The Childcare Cliff Is Upon Us, and Congress Must Take Action

Research shows the cognitive and social emotional benefits of early learning, and an overwhelming majority of Americans feel childcare is a good use of their taxpayer dollars. Congress’ disconnect on this issue remains unconscionable.

Dual-language kindergarten students at Coldwater Canyon Elementary on Aug. 14, 2023 in Valley Glen, Calif. In the U.S., the annual cost of care has risen to over $30,000 for 20 percent of families. (Brian van der Brug / Los Angeles Times via Getty Images)

Since Congress failed to extend the childcare stabilization funding from the American Rescue Plan Act (ARPA) in September 2023, the supply of childcare has fallen off a cliff in many places across the United States, and its effects on families and the early childhood education (ECE) workforce are being felt more than ever. 

If you haven’t already done so, it is time to sit up and pay attention. As childcare programs increase fees to make up for budget shortfalls, the annual cost of care has risen to over $30,000 for 20 percent of families in the U.S., with another 50 percent paying approximately $20,000 annually. These costs often exceed the cost of college tuition. 

As early educators themselves are calling out, the childcare sector is definitely not okay. Early educators, now severely underpaid, were afforded modest increases to their salaries as a result of ARPA funds at first. Now, they are seeing cuts to those wages, and they are leaving the field for other employment.

Today, 46 percent of educators report experiencing burnout, and 32 percent say they are financially worse off than a year ago. A growing workforce shortage will only exacerbate this crisis. As the workforce becomes more unstable and qualified educators scarcer, many employers are hiring inadequately prepared educators to replace them. 

The current ECE system is driven by the private market, but childcare is a failed market endeavor. The tax code was set up to incentivize investments in private markets, such as home purchases. But when it comes to childcare, simply providing tax breaks won’t solve the problem if there aren’t enough childcare services available or if their availability is dwindling.

Some states, such as Massachusetts, have invested public dollars to mitigate this cliff. State investment is necessary but not sufficient to address the magnitude of the problem. In addition to increasing costs for families, a majority of states are now facing shortages in the availability of affordable, high-quality childcare as programs either shut their doors entirely, or reduce the number of classrooms in operation. Furthermore, the cliff is disproportionately affecting communities of color and communities experiencing poverty. 

The solution is clear: It is necessary to invest in universal early care and education—similar to what was proposed in Build Back Better and referenced in the president’s 2024 State of the Union address—so that families do not have to bootstrap these solutions themselves, so we can build an adequate supply of affordable and quality care, and so the workforce is paid a just and living wage.

At a minimum, Congress should revitalize and pass the Child Care Stabilization Act proposed by congressional members and supported by President Biden. This act provides $16 billion in funds per year over the next five years to further stabilize the sector. This, combined with state investment, may prove to be sufficient to stem the bleeding. 

There do exist federal policy proposals to offer families relief that tinker around the edges.

  • The president is advocating for the reinstatement of the expanded child tax credit, a program that cut child poverty in half in 2021.
  • A group of Democratic senators are proposing to double and make permanent the Child and Dependent Care Tax Credit.
  • There are bills in both the Senate and House that would enable families to use dependent flexible spending accounts to increase the amount of pre-tax dollars families can contribute, which could be used to pay for childcare.  

These proposals are viable to make care incrementally more affordable in the absence of equitable federal funding for early education and care. However, these proposals do not supersede the necessity for a durable, annual investment in the sector that a new Build Back Better bill or the Stabilization Act could provide.

Daesean Cunningham, an early educator, speaks to fellow early childhood educators and parents at a rally for funding for D.C.’s Early Childhood Education Pay Equity Fund at Samuel Gompers Park on April 5, 2024. (Paul Morigi / Getty Images for Under 3 D.C.)

If we fail to act, the data suggests the crisis will get worse. A recent survey of state childcare administrators conducted by the American Public Human Services Association shows that some state legislatures are pushing for deregulation of childcare programs to circumvent funding and workforce shortfalls. This raises significant concerns about an increase in health, safety and supervision violations—particularly for infants and toddlers, who require a low teacher-to-child ratio for safety.

Moreover, administrators share a high level of uncertainty in the risk of facility closures, with some states already reporting increased closures above expected attrition. The lack of an available workforce means that programs are operating at a reduced capacity, with increased waiting lists, and with significant increases in costs to families.

Children, families and early educators deserve more than the failures their government consistently delivers them. Research has long shown the cognitive and social emotional benefits of early learning, and an overwhelming majority of Americans feel that childcare is a good use of their taxpayer dollars. Congress’ disconnect on this issue remains unconscionable. Families need relief now, as do early educators who continue to be an essential workforce for a thriving society. 

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Rebecca E. Gomez is a program officer at the Heising-Simons Foundation.