Congress, Bring Down Childcare Costs for Families

As Congress looks to legislation to shore up the economy, childcare should be a centerpiece of any economic plan.

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A childcare center in British Columbia, Canada. In the developed world, the United States is an outlier in its low levels of financial support for young children’s care. (Province of British Columbia / Flickr)

Our country’s chronic denial of the public role in sustaining a healthy childcare sector is untenable. The U.S. Treasury Department calls the nation’s childcare system “unworkable.” Childcare fees exceed housing costs and college tuition in some states. While parents shoulder enormous cost burdens, childcare workers earn near-poverty wages. Children also suffer the consequences. High-quality programs—those with sufficient resources to create environments that keep children safe, healthy and support their learning—are out of reach for many families.

Our disregard for the importance of childcare is shortsighted from an economic perspective. Investments in high-quality childcare and early education pay long-term dividends for the economy. In addition to stabilizing work and earnings for parents, children who attend high-quality programs are better prepared for school and go on to have better outcomes, including higher earnings, into adulthood. It’s why every developed country in the world has chosen to invest in its youngest children—to support children, parents and the economy.  Yet, prior to the pandemic, the United States so badly underfunded early childhood that fewer than one in six children eligible for childcare financial assistance got help.  

In a Senate hearing last week, Democratic and Republican lawmakers agreed that families need help with childcare—yet had big differences in their approaches. Democrats have proposed a significant expansion of public funding for childcare to address affordability, access and compensation for providers.  Republicans proposed changes to current law with no substantial increase in funding—missing the crucial component of what is needed to fix the crisis. Significant public funding is needed to bridge the gap between what families can afford to pay and the high costs of care. 

Children who attend high-quality programs are better prepared for school and go on to have better outcomes, including higher earnings, into adulthood. It’s why every developed country in the world has chosen to invest in its youngest children.

Parents across the income spectrum experience childcare as a pain point in their household budget. But for families with the lowest incomes, high costs stand in the way of financial stability and have big consequences. Among families who pay for childcare, those with incomes below poverty spend on average 30 percent of their income on care. Families with slightly higher incomes, pay 12 percent on average—still higher than the 7 percent threshold that the federal government considers a standard for affordability. Many of the families with the lowest incomes simply cannot devote that share of resources to childcare. As a result, they face difficult choices: using less-safe, lower-quality care; forgoing other household expenses such as food or rent; or leaving employment altogether.

Last year, when faced with the unmistakable harm that would come from allowing childcare to completely collapse, Congress finally took action by providing $39 billion in childcare relief funds in the American Rescue Plan (ARP) Act to address the industry’s fallout from the pandemic. And those funds are making a discernible difference. States are providing financial relief to childcare businesses, expanding childcare assistance to more families, and increasing compensation for workers.

Investments through the American Rescue Plan confirm: Public investment in childcare and early education works.

As crucial as these resources are, they are only temporary and only intended to rescue the industry from free fall. They don’t address the longstanding cost burden for American families. They don’t create a sustainable path for raising wages of care workers. And they don’t address the severe gender and racial inequities that are reinforced through our woeful underinvestment. Women of color—who are more likely to be primary earners than their white counterparts—are also more likely to carry a high childcare cost burden. So, too, are women of color disproportionately represented among the underpaid and undervalued childcare workforce.   

Failure to address our country’s childcare crisis has been status quo for so long the problem almost feels unsolvable. And yet investments through the ARP confirm: Public investment in childcare and early education works. With federal resources, states can bring down childcare costs, raise pay for workers, and make quality care more readily available.

As Congress looks to legislation to shore up the economy, childcare should be a centerpiece of any economic plan. Families are struggling with inflation and rising costs. Congress can provide immediate help to bring down childcare costs.

It took the near collapse of our childcare system to shine a light on how deeply flawed our system was. Congress should not let this moment pass without seizing the opportunity to course-correct our decades-long underinvestment in childcare and neglect of working families with a robust investment in childcare.

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About

Hannah Matthews is the deputy executive director for policy at the Center for Law and Social Policy (CLASP).