‘Unprecedented:’ States invest in child care to recover pandemic losses

State governments are directing tens of billions of dollars to child care businesses in what experts say is an unparalleled investment in salvaging an industry that was devastated by the pandemic.

The money is flowing through stabilization grants, funded by the latest round of federal coronavirus relief approved by Congress last year. All but four states and two territories have set up grant programs for those businesses, grants that child care providers can use to pay for anything from the rent on their facilities to the wages their workers take home.

“A phenomenal, unprecedented amount of money has been granted to child care in the three stimulus packages that were passed since COVID started,” said Cindy Lehnhoff, director of the National Child Care Association and a 40-year veteran of the industry. “Our federal legislators recognized that the economy doesn’t work without child care. They recognized that child care is essential. We’re the essential workforce that allows all other workforces to go to work.”

The first round of coronavirus relief funding directed $13.5 billon to child care programs. The third round, the American Rescue Plan, directed another $39 billion to those providers, an investment orders of magnitude above what Congress has allocated for the industry in the past.

Most of the funding in the American Rescue Plan was earmarked for stabilization grants to ensure child care providers could stay afloat during the pandemic. But about $15 billion was earmarked for child care development funds, and some states, from Michigan to Georgia, have used that money to expand access to low-income families.

“Loosening those restrictions, loosening those regulations to get states to address a really severe crisis in our child care sector, which ripples out through our economy, was so important,” said Rasheed Malik, director of early childhood policy at the Center for American Progress. “What the stabilization grants have done is to staunch the bleeding and to preserve what we could.”

Several states have announced new programs that go beyond the federal spending. Maryland Gov. Larry Hogan (R) this week announced his state would provide an additional $50 million to child care providers, after those businesses snapped up $285 million in federal grant funding.

“Child care is one of our most essential services, and keeping facilities open and available to parents with minimal disruption is a top priority,” Hogan said Monday.

In an address laying out her budget proposal, New York Gov. Kathy Hochul (D) offered $1.4 billion in new investments in child care, enough to make another 400,000 families eligible for early care.

“Working parents need all the support they can get,” Hochul said Tuesday.

For some child care providers, that money has been essential to keep the doors open and the lights on. Jessica Duckett, who runs Teddy Bear Day Care in Fairfax and Alexandria, Va., said a grant her company received had allowed her to keep paying staff who were sick or temporarily absent from work during the pandemic’s darkest days.

“We have been able to pay the staff while they’re out sick with Covid,” Duckett said in an interview. “The last thing we want is the staff to be struggling for resources and basic needs in the middle of a pandemic.”

Still, the child care industry is struggling to recover what it lost over two years of lockdowns and Covid mitigation plans. About a third of the child care workforce disappeared during the pandemic, either because their places of employment were shuttered or because they took other jobs or retired.

In the months since, the industry has attracted back just two-thirds of that loss.

“We’re still about 100,000 qualified individuals short of filling the positions we once had,” Lehnhoff said. “Child care is in dire straits right now and we are struggling to get staff.”

Some of the competition is coming from other economic sectors that are now offering better wages in a worker-friendly labor market. Other competition comes from school systems, which can offer qualified providers better pay and benefits as early education teachers, with a generous summer break to boot.

“This is a high cost industry that has been underfunded and undervalued for a long time,” Malik said. “The pandemic has revealed to us all how crucial the child care sector is to our overall economy. It’s the workforce behind the workforce.”

That competition has meant day care facilities operating far below capacity. The Teddy Bear Day Care in Fairfax cares for 60 children today, just more than half the 109 for which they are licensed; the Alexandria branch has 26 students, less than half their maximum capacity of 53. In both cases, the lack of staff caps the number of available slots.

“This classroom is intended for 3 staff and 11 babies, and I don’t have the babies because I don’t have the staff,” Duckett said from an empty room at her Fairfax branch. “Hiring new staff is not really happening.”