Crisis not averted — child care worries intensify

Much of the nation breathed a sigh of relief last weekend as Congress reached a bipartisan agreement to keep the government funded until mid-November. However, the last-minute brokering failed to address another crisis that was triggered on Saturday: the expiration of America Rescue Plan Act (ARPA) funding for childcare. If Congress doesn’t act quickly to replace this funding, the effects of shrinking access to childcare will ripple across the economy.

ARPA, a 2021 spending package that was designed to buffer the economic effects of COVID-19, invested nearly $24 billion to support childcare providers—enabling many of these struggling businesses to stay open, boost pay to attract and retain workers, and subsidize rates for families that struggled to afford care. At a time when demand for childcare fluctuated with pandemic surges, and when hourly wages were rising in response to worker shortages, this supplemental funding was vital in keeping this essential industry afloat. In fact, 80 percent of childcare providers benefited from this funding. 

But the childcare industry had been in trouble long before the pandemic hit, so COVID-19 only hastened the impending crisis. For years, childcare costs have increased while wages have stagnated. Many families with young children pay more for childcare than for housing, and that’s after waiting 18 months or more for a spot in many areas of the country. 

In 2021, Treasury Secretary Janet Yellen described childcare as “a textbook example of a broken market,” explaining that “those who provide childcare aren’t paid well, and many who need it, can’t afford it.” Indeed, the average cost of childcare for one infant is $14,760 per year, with costs much higher in many metropolitan areas. In Denver, for instance, the average is nearly $19,000 per year for one child. Meanwhile, childcare workers make, on average, only $29,570 per year, which puts them in the bottom 2 percent of wages of U.S. workers.

It is no wonder that even with the ARPA funding, many childcare providers have struggled to find workers or have gone out of business altogether. Nationwide, there are roughly 10 percent fewer childcare spots available now than before the pandemic started. 

For an industry already struggling with rising inflation and worker shortages, the disappearance of ARPA funds spells disaster. In the coming weeks and months, many providers will be forced to close or reduce capacity even more than they already have. This will hurt families—some workers will be forced to quit their jobs or reduce hours to care for their kids—and it will hurt businesses, which already struggle to find qualified workers. Reduced household income hurts spending, too, and at a time when student loan payments are also kicking in again, many household budgets will be stretched to the breaking point. 

Lack of access to early childhood education also hurts children. Many children benefit from the socialization and developmental supports offered in childcare settings, and studies indicate that children who participate in early education programs before age five show higher cognitive and socioemotional development, are more likely to graduate from high school, and earn more as adults than peers who do not access early education programs. 

Providing these opportunities to young children should not bankrupt families. Access to childcare is critical for the U.S. economy and yet there are obvious and persistent market failures in this industry. As budget negotiations continue this month, Congress must prioritize funding to support the nation’s childcare providers. Families, employers, and our economy need Congress to act now. 

Jennifer C. Greenfield, PhD, MSW, is an Associate Professor and Associate Dean for Doctoral Education at the University of Denver’s Graduate School of Social Work.