The U.S. is on the brink of a “child care cliff,” as pandemic emergency relief funds that supported child care centers are set to expire. These funds helped child care centers pay their staff, improve facilities, and keep costs lower for parents.
When the funding ends on September 30, up to 70,000 child care centers could face closure, leaving as many as 3.2 million children without access to care, according to forecasts.
The funding comes from the American Rescue Plan Act (ARPA), a $1.9 trillion stimulus plan signed into law by President Joe Biden in 2021. Nearly $40 billion was allocated to the child care industry, providing much-needed support to a sector that typically sees little assistance from the federal government.
This funding allowed child care operators to stabilize their businesses during the crisis. They were able to increase staff wages, reducing employee turnover caused by higher-paying job opportunities elsewhere. Additionally, some centers used the funds to keep prices affordable for parents, who already struggle to afford child care costs that have increased by 53% over the past decade to an average of $15,000 per year for one child.
“We know that the money worked – over 220,000 child care programs received funds,” said Julie Kashen, a senior fellow and director for women’s economic justice at The Century Foundation. “It was exactly the lifeline needed. It was the first time the federal government invested that much money in securing the child care sector, and it made a huge difference.”
However, without continued funding, Kashen estimates that 70,000 child care centers could close, leaving 3.2 million children without care. This would impact the ability of parents to work and result in an estimated $9 billion in lost earnings.
“A broken business model”
The issue at the heart of the matter is the involvement of the federal government in supporting child care. Boosting support could assist parents who want to work but are hindered by the cost of early childhood programs. Compared to other wealthy countries, the U.S. only spends about $500 per child annually on child care, while other nations spend around $14,000 per child.
Kashen believes it is no coincidence that the share of women in the workforce has reached record highs recently, which she attributes to the ARPA funds supporting child care centers. “If we don’t have child care, we can’t have everyone who wants to work working. The stability of the child care sector has made a big difference in supporting mothers’ employment,” she explained.
Susan Gale Perry, CEO of Child Care Aware of America, a national network of child care resource and referral agencies, reflects on the end of ARPA funding. “The funds ending brings us back to the fact that we had a broken business model before the pandemic,” she said. Child care businesses are left with tough choices, such as increasing fees for families or reducing wages and benefits.
Raising fees
The Greenway Learning Center in Greenbelt, Maryland is one of the programs preparing for the loss of funding. Director Patti Smith expressed concern that some parents may not be able to afford tuition after the funding expires. Another child care center, the Dr. Jerry Hamm Early Learning Center, used the ARPA funding to make necessary upgrades and provide more materials and toys for their students. Prior to the funding, such enhancements were financed out of pocket.
Childcare Stabilization Act
In response to the impending expiration of ARPA funds, some lawmakers have proposed the Childcare Stabilization Act. This bill seeks to provide $16 billion in annual mandatory funding for the next five years. Although the bill is not supported by Republicans, child care workers argue that their services support families and the economy as a whole.
“I don’t know how you put a price on it,” said Amanda Cavaness of the Dr. Jerry Hamm Early Learning Center. “This profession makes all other professions possible.”
– With reporting by Nikole Killion
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