For two years, the United States has virtually conducted an experiment in which the federal government funds child care providers. The $24 billion spent on pandemic relief is the largest investment in childcare in US history. Child care providers used the money to raise teachers’ salaries, buy equipment and pay mortgages.
In September, these funds will expire, making them one of the last pandemic-era safety net benefits to end. This is an imminent crisis for the industry, which could lead to tuition hikes, layoffs and closures. Overall, 3 million children, nearly a third of those in care, could be out of care, according to the report. report It was announced Wednesday by the Century Foundation.
The National Association for Early Childhood Education conducts regular surveys of day care managers and staff. The latest of these is investigation As for subsidies, in October 2022, four in 10 board members and managers nationwide said they would need to raise tuition when the subsidies end this fall.
More than a quarter said wages need to be cut from the median wage of about $12 an hour. Nearly a third of day care centers, including 44 percent of those run by minorities, said they might consider quitting their jobs or, in the case of home care, closing them entirely.
“Federal funding has made a big difference,” said Julie Kashen, a senior fellow at the Century Foundation and author of the new report. “The consequences will be devastating and disastrous for child care workers, families and employers.”
Children’s Corner, which cares for 80 children in Mill Creek, Utah, receives a subsidy of $26,000 a month, said its director, Jenn White-Fredrickson. Without her grant, the center her parents founded 40 years ago would have closed during the pandemic, she said.
She used the money to raise her hourly wage to $15. “They all deserve it,” she said. “We plan to raise tuition,” she said, when her subsidy ends. She’s already raised her 2-year-old from $900 to $985 a month, and will probably increase it to over $1,000.
For Lorna Adkins, who runs Growing Place from her Huntington, West Virginia home, it’s not an option for her family. Not in West Virginia, not in this economy, not here. “
She receives $3,200 a month. She spent it to cover her wages, cleaning supplies, utility bills, and rising food prices for her. After deducting her expenses, her unsubsidized take-home pay was about $2.50 an hour, she said. With the end of her subsidy, combined with rising costs and new regulations on providers, she said she plans to retire early.
“There are a lot of people trying to close daycares because of this,” she said. “It’s just a fact.”
Analysts and providers say federal bailout funds have saved the industry. Her 1 in 3 of the subsidized daycares, or he could be 70,000 closed. Unlike public schools, childcare costs are almost entirely covered by private tuition. When funds dried up during the lockdown, the providers were no longer viable.
But the sector was volatile even before the pandemic. Treasury Secretary Janet Yellen said parenting was an important issue. A textbook example of a broken market. The worker’s wages are lower than his 98% in other occupations, but many providers cannot raise their prices because their parents often cannot afford it. already, half of parents More than 20% of household income is spent on raising children.
“This grant was intended to shore up a system that was already dysfunctional even before the pandemic,” said Caitlin McLean of the Center for Childcare Employment Research at the University of California, Berkeley.
The pandemic has also reshaped businesses. In some areas, parents are using childcare less regularly than in the past, and many are working from home. Recruitment is also becoming very difficult as wages for other, often less demanding, jobs are starting to rise.
A survey by the National Early Childhood Education Association found that two-thirds of caregivers said they were experiencing staff shortages, and nearly half of those said they had fewer children to care for as a result.
Three-quarters of Some childcare providers who received subsidies used the money to pay teachers. They are now facing pay cuts while being subject to employment constraints.
“We are in a corner now because we can’t lower their wages because then we will definitely have no teachers. You can’t even raise it,” Brooke Skidmore said. She owns Growing Tree in New Glarus, Wisconsin with her brother.
of $24 billion Subsidies to stabilize the industry were included in the American Rescue Plan, and subsidies were distributed by states according to various rules. Over 80% of his providers received them. Until now, federal childcare support has come primarily through block grants that states use to help care for low-income parents. Congress also increased those subsidies by $29 billion during the pandemic, set to expire in September 2024.
Some Democrats in Congress are calling for childcare subsidies to be extended or made permanent. Some Republican lawmakers are also proposing increased federal funding for childcare.
Senator Bernie Sanders recently published a report In an interview with Senator Patty Murray on the issue, he said, “If we let this cliff rise and lose the billions of dollars we invested in raising a stable child, the dire situation will only get worse.” rice field.
However, the Democratic Party’s massive social safety net bill, which included childcare subsidies and universal preschool education, did not pass. Republicans, along with Democratic Senator Joe Manchin, said, among other concerns, that the investment is too high. Senior Biden administration officials said they were unlikely to see billions of dollars in additional funding for childcare providers, especially given recent Republican pressure to limit government spending.
Some states and local governments have found ways to continue childcare subsidies, and others are considering them.Minnesota make $750 million investment. Maine policymakers are proposing to keep investing in the pandemic era. November, New Mexico passed a constitutional amendment Guarantee the right to early childhood education.
Adeze Ngodi, owner of Rex Childcare and Early Learning Center in Rex, Georgia, said she hopes there is a way to continue financial assistance. Even with a $51,000 monthly grant, she said her business has not fully recovered from the pandemic and she has not been able to fill six vacant teaching positions.
“Hopefully this situation will continue until things really get back to normal,” she said.
