For two years, the United States has effectively been running an experiment to federally finance child care providers. The $24 billion in pandemic relief is the largest investment in child care in US history. Child care providers have used the money to raise teachers’ salaries, buy supplies and make mortgage payments.
In September, those funds expire, one of the safety net gains of the pandemic-era. This is a looming crisis for the industry, and could lead to tuition hikes, layoffs and closures. Overall, child care could be disrupted for three million children, close to a third of those in child care, according to a report Released on Wednesday by the Century Foundation.
The National Association for the Education of Young Children regularly surveys child care owners and workers. at your most recent survey On grants, in October 2022, four out of 10 directors and owners nationwide said they would have to raise tuition when the grants expire this fall.
More than a quarter said they would have to take a wage cut – with an average hourly wage of about $12. Nearly a third of providers, including 44 percent of minority-owned providers, said they might consider leaving their jobs or closing altogether in the case of home-based child care.
“Federal funding has made a big difference,” said Julie Kashen, a senior fellow at the Century Foundation and author of the new report. “There are going to be huge and terrible consequences for employers, for families, for child care workers.”
Children’s Corner, which provides care for 80 children in Millcreek, Utah, is receiving $26,000 in grants each month, said its director, Jane Whyte-Fredrickson. Without the grant, she said, the center, which her parents started 40 years ago, would have closed during the pandemic.
She used the money to raise her hourly wage to $15 “because they all deserve it,” she said. When the grant ran out, she said, “the plan is raising tuition.” She’s already raised it from $900 monthly to $985 for a 2-year-old, and will probably raise it above $1,000.
For Lorna Adkins, who runs Growing Place from her home in Huntington, W.Va., it’s not an option for their families: “Raise tuition? Not in West Virginia, not in this economy, not here.
He is getting $3,200 per month. She has spent it on wages, cleaning supplies, utilities and to offset rising food prices. After expenses, she said her take-home pay without the grant was about $2.50 an hour. With the grant ending, rising costs and new regulations on providers, she said, she plans to retire early.
“There are a lot of people in child care that are going to be laid off because of this,” she said. “It’s just a fact.”
Analysts and providers say federal relief funds saved the industry. One in three child care providers – 70,000 – may have stopped receiving grants. Unlike public schools, child care is funded almost entirely by private tuition. When this dried up during the lockdown, the providers could not keep up.
But even before the pandemic, the sector was uncertain. Treasury Secretary Janet Yellen calls child care a textbook example of a broken market, Workers are paid less than 98 percent of other businesses, but many providers can’t raise prices because parents often can’t afford it. already, parent’s half spend more than 20 percent of their household income on child care.
“The grants were really designed to prop up a system that was already failing before the pandemic,” said Caitlin McLean of the Center for the Study of Child Care Employment at the University of California, Berkeley.
The pandemic also reshaped business. In some places, parents are not regularly accessing child care, as they are working from home. Hiring has also become very difficult, as other jobs, in many cases less demanding, have begun to pay more.
In a National Association for the Education of Young Children survey, two-thirds of providers said they were facing staffing shortages, and nearly half of them said they were caring for fewer children because of it.
three quarters How many of the child care providers who received the grants have used the money to pay teachers? Now they are facing pay cuts—while the hiring is in a bind.
Brooke Skidmore said, “We’re in a corner now, because we can’t lower their wages because then we certainly won’t have teachers, and we can’t raise our rates for parents because parents Can’t pay more than that.” , who with her brother owns Growing Trees in New Glarus, Wis.
$24 billion The American rescue plan came in to stabilize the industry, and grants were distributed by states according to varying rules. More than 80 percent of providers received them. Previously, federal support for child care came primarily through block grants that states used to subsidize care for low-income parents. Congress increased these grants by $29 billion during the pandemic to end in September 2024.
Some Democrats in Congress want the child care subsidy to be increased or made permanent. Some Republicans have also proposed increasing federal funding for child care.
Senator Bernie Sanders, who recently issued a report On the subject, along with Senator Patty Murray, said, “If we allow this cliffhanger to happen and lose the billions of dollars that we put into stabilizing child care, it will make a catastrophic situation worse.”
Yet Democrats’ larger Social Safety Net bill, which includes subsidized child care and universal Pre-K, failed to pass. Republicans, along with Joe Manchin, a Democratic senator, said the investment was too expensive, among other concerns. Senior Biden administration officials said the prospect of billions in additional funding for child care providers appears bleak, especially given recent pressure from Republicans to limit government spending.
Some states and localities have found ways to continue subsidizing child care, and others are considering it. Minnesota made 750 million dollars investment. Policymakers in Maine have proposed continuing pandemic-era investments. New Mexico in November passed a constitutional amendment To guarantee the right of early childhood to education.
Adaze Ngodi, owner of the Rex Childcare and Early Learning Center in Rex, Ga., said she hopes financial help will be one way to come. Even with $51,000 in monthly grants, her business has not fully recovered from the pandemic, she said, and has been unable to hire for the six open teaching positions.
“I hope they continue until things really go back to normal,” she said.
