Siegfried Nacion/STAR MAX/IPx
New York City councilmembers hold a press conference calling for a universal child care bill, March 2, 2023, at New York City Hall.
Two years ago, in the midst of negotiating Build Back Better, Congress passed a block of grants intended to stave off impending disaster in the child care sector. The problem was a chronic lack of capacity, exacerbated by a severe labor shortage as workers shifted to better-paying jobs. These grants indeed stabilized the sector. But if they are not reauthorized by Congress before their expiration in September, activists and policy watchers worry about wholesale economic impact.
The pandemic-era funding totaled $52 billion, mainly delivered through the Child Care and Development Block Grant (CCDBG) and Child Care Stabilization Grants with money from the American Rescue Plan. Some $37 billion of those grants is set to expire, which would be a gaping hole in an already strained and underfunded economic sector.
“There’s a balance of understanding the tremendous difference that [the funding] made, and the recognition that we’re entering a period of deep uncertainty and fear—the likes of which, I would say, we have not seen in a long time,” Lauren Hogan, managing director of policy for the National Association for the Education of Young Children (NAEYC), said.
In a packed legislative session, the issue has begun to get some attention. The Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on the subject in late May, which Hogan testified at. In conjunction, Sens. Bernie Sanders (I-VT) and Patty Murray (D-WA), senior members of the HELP Committee, co-released a report on how these funds have kept the child care sector afloat, and the potential impact of their expiration. Ultimately, child care activists worry that policymakers do not appreciate what child care providers do for the economy, and that the continued lack of federal support for the sector has a deep impact.
Whereas public schools are funded through broad-based taxes, child care is largely funded through fees on parents. That makes care extremely expensive, yet still workers are poorly paid—making less than half as much as public school teachers, on average. “Until we address the issue of compensation, we aren’t going to solve the challenges in child care,” Hogan said. “It’s a constraint that demands public investment.”
In 2018, the Center for American Progress found that about half the neighborhoods in the country qualified as “child care deserts.” The pandemic only brought further strain. A Department of Health and Human Services (HHS) report found that the child care workforce declined significantly during the pandemic, and that numbers have yet to return to pre-pandemic levels. The report also found that more centers were making due with fewer workers.
The stabilization funds were a welcome change. According to the senators’ report, the funds allowed child care providers to hire staff, keep tuition stable, and serve more children. Up to 220,000 child care providers were supported with the grants, with much of this funding flowing to lower-income and rural communities. Among the programs that received funding, most served infants and toddlers.
Danielle Alexander, communications director for Child Care for Every Family Network, told the Prospect that, without the support, thousands of child care programs may shutter, potentially causing millions of children and families to lose their child care spots. Child Care for Every Family Network, a “coordinated movement for universal child care,” worries that the loss of funding will harm the larger economy as thousands of parents leave the workforce.
In 2018, the Center for American Progress found that about half the neighborhoods in the country qualified as “child care deserts.” The pandemic only brought further strain.
$15 billion in supplementary funding through CCDBG grants is also set to expire in 2024. According to a NAEYC November 2022 report, without the stabilization grants, 43 percent of child care center directors and 37 percent of family child care providers said their program will be forced to raise tuition. Twenty-two percent of child care center directors expected to lose staff, while 29 percent of family child care providers said they will likely cut wages or be unable to sustain current wages.
Furthermore, policy watchers see this funding as only a stopgap for the increasingly volatile child care sector. These stabilization grants were intended to be the bridge that would keep the sector alive until Build Back Better funding infused it.
“Had that happened, the stabilization funds would have gotten us through this challenging time,” Julie Kashen, senior fellow at The Century Foundation, said. “And then on the other side of that we would have a system in place by actually investing in [the] true cost of care.”
The loss of these funds will impact many families across the country. Some families will be worse off than others. “Without a doubt, families with the lowest incomes will be the ones who are hardest hit,” Stephanie Schmit, director for early childhood education at the Center for Law and Social Policy (CLASP), told the Prospect in an email.
Schmit also notes that Black families and other families of color will also be disproportionately affected, attributing this imbalance to a systematic isolation of Black women from funding, due to policymakers “relying on racist ideas around deservingness and need to shape policy.”
In addition, every state received some funding from the grants, and “every state will feel the impact,” Alexander said. Child Care for Every Family Network projects that in Arkansas, Montana, Utah, Virginia, Washington, D.C., and West Virginia, the number of licensed programs “could be cut by half or more.” In another 14 states, the supply of licensed programs “could be reduced by a third,” Alexander said.
“The pandemic relief resources saved the sector from total collapse, but they were never intended to solve the deep-rooted, systemic problems that have been ever-present in the child care sector,” Schmit said.
Activists tell the Prospect that the sector has long needed federal investment. Every state offers a low-income subsidy for child care at a market rate, a rate that is supposed to be what an average family can afford to pay for child care. As Erica Phillips, executive director for the National Association for Family Child Care, explained to the Prospect, child care prices are often set relative to this rate.
“Unfortunately, this market rate has no relation to cost and is often much lower than the actual cost of care,” Phillips said. “We must increase public investment in a mixed-delivery child care system, ensuring families have access to multiple options that meet their needs and early educators can earn a life-sustaining wage.”
Without that investment, child care activists foresee more child care centers closing, causing more parents to lose wages, potentially over $9 billion in earnings, according to Alexander. Not to mention the potential for downstream emotional damage on children, who would be facing economic instability.
Child care has been unrecognized as a necessary commodity of the economy. The systematic underfunding of the sector has depressed wages, worsened child care deserts, and held back countless families. The solution, as activists see it, can only be federal support.
“We know that this is a public good,” Kashen said. “And Congress is not investing in it the way it needs to be invested.”
