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Why is a child care ‘cliff’ looming this month?

Pandemic benefits are going away, which is expected to put some child care providers — and the families that use them — in a bind.

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An illustration of a children’s tricycle.

Alex Cochran, Deseret News

Some child care providers and the families who use them could face a crisis starting this weekend as pandemic-era emergency financial support ends Sept. 30, which is the end of fiscal year 2023.

Congress passed the American Rescue Plan Act of 2021, including $24 billion in grants to help shore up child care, which was caught up in one of the most obvious crises of the pandemic as people were sent home from work, school and other activities. With the influx of money to stabilize them, care providers — both centers and home-based — could pay workers, bills such as utilities and mortgage and the cost of personal protective equipment like masks and sanitizers.

According to Time, “Some 220,000 child care programs, the majority of which were family home providers, benefited from these grants, according to the Department of Health and Human Services. At the end of 2022, the average grant award stood at $23,300 for family home providers and $140,600 for child care centers.”

In the wake of the aid’s sunset, the Century Foundation, a progressive think tank, predicts as many as 70,000 child care programs could close — about 1 in 3 — which translates to at least 3 million child care slots disappearing. The foundation said the removal of the funding will also directly dampen national economic activity by about $10.6 billion.

Meanwhile, the nonprofit advocacy group Child Care Aware of America has said that the U.S. was short about 3.6 million affordable quality child care slots even before the pandemic.

Child care is not the only pandemic boost disappearing. The student loan pause is ending, with monthly payments resuming in October. Temporary suspension of the work requirement related to those who have Supplemental Nutrition Assistance Program (food stamp) benefits is over. And a ban on culling people from the Medicaid rolls ended in April, though some states are still working on determining who does and does not remain eligible for coverage.

But child care is one of the areas in a divided Congress where there’s bipartisan agreement that assistance is needed. And it’s also one of the areas where challenges are easy to spot. Julie Kashen, a senior fellow at the foundation, told The Washington Post that “when more than 3 million children lose care, that means all of those parents are going to have to figure out something else or reduce their work hours or leave their jobs altogether.”

The state of child care

A 2022 LendingTree study found child care costs average just under $1,000 a month nationwide and that the cost of care for children younger than 5 “ate up between 17% and 20% of the average American’s yearly earnings. In some states, that percentage reached nearly 30%.” The findings were based on an analysis of data from the nonprofit Child Care Aware of America and wage data from the U.S. Bureau of Labor Statistics.

Care.com bills itself as the “largest online platform for finding and managing high-quality family care.” According to its research, 40% of the U.S. population lives in households with children, the national family median household income $91,000. It noted that 45% of families with income below $100,000 a year will spend more than $18,000 on child care in 2023, or at least 18% of their household income.”

The New York Times cited a survey by The National Association for the Education of Young Children conducted last October that found 43% of child care center directors and owners said they’d have to raise tuition when the grants end Sept. 30. And 27% said they’d end up cutting wages, 22% said they’d lose staff, 18% said they’d serve fewer children and 16% predicted the need to cut staff benefits.

Asked the same questions, home-based providers said they’d raise tuition (37%), cut wages (29%), lose staff (17%), serve fewer children (19%) and cut staff benefits (27%).

The article noted that if they don’t make any cuts, the median hourly wage is about $12.

In Utah, the Times talked to Jen Whyte-Frederickson, who runs Children’s Corner, started by her parents 40 years ago. She used the pandemic grant money to raise her staff’s hourly wage to $15 and said she’ll have to raise tuition when the grant ends — likely above $1,000 a month for a 2-year-old. Right now the charge is $985.

Can child care be fixed?

A letter signed by 995 organizations nationally dated was sent to congressional leaders in mid-September asking for “at least $16 billion per year in emergency child care funding to avert a devastating decrease in the supply of care that would disrupt both families and our economy.”

The signers were national, state and local organizations representing “children and families, child care providers and early educators, school-age after school and summer programs, small businesses and workers, civil rights and faith-based organizations,” among others. Every state was represented.

The letter predicts that without action, many parents will have to leave the labor force because they can’t afford care. It says those most impacted are apt to be families in rural communities, low-income families and women and families of color.

“Even before the pandemic, families struggled to find and afford care, early educators made poverty wages, and over half of counties were child care deserts, without sufficient supply of child care. If Congress fails to act, it will leave the child care industry even worse off than its pre-pandemic precarity,” the writers said.

“But the sector was precarious even before the pandemic,” as The New York Times reported. “Treasury Secretary Janet Yellen has called child care a textbook example of a broken market. Workers are paid less than in 98 percent of other professions, but many providers cannot raise prices because parents often can’t afford it. Already, half of parents spend more than 20 percent of their household income on child care.”

The Washington Post article reported that inadequate access to affordable, quality care tends to send women home from the workforce, “which could lead to worsening worker shortages in industries such as nursing, teaching and hospitality, which have all struggled to refill their ranks since the start of the pandemic.”

The article notes that home-based child care centers, “which disproportionately serve low-income and rural children, are among those at highest risk of closure. More than 97,000 licensed family child care homes have shuttered since the early 2000s, cutting the overall industry by nearly half, Department of Health and Human Services figures show. Another several thousand more are expected to go dark this year, experts say, as pandemic-era funding expires.”

In a perspective piece for Deseret News, Elliot Haspel wrote that without federal assistance, “quality child care may become a luxury good as COVID-19 aid expires.“

Haspel, senior fellow at the think tank Capita and author of “Crawling Behind: America’s Childcare Crisis and How to Fix It,” wrote that “However bad you think the child care crisis is right now, it’s about to get worse. The sector has lost nearly 100,000 workers from pre-pandemic levels, while thousands of programs have closed permanently and tens of thousands of classrooms sit empty. The only thing holding back a full landslide is a thin net of federal pandemic funds, but those funds expire soon. For the sake of America’s families and economy, Congress must act now — beginning in the lame-duck session — to permanently fix this critical infrastructure.”

American Enterprise Institute senior fellow and poverty studies scholar Angela Rachidi not long ago told Deseret News she agrees the need for more child care resources for low-income families remains. “That existed even before the pandemic,” she said. 

But she thinks the argument that the pandemic showed a child care shortage that reduces labor force participation is “overblown.” Not everyone needs child care assistance, she said, “so I do not support the need for providing child care subsidies for everyone.”

Her report, “The Safety Net During the Pandemic: Childcare, Paid Leave and Income-Support Programs,” suggests that temporary help did get people through the worst of the crisis. She has said it’s possible that Congress could “overreact and offer safety net expansions whose costs and services are not needed.”

Tackling the challenge

Time reported that “child care disruptions have become a rare issue of bipartisan agreement in Congress. Although no formal plan has been made — and some Republicans are pushing to slash safety net programs — many lawmakers agree that child care needs to be more accessible and affordable, with increased pay for workers.”

As an example of bipartisan accord, Rep. Nancy Mace, R-S.C., and Rep. Ro Khanna, D-Calif., have started a Congressional Bipartisan Affordable Child Care Caucus to tackle issues of child care cost for families. Khanna is working on legislation to subsidize child care so families that qualify for help would pay $10 a day and those caring for the children would earn $20 an hour.

Some states aren’t waiting for Congress to act. Several, including Minnesota, New York and Vermont, have boosted funding for early childhood efforts recently. Michigan created a partnership where family, the employer and the state share equally the cost of child care.

Utah last year gave one-time $2,000 bonuses to teachers, including early childhood educators. Alabama is offering quarterly bonuses to get early childhood educators to stay in the workforce. Virginia capped parent fees with an infusion of money, though the state’s plan requires federal funds that may not be available. And New Mexico voters just approved a constitutional amendment to give money for early childhood education a big boost, as the Albuquerque Journal reported.