The Covid-19 pandemic not only exposed the vulnerabilities in the American economy but also highlighted the resilience within certain sectors. Child care, in particular, took center stage as daycares closed, schools shifted to remote learning, and parents struggled to balance work and childcare responsibilities. While employment in the child care sector has slowly recovered post-pandemic, there remains a shortage of workers and available slots for children in certain areas, putting a strain on the industry. Additionally, families are experiencing an increase in costs associated with child care services. According to a report from Bank of America, average child care payments per household have risen between 15% and nearly 30% year-on-year during the fourth quarter of 2023, with the most significant increases seen among households earning between $100,000 and $250,000 annually.
The Economic Impact on Working Families
Policy advocates argue that child care is not just a personal issue for families with young children but also an economic concern that affects all Americans. The expiration of billions in stabilization funds from the American Rescue Plan Act last fall has further exacerbated the situation, potentially leading to increased costs for families or even the closure of child care centers. ReadyNation, an advocacy group comprised of over 2,000 business executives, emphasizes the economic consequences of the nation’s infant-toddler child care crisis. A report released by the group estimated that the crisis costs the U.S. $122 billion in lost earnings, productivity, and revenue annually, a significant increase from $57 billion in 2018. ReadyNation’s national director, Nancy Fishman, highlighted the impact on taxpayers, stating that the loss amounts to $1,470 per working parent annually due to lower income taxes and reduced purchasing power from unemployment.
One proposed solution to the child care crisis is to support the early childhood workforce, often referred to as the “workforce behind the workforce.” Providing child care providers with benefits, such as access to healthcare and high-quality child care for their own children, is essential. Additionally, programs that offer training and education opportunities for child care providers are crucial in improving the quality of care. In California, the economic toll of the crisis is estimated to be $17 billion, the highest among all states. Child care providers in the state have faced challenges, with many struggling to make ends meet on low wages. The Child Care Providers United union, representing over 40,000 providers, has been advocating for better compensation and benefits, including reimbursement for the full cost of providing care.
Lawmakers have recognized the importance of addressing the challenges faced by the child care sector and have taken steps to support providers. State Senator Nancy Skinner, representing parts of the Bay Area and chair of the California Women’s Caucus, highlighted the Caucus’ efforts to increase funding for early care and education by $2 billion over the past two years, totaling $6.5 billion. The Caucus continues to prioritize early child care and education, advocating for steady rate reimbursement rates for child care providers to ensure the sustainability of the industry. Skinner emphasized the need to support child care providers amid a shifting economic landscape where many sectors are competing for workers.
The Covid-19 pandemic has underscored the critical role of child care in the U.S. economy and the challenges faced by families, providers, and policymakers. Addressing the child care crisis requires a multi-faceted approach encompassing financial support, workforce development, and policy changes to ensure the sustainability of the industry and support working families.