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Wake-Up Call for Child Care as Pandemic Exposes Troubled System

By Kelley Griffin  |  January 17, 2022

When the pandemic forced many child care providers across the country to close or scale back operations, parents were left scrambling—and businesses got a clear view of how much they rely on the child care system.

Billions in productivity were lost, according to the Harvard Business Review, as parents—mostly moms—dealt with the daily challenge of managing work and child care, a challenge greatly amplified for parents who didn’t have the option of working at home. And millions of women couldn’t sustain their jobs and left the workforce altogether.

"The critical thing we learned in COVID is the child care business model doesn’t work." —Linda Smith, director of the Early Childhood Center at the Bipartisan Policy Center

This shock to the child care system prompted a massive federal investment, one that child care advocates say has the possibility to transform a broken system. Congress approved $50 billion in emergency funding for states, territories and tribes. And the House passed the Build Back Better plan to spend $1.7 trillion over 10 years, with $109 billion to expand preschool, support parents with tax credits and improve pay and benefits for child care workers. The measure has not been taken up in the Senate.

“It’s a complete reimagining of the way our country invests in child care and early learning,” says Mario Cardona, chief of policy and practice at Child Care Aware, a national nonprofit group whose goal is to ensure all families have access to high-quality, affordable child care. “There’s going to be a lot of good faith efforts by the states to make these systems better. I’m optimistic, I’m hopeful that folks are going to be doing their darndest to make this work.”

As states are finding out, this isn’t a system that will snap back to normal when the pandemic abates. And in any case, advocates say, “normal” wasn’t good enough. 

“The critical thing we learned in COVID is the child care business model doesn’t work,” says Linda Smith, director of the Early Childhood Center at the Bipartisan Policy Center. “Because when it costs more to produce a quality product than the people who need it could pay, then it’s broken.”

What’s Broken 

It’s not that the issues in the child care system aren’t clear. Ask anyone involved in the field, and they can rattle off the list of problems:

  • Pay is so low, it’s hard to find workers. More than 126,000 lost or left their jobs during the pandemic; the Center for the Study of Child Care Employment at the University of California, Berkeley found in September that the workforce was at 88% of capacity. Allyx Schiavone, who runs the Friends Center for Children in New Haven, Conn., says she has not been able to reopen to full capacity because she can’t find staff. “In the last 18 months of COVID, I’ve done more interviews than I did in my previous 10-plus years,” she says, adding that people with the education and experience to work in child care are finding better pay elsewhere. 
  • Workers often lack training, even though they are dealing with children at crucial developmental stages; chalk that up to the low pay. 
  • Huge swaths of the country are “child care deserts” where either there are no options or there are three times the number of children as there are spaces. One center in Decorah, Iowa, population 8,000, serves 120 children but has a waiting list of 130. And in North Carolina, “There’s a child care desert in every county in our state, and there are 100 counties,” says Davina Boldin-Woods, the owner and administrator of a child care center in the state. “Child care deserts are the places where the programs are collapsing the quickest, those are the programs that have closed their doors under the weight of the pandemic.” 
  • Even when parents can find child care, surveys have consistently found that many have trouble making it work in anything outside a traditional 9-to-5 work schedule. 
  • And while many child care providers barely scrape by with what they charge for care, a large number of parents have trouble affording it. That’s why the Biden administration is aiming to ensure that no family pays more than 7% of their income on child care.

All of this hits Black and Latina women, who make up 44% of the child care workforce, particularly hard. Research by the Center for the Study of Child Care Employment found even before the pandemic, Black early educators earned an average of $.78 less per hour than their white counterparts. Half of the nation’s Black- and Latino-owned centers were expected to shutter, according to a survey last July. 

That’s a lot to fix, but the cost of not fixing it is clearer than ever, according to researchers. A 2019 report by the nonpartisan national business group ReadyNation found that, even before the pandemic, an annual cost of $57 billion in lost earnings, productivity and revenue could be attributed to problems with the child care system. A whopping 86% of employees who are primary caregivers said it had affected their work.

In September, the group sent a letter to Congress signed by 51 business leaders who are on ReadyNation’s Task Force on Early Childhood urging lawmakers to increase and sustain public funding for child care.

Emergency Funding Sets the Stage 

The federal government has provided more than $50 billion for child care reform through the CARES Act and the American Rescue Plan Act. But this has been aimed at piecing the child care system back together after it fell apart during the pandemic. These funds must be used up by 2026, and sooner in some cases. This kind of funding amounted to five times the budget most states would normally get in a single year. 

States have reported using the money—or planning to use the money—in a variety of ways. The Office of Child Care in the U.S. Department of Health and Human Services compiles all the states’ plans, which include supporting better wages and health care coverage for child care workers; helping the owners of day care centers recoup losses from the pandemic; and offering parents various means of financial support. 

It hasn’t been easy for states to move that much money quickly. 

“It is not well understood how difficult it is for states to make payments out the door to individuals or organizations,” says Woody Dover, the enterprise project management director at Bright from the Start in the Georgia Department of Early Care and Learning. 

Like staffers and lawmakers in many other states, Dover worked with teams of people to reach out to providers, parents, businesses and other stakeholders just to get a handle on the system’s needs. Next, it was a matter of figuring out who should get money directly. Dover says they discovered that tax issues were created if the state wrote checks to child care operators to give to their employees to help stabilize their income. So officials had to figure out how to identify all the eligible workers and get money to them, which entailed creating an application and finding temporary staff to process the forms that came in. And that was just one element of spending child care relief money. 

“Everybody sees it as an opportunity,” Dover says. “It’s exciting to be in the room to be able to put things on the table and propose ideas that in the past everybody looked at each other and said, ‘How can we do that?’”

Dover is aware the programs Georgia is implementing with pandemic relief may not be sustained when that relief money runs out, and the state still must decide how far it will go to implement the federal American Families Plan. At least, he says, the funding is providing important help now, and the state has learned a lot about how to meet the needs of the child care system and could offer aid more quickly in the future. 

Long-Term Solutions

Some states began putting long-term solutions in place even before there was any concrete funding through the American Families Plan. 

Iowa Rep. Michael Bergan (R) has long been involved in the child care issue, first as a county supervisor and later coordinating early childhood services in the northeast part of the state. He was among those pushing a bipartisan set of reforms in 2019 to address many of the problems the pandemic would lay bare in 2020. 

“As we approach child care, we’ve approached it from many different angles,” Bergan says. “There is no one simple answer.”

Bergan says the Iowa Legislature has been making plans, and several reforms have gained bipartisan support in the House and have passed the Senate or are awaiting action when the session picks up again in January. 

For example, the Legislature passed a bill that would expand eligibility for child tax credits, modeled after the credits the federal government established during the pandemic. But Iowa doubled to $90,000 the amount families could earn and still be eligible. Lawmakers also approved a gentle transition off child care subsidies, rather than an abrupt end as soon as a family’s income exceeds the limit.

Bergan notes these steps to make child care costs more manageable aren’t dependent on the federal funds; the laws make them a fixture in the state budget.

Legislators in Washington set up new systems using some of the temporary money—but also created a permanent funding source even before the American Families Plan passed. Their Fair Start for Kids Act, enacted in May, will be funded by a capital gains tax focused on high-income families.

The tax is being challenged in court. But Sen. Claire Wilson (D), who led the effort, is optimistic it will pass muster. In any case, the law requires the state to pay for the reforms even if the capital gains tax is thrown out.

The measure will, among other things, reduce the amount families shoulder for subsidized child care; expand eligibility for the Early Childhood Education and Assistance Program; expand child care providers’ access to health insurance; and support professional growth and development among providers.

Wilson had been pushing for child care reform in Washington for decades before she was elected to the Senate. When she saw how the pandemic made so many people take notice of the turmoil in child care, she was not going to miss the chance to push for change.

“It was an opportunity to take the pandemic and, however horrible that was, create an opportunity because it was the first time that even people with privilege and resources could not get what they needed,” Wilson says.

Businesses on Board

The business community is increasingly stepping up, creating groups specifically to support child care reforms in several states, including Iowa. 

“We really saw an emergency in our business community, recognizing child care as a component of being able to expand and hire more employees,” Bergan says. 

In Massachusetts, a range of businesses formed the Business Coalition for Early Childhood Education last February after the pandemic drove home the problem. 

Executive Director Tom Weber says his group wants to see the state establish a world-class system of early childhood education, affordable and accessible to all children, from birth to 5.

“Any state that becomes a leader in early childhood education is going to become that much more attractive to families that are looking for a quality place to raise their children and pursue their livelihoods,” Weber says. 

The coalition also recognizes the inequities in the current system for women of color and for mothers who manage the bulk of child care responsibilities and face restricted opportunities in the workforce. 

Weber says investing in early education helps not just families and their employers, but society overall.

“It’s extraordinarily well documented,” he says. When children get support to grow and learn from an early age, as adults they “will earn more, be far less likely to engage in costly antisocial behaviors and the consequence is enormous to society.” 

For all the work states are doing to manage the pandemic influx of federal child care dollars, they will have much more to consider if the Build Back Better plan is enacted. That measure, which passed the House, would pump billions of dollars into the system in the coming decade if it gets through the Senate.

The pandemic has helped states understand what to fix and allowed them to begin to implement solutions. But while there’s strong bipartisan support at the state level to act, some lawmakers are concerned about standing up programs they won’t have the money to support in the long run, even with the new federal funding. 

Arizona Rep. John Kavanagh (R) thinks child care problems are exaggerated to justify what he considers excessive spending that the nation can’t afford as it faces a huge deficit.

“It’s a shift to Euro-style cradle-to-grave socialism,” Kavanagh says. “It’s not the government’s job to provide child care.” He insists child care has “never been a problem in the history of the United States.”

“Nobody seems to care about the children who they want to be giving child care today who as adults will be paying for this spending madness,” he says.

But many advocates, including business and state leaders, say the nation shouldn’t let this moment pass. 

Linda Smith of the Bipartisan Policy Institute points out the U.S. is “light years behind on this issue. If you look at other developed countries and their early childhood (programs), it doesn’t take long to see that we’re not going to compete without an investment in early education, where it all starts.”

Boldin-Woods, the North Carolina child care operator, hopes the pandemic has driven home what providers in her field have long known.

“Brains are not born—they are built,” Boldin-Woods says. “If indeed we are not doing the building and creating an absolutely high-quality early learning environment to ensure those synapses are being formed, those foundations are being laid, (then) we are creating a generation of citizens who are not well equipped,” she says. “That’s the work.”

Kelley Griffin is a writer and editor in NCSL’s Communications Division. Jennifer Palmer, a senior policy specialist in NCSL’s Children and Families Program, contributed to this story.

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