. This all helps explain growth in child care employment, said Sydney Petersen, a spokesperson with the National Women’s Law Center, a liberal advocacy group.

Still, that more women are joining or staying in the labor market with young kids isn’t necessarily something to cheer about in all circumstances. Katharine Stevens, the president of the Center on Child and Family Policy, a conservative think tank, said some women are working likely because they couldn’t make ends meet on what they were earning before recent rises in inflation.

“Unfortunately, that probably means that women who would have preferred to stay home full- or part-time to raise their own young children have been forced to spend more time working outside the home instead,” she said. “We should be making it easier, not harder for them to do so.”

Paid leave and child care subsidies could boost labor participation more

That rising wages and a strong economy have boosted employment among women doesn’t mean supportive care policy couldn’t drive those gains further. Suzanne Kahn, vice president of the Roosevelt Institute, a liberal think tank, said they’ve been focused on how to make these labor gains “sticky” even if the nation’s economic conditions decline.

Advocates for public investment say there’s already evidence that states that increased their child care spending have seen better results. A new brief from the National Women’s Law Center analyzing Census Household Pulse Survey data found that the share of respondents with children under 12 who lacked child care increased by more than 5 percentage points since the fall in states that didn’t make major new investments in their child care sectors.

By contrast, in the 11 states that did make significant new investments, the share of women respondents with children under 12 who wanted to work but reported not being able to because they were caring for a child decreased from 45.3 percent to 31.9 percent.

Schweer, of the Bipartisan Policy Center, pointed to a poll her think tank conducted last year that found that among prime-age adults not working due to issues related to caring for children, 39 percent said they would have likely continued to work in their last job if they had paid parental leave, and 45 percent would be more likely to start or return to work if a future employer offered that benefit.

“At the moment, macro policy is pushing up employment in general but that does not mean there is not still an increment of women out there who would also be employed (or at least job seeking) if there were more child care subsidies,” said Matt Bruenig, founder of People’s Policy Project, a left-wing think tank.

McCabe of the Niskanen Center said policies like subsidies for child care and paid leave are probably important to boosting women’s labor force participation to similar levels in other countries because rising wages alone “aren’t enough to get us there.”

Child care access could be much better

Just because more women are working doesn’t mean their lives aren’t being affected by child care issues, and even remote work can be a double-edged sword for moms, as my colleague Anna North has written.

“As a mom of a small child, I have to say just because it’s now possible to work from home with a kid doesn’t mean it’s not extremely challenging,” said Kahn, of the Roosevelt Institute.

“They are making it work, but paying with the cost of their own health and well-being,” argued Julie Kashen, director for women’s economic justice at The Century Foundation. “Increasing labor force participation is only good for the individuals working more if they are also being paid enough to pay their bills and save for emergencies and the future, and if providing for their families isn’t at the expense of caring for them and spending time with them.”

Diane Swonk, the chief economist at KPMG, a US audit and tax services firm, noted that child care access issues are making it harder for women who are working to stay at work.

Absences from work due to family or personal obligations hit a record high in March, she said, and stayed elevated in April. Full-time workers who cut down on hours and worked part-time due to other family or personal obligations in April was the highest month since May 2008.

We don’t need doomerism to advocate for families, workers, and kids

Despite the ubiquity of the “child care crisis” phrase, people have different and sometimes competing ideas about what policies are needed to make balancing work and family rearing easier in America.

That conversation may get hard and messy at times, but will push us closer to the truth than making sweeping-yet-thin projections about economic and societal collapse.

“Boosting employment was never the best justification for supporting working parents in the first place,” said Chris Griswold, the policy director at American Compass, a conservative think tank. “Helping families afford to raise children isn’t good because it maximizes economic activity — it’s good because families matter and economic pressures hurt kids and parents alike.”

“There are clearly steps we could take to improve the functioning of the child care market, but the idea that we need a massive federal overhaul to fix a ‘broken’ or ‘failed’ market has been largely disproven,” argued Brown, of the Ethics and Public Policy Center. “Markets are more resilient than many on the left give them credit for. The ‘sky is falling’ crowd is, yet again, overhyping the evidence to push an agenda that doesn’t fit what parents want.”

There are smart people on the left and in the center who disagree with Brown, including US Treasury Secretary Janet Yellen, who argues child care in America is a “textbook example of a broken market.” These are critical questions shaping the well-being of millions, and we should continue investigating them. But the child care cliff should make everyone cautious the next time there’s a political crisis advocates don’t want to waste.

A program that saved child care for millions is expiring. What now?

Originally published on September 29, 2023.
—-

This weekend, parents and child care providers across the nation are bracing for the end of an instrumental federal program that has stabilized child care programs and reduced costs for families over the past three years.

Some $24 billion worth of child care funding — one of the last remaining Covid-19 emergency relief programs still in effect — is set to expire Saturday. Issued as part of the $1.9 trillion American Rescue Plan, the program marked the largest investment in child care in US history and allowed fragile businesses to cover rent and maintenance and raise wages for their notoriously underpaid staff. The Biden administration has reported that the grants helped 80 percent of US licensed child care centers stay afloat.

Frequently referred to as the “child care cliff,” the expiration of the grants is expected to renew strain on the child care sector, which already runs on tight margins, struggles to recruit and retain staff from higher-paying industries, and charges most parents far more than they can comfortably afford.

Many news organizations, including the New York Times, the Washington Post, Axios, Bloomberg, the Wall Street Journal, and MSNBC, have cited an estimate from the liberal think tank the Century Foundation stating that 70,000 child care programs will likely close, resulting in 3.2 million children losing access to care.

That figure was derived from an October 2022 survey of 12,000 early childhood educators that found 34 percent of child care programs reported that they would have closed during the pandemic if not for the emergency grants. The grants covered 220,000 programs and 9.6 million kids, so the Century Foundation multiplied those figures by 0.34 to arrive at its estimate.

Experts in child care policy told Vox, however, that the “cliff” may prove far less of a tumble for providers and families than that popular statistic suggests — partly due to poor data on industry supply and demand and partly because most states have made unprecedented investments in their child care systems over the last two years.

The federal grants were authorized to help child care programs during the extraordinary circumstances of the pandemic, after lawmakers deemed the child care sector “uniquely vulnerable” to the crisis, and less able to access relief loans through methods available to other small businesses. In a US Senate HELP Committee report issued this past spring, Sens. Bernie Sanders (I-VT) and Patty Murray (D-WA) noted that emergency relief was needed because child care providers began “hemorrhaging money during pandemic shutdowns” as fewer children attended and they faced unexpected costs to comply with reduced group sizes, cleaning materials, and personal protective equipment.

Today, programs are no longer struggling to enroll students nor needing to cover the costs of pandemic safety regulations. “Saying you would have closed during Covid if not for the grants is not the same thing, that you will close after Covid if the grants don’t continue,” said Matt Bruenig, founder of another left-wing think tank, the People’s Policy Project.

One leading child care expert declined to comment on the widely cited Century Foundation estimate (“We didn’t do the number and I don’t want to speak directly to that,” Sarah Rittling, of the First Five Years Fund, told Vox), while another said that they knew no one who expected the loss of programs to reach anywhere near 70,000, but did not want to say so on the record for fear of alienating other leaders in their child care advocacy coalition.

“Will there be some adjustments [when the funds expire]? Yes, obviously, that’s fairly true, but you see estimates that a quarter of American kids will lose their child care spots and I will gladly take any bet that anyone at the Century Foundation wants to place,” said Patrick T. Brown, a child care policy analyst at the Ethics and Public Policy Center, a conservative think tank. “I do not think 25 percent of kids are going to lose their child care. People have a vested interest in using strong frames and narratives to say we have a broken market.”

Julie Kashen, director for women’s economic justice at The Century Foundation, defended her organization’s analysis but acknowledged that the estimate of program closures is unlikely to come to pass, telling Vox it’s more like a “worst-case scenario.”

“A number of states have put forward their own state funding and our analysis did not account for that,” she said. “We don’t have numbers yet of how much will be mitigated by state investments, but from Alaska to Maine to Illinois, they have put their own funding in, and that will make a decent difference in reducing the losses.”

Why Congress isn’t extending the Covid-19 child care grants

The federal pandemic grants were objectively successful in helping to stabilize the child care sector over the last three years, leaving many people baffled that Congress would choose not to renew the funding now. The Department of Labor recently reported that the price of child care rose 6 percent in July over the previous year, nearly double the rate of inflation.

From Republicans’ perspective, the child care grants, like other Covid-19 safety net programs, were passed as an emergency relief measure, and now that the emergency is over, the pandemic level of spending should not become the new federal baseline. A strong current among conservatives supports “going back to normal” and reining in spending more broadly to address inflation and the deficit.

Democrats and progressives argue that funding for child care was woefully low before the pandemic, and returning to the status quo now, amid a tighter labor market and fierce hiring competition from other industries, would be untenable. Reduced federal funding could mean pay cuts or hiring freezes, or hikes in costs that families can’t afford, leading to fewer children served and, ultimately, closure of some programs.

In response to the impending deadline, congressional Democrats earlier this month proposed a bill to give $16 billion to child care providers each year for the next five years. It has no Republican co-sponsors and even its own authors concede that it’s unlikely to go anywhere. The Biden administration has declined to lobby for additional child care funding in the fraught ongoing budget negotiations, arguing that it needs to bargain with Republicans only over emergency priorities to stave off a government shutdown.

One recurring challenge for Democrats is that because they have so many areas they want to see new big investments in, and because they work within broad advocacy coalitions, leaders often struggle to home in on a few specific priorities, instead championing lots of big social investments at once.

This dynamic was on display during the failed Build Back Better negotiations and amid Inflation Reduction Act talks. Child care investments were in competition with new spending on preschool, affordable housing, paid medical and family leave, and the expanded child tax credit. In the end, virtually none won out.

Child care programs face tougher staff recruitment. Parents face higher costs.

Over the last two years many states passed new legislation to support child care access, affordability, and quality, including red states such as Alabama, Louisiana, Montana and North Dakota, as well as blue and purple states like Minnesota, New Mexico, New Hampshire, Illinois, California, Alaska and Vermont. Most states were in strong fiscal positions and built on the political momentum for child care investments that coalesced during the pandemic.

Linda Smith, who heads early childhood research at the Bipartisan Policy Center, told Vox that the impact of the expiring pandemic funds will vary by state, but she expects that broadly, retaining child care workers will become harder. In 2019, the median child care worker earned $11.65 per hour. Today their pay averages $14.22, but without public subsidy, programs may have to raise rates for families to continue paying workers those higher wages. The survey released last October and cited by the Century Foundation found that 43 percent of child care centers and 37 percent of home-based providers expected that they’d have to raise rates when federal relief dollars dry up.

“In lower-income working families, passing those costs on to parents is not going to be an option,” said Smith. These increased costs will also overlap with the resumption of student loan payments in October after a three-year pause, and higher interest rates on credit cards, mortgages, and car loans.

Some states are already starting to see the effects of diminished funding. In June, the Republican-controlled legislature in Wisconsin started reducing its federal stabilization grants from $20 million a month to $10 million, and the remaining funds are expected to end completely in January. Ruth Schmidt, the executive director of the Wisconsin Early Childhood Association, told CBS that nearly 90 percent of day care centers are raising tuition in response. Some programs have closed.

Whitney Evans, the California director for ParentChild+, said she expects the decline in federal funding will affect low-income parents who are least able to work remotely. “For middle-income families, this is going to be a huge pain in the ass but they’ll figure out a way,” she told Vox. “But for children with the least access to resources, who won’t be able to pay more for slots if rates go up, there will be even less space available.”

Could this affect female workforce participation?

A big question looming over the expiring child care funds is whether a major disruption to the child care ecosystem would force parents — and mothers in particular — out of their jobs. Child care advocates have been saying for years that a failure to invest more in the nation’s child care system will result in that outcome; this was a key argument during the fight for the Build Back Better Act.

However, despite the failure of Congress to pass those new child care investments, workforce participation among moms, and even moms of very young children, has continued to rise. The latest data showed 66.6 percent of women who gave birth in the previous 12 months were working in 2022, up from 66.5 percent in 2021, and 61.6 percent in 2010. And more than 70 percent of mothers with kids under five were working this past summer — more than even before the pandemic. The expansion of remote work, which makes it easier for parents to juggle their jobs and child care responsibilities, is likely one major contributing factor.

Kashen, of the Century Foundation, credits the American Rescue Plan investments for staving off female workforce fallout, and said that the “reality is most parents have to work,” so even if moms are employed, it doesn’t mean they aren’t making hard trade-offs behind the scenes, including working later hours, facing declining mental and physical health, or spending less time with family.

Is there any chance child care funding will return?

The politics are challenging right now. Congressional Republicans are currently engaged in a fierce battle over cutting federal spending and have expressed little appetite for new social investments.

Still, the news isn’t all bad. Among parents, the child care issue is far less polarized. A recent poll of Kentucky voters and parents found strong support for investing more taxpayer money into child care programs, and a national poll conducted for the First Five Years Fund this summer found that 74 percent of voters, including 61 percent of Republican voters, back increased federal spending for child care.

Moreover, during the second Republican presidential debate earlier this week, the moderators pressed candidates on how they would expand access to care — even citing the expiring pandemic-era funds. South Carolina Sen. Tim Scott blasted the Biden administration for allowing day care costs to exceed $15,000 per child, and Doug Burgum, the GOP governor of North Dakota, stressed that “child care is workforce infrastructure.”

That bipartisan support for affordable child care is likely why Republicans, after rebuffing Democrats’ $400 billion child care proposal during the Build Back Better fight, agreed to a 30 percent increase last year of the Child Care and Development Block Grant, a federal program aimed at reducing child care costs for low-income families. And this past summer, Reps. Ro Khanna (D-CA) and Nancy Mace (R-SC) announced the launch of a new Bipartisan Affordable Childcare Caucus in Congress, and Reps. Salud Carbajal (D-CA) and Lori Chavez-DeRemer (R-OR) introduced a bipartisan bill to improve federal child care tax credits, legislation endorsed by advocacy groups and the US Chamber of Commerce.

Some Republican lawmakers remain ideologically against government involvement in child-rearing and oppose efforts such as increased spending on non-religious day care centers. This is partly why some Republicans are more open to expanding the federal child tax credit, which gives money directly to families to spend how they see fit. Expanding the tax credit is also a priority for Democrats, though it might be tough for lawmakers to secure new investments for child care and the child tax credit at the same time.

Progressives, for their part, are hopeful that they’ll have another opportunity to push new child care investments during the end-of-the-year omnibus tax package negotiations. Last year advocates secured new funding in this period for a maternal and child health home visiting program, doubling the amount of federal spending and reauthorizing the program for five years.

“The pandemic gave us all a better sense of what it means to have more money in the child care system,” said Rittling, of the First Five Years Fund. “We know that money needs to be sustained beyond Covid, and we’ll be looking at every possible way we can to make that happen.”