With the expiration of pandemic emergency assistance funds that had helped thousands of child care centers pay their workers, upgrade buildings, and help keep costs low for parents, the U.S. is on the verge of a “child care cliff.”
According to one prediction, as many as 70,000 child care facilities may have to close when the financing runs out on September 30 and as many as 3.2 million youngsters may lose their slots.
The American Rescue Plan Act (ARPA), a $1.9 trillion stimulus package that President Joe Biden signed into law in 2021, is the source of the cash that is about to expire. The child care sector, which generally receives little support from the federal government, was given around $40 billion.
Due in part to the funding, child care providers were able to keep their employees from leaving for jobs with higher pay during the crisis. This was problematic because many rival employers had been raising wages to recruit new employees in a competitive labor market. However, several daycare centers also used the money to keep expenses down for parents, many of whom are already struggling to pay for care, which, according to Care.com, costs an average of $15,000 per year for one child, a 53% rise from ten years ago.
According to Julie Kashen, senior fellow and director for women’s economic justice at The Century Foundation, “we know that the money worked; over 220,000 child care programs received funds.” The lifeline was just what was required.
The federal government has never invested that much money in safeguarding the child care industry, she continued. That proved to us that it truly does make a difference when we do that.
Kashen predicts that without the funds, 70,000 child care facilities will close, endangering the care of 3.2 million children. Millions of parents’ capacity to continue working could be impacted by this, and they could end up losing $9 billion in wages as a result, she said.
“A flawed business strategy”
The topic of how the federal government should support child care is at the core of the debate, as is the possibility that increasing support could benefit parents who want to work but must reduce their hours or take time off due to the high expense of early childhood programs.
According to Kashen, other wealthy nations spend around $14,000 yearly per child on childcare, compared to the United States’ $500 annual expenditure per child. The United States and Denmark vary in that the latter country guarantees child care to children over 6 months of age, with the government covering 75% of the costs.
According to Kashens, it’s no accident that the proportion of women in the American workforce has recently reached historic highs. She links this development to the ARPA grants supporting child care facilities.
“If we don’t have child care, we can’t necessarily have everyone who wants to work working,” she said. “Mothers’ employment has been supported significantly by the child care sector, which has been more stable recently than in the past.”
The termination of ARPA funding “will bring us back to the fact that we had a broken business model before the pandemic,” said Susan Gale Perry, CEO of Child Care Aware of America, a network of more than 500 child care resource and referral organizations.
“The biggest thing I’m hearing from child care businesses is, ‘This funding is ending, and I’m in a position where I’m going to have to make a hard choice, one of which is having to increase fees for families,'” Perry continued. Another option is to reduce pay or perks.
Charging more
The Greenway Learning Center in Greenbelt, Maryland, is one of the organizations preparing for the loss of funds; director Patti Smith expressed concern that some parents might not be able to afford the tuition once the funding runs out.
“Unfortunately, I don’t believe those parents will be able to pay our tuition if the financing stops. Therefore, those kids won’t have any care,” Smith told CBS News. We might need to close the classrooms, but hopefully not the entire facility.
Amanda Cavaness of the Dr. Jerry Hamm Early Learning Center, a different daycare center, said ARPA money helped her facility to make significant, long-overdue improvements, such installing a new fire alarm, as well as provide more resources and toys for classes and students.
Since the cost of living has increased, she said, “We have always tried to enhance the program, but it comes out of our own pockets. Having that money was nice.”
Act Stabilizing Childcare
Through the Childcare Stabilization Act, some federal lawmakers have suggested fresh financing to cover the financial gap when the ARPA monies run out. The idea, which was put up by Senators Patty Murray, a Democrat from Washington, and Bernie Sanders, an independent from Vermont, as well as other lawmakers, would mandate $16 billion in financing over the course of the following five years.
Some of the lawmakers who backed the measure claimed that their motivation came from their own experiences paying for child care.
Undoubtedly, given that the GOP controls the House, it is improbable that a proposal with no Republican backing can garner enough votes to become law. However, childcare providers claim that their services benefit not only families but also the wider economy.
Cavaness remarked, “I don’t know how you place a price on that. “This profession is what makes all other professions possible.”
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