Child Care Fiscal Cliff Looms For Working Families

As Congress struggles this week to find a compromise to keep the government open, another end-of-month deadline looms. On Saturday, stabilization funding from the American Rescue Act for child care operators will end—and a new paper from the Century Foundation predicts that more than 70,000 child care programs, one-third of those supported by ARP funding, will likely close, and approximately 3.2 million children could lose their child care spots. Julie Kashen, director, Women’s Economic Justice and Senior Fellow at the Century Foundation, spoke to Spotlight about the looming child care cliff and the paper’s findings. The transcript of that conversation has been lightly edited for length and clarity.

Why don’t we start by explaining the child care cliff, which is now almost upon us.

I want to start with the general context, which is that affordable, safe, and nurturing child care options should be available to every family. But right now, too many families are stuck on wait lists or breaking the bank to afford the care they need. And this has been the case since before the pandemic. Families are having to pay $10,000, $15,000, $20,000 a year for child care and that’s a lot of money, especially for low-income budgets. And there’s also just a scarcity of options—there’s just not a lot there.

So, you had this challenging situation to begin with, and then the pandemic came, and it basically drove a Mack truck through the existing child care sector. You had child cares forced to close. You had parents keeping their kids home for safety and health reasons. You had early educators leaving. And when child cares opened again, a lot of folks were only able to stay open by going into personal debt or no longer paying themselves a salary. And the child care sector really suffered as a result.

And what Congress did was invest $24 billion to stabilize the child care sector. This was historic, this was unprecedented, and it worked. What we saw was that child care programs were able to stay open. They were able to raise wages at least temporarily for early educators who historically were paid poverty-level wages. They were able to keep their doors open, and they were able to make their programs safer. They were able to invest in professional development for some of their teachers. It essentially saved the sector; it was a lifeline it needed.

The challenge is we have long been fighting for a comprehensive early childhood and education system. And we got close in the Build Back Better act. It had what we needed, what we were fighting for, and it passed the House of Representatives, which was a big deal, but it didn’t make it all the way through. So, here we are, we’re fighting to build this bridge to get us through this tough time and at the other side, our vision was that there would be a new system that uses public dollars to do what needs to be done to fix this broken market.

But that’s not what happened. We built this bridge, and now the money must be spent by September 30, and there will be no more federal dollars going out the door after September 30. So, we looked at the 220,000 providers who received those funds and found that a good portion would’ve closed without that aid, and we project could still close once this money goes away. The Century Foundation report found that 3.2 million children could lose their child care as a result of programs shutting down, staffing shortages that shut down classrooms and tuition increases. Forty percent of providers have said they’re going to have to raise tuition when this money goes away and that may price people out of being able to afford child care.

Now, this won’t happen all at once—it’s not like October 1, everything shuts down. Just like during the pandemic, providers are going to do all they can to stay open. These are people who are doing this work, they love children, and they want to support families in their community. They want to do this work, they want to keep their doors open, but the math just hasn’t added up previously. And it’s going to continue to not add up once this money goes away.

And there are particular states that are going to be hit harder than others? Can you give us just a few examples of those and why?

Some of the more rural states, where child care deserts were already significant to begin with—Arkansas, Montana, Utah, West Virginia, these are states where we projected that the number of licensed programs could actually be cut in half or more as a result of this money going away. There are also states that have stepped up and said, this is a crisis that we can deal with—states like Minnesota, Vermont and Maine, where they’ve actually put state dollars in to support the child care sector.

The paper also looks at the residual economic impacts beyond the child care sector. If you want to talk a little bit about that.

We know it should be enough that we invest in child care because it helps children to thrive. It should be enough to invest in child care because it helps parents to work or go to school for education and training. But for those for whom that’s not enough, it turns out this is a big deal for the economy. Child care disruptions cost employers productivity. And so, what we found is that parents having to cut their hours or leave the workforce altogether as a result of child care closures could impact their own parental earnings to the tune of $9 billion a year. We also found that as a result of lower tax revenue for states and employer disruptions, there could be about $10.6 billion a year of economic activity lost in the country as a whole.

Let’s talk a little bit about what’s happening, or I fear probably more accurately what’s not happening, on Capitol Hill in terms of a response. How does that look at the moment?

You know we had over 100 Democratic members of the House, and over 30 Democratic members of the Senate sign a letter calling for $16 billion in emergency child care funding. So, there’s definite interest in it. There’s definite concern and energy around it. There’s a lot going on right now with the possibility of a government shutdown, but the energy is certainly building around the need for these funds.

And has it gotten to the point of how that might move? Would it be part of an appropriation bill or added to the supplemental?

I think that the most likely way it would happen is through a supplemental.

Talk about the polling hat you did in conjunction with the paper.

We polled in June with Morning Consult, and we found that two out of three Americans are concerned about the expiration of these dollars. Seven in 10 Americans say they’re more likely to support a candidate for Congress who supports expanding child care options. And the one that’s really concerning is that more than half said it would take them at least one month to find a good child care alternative if their program closed.

I know the paper calls for a national response, but are their particular examples of the response at the state level that you would highlight that might be scalable or usable in other places?

I think that no state can do it alone. This is something where it’s really an all-hands-on-deck kind of a project where families are part of it, state governments can be part of it, local communities can be part of it. And we need the federal government to invest the dollars needed because to do it well, we need a federal government partnership. That said, we’ve seen some great things happen in New Mexico. They passed a ballot initiative that now has a constitutional set-aside of child care dollars, so that’s really innovative and really helpful. In Vermont, Maine and Minnesota, they have dedicated state funds. And what is so intriguing in Minnesota, is that Democrats had control of both legislative chambers and the governor’s office, and they were able to get a lot done, including about $1 billion for child care.

Ultimately, what we want to see is we want to build a comprehensive child care and early learning system; that’s the end goal. The stabilization dollars showed us, once again, investing works when we do it. So, let’s use this as the model to build for the future.