By this weekend 70,000 childcare facilities across the United States will not have enough money to operate and will likely close soon, according to research by the Century Foundation. That will leave 3.2 million children without a place to go while their parents work.
Trickle Down Economic Loss
The impact of such a loss of childcare facilities will ripple through the economy.
“Well, I think the pandemic really did make clear how dependent we all are on child – the child care system,” Dr. Julie Morita, vice president of the Robert Wood Johnson Foundation told NPR last month. “It really is a public good that boosts our economic participation in growth, workforce development and child well-being. Without an additional infusion of resources, millions of children could really lose access to the care, and that impacts their families as well in so many other ways.”
Specifically, millions of working parents will have to reduce hours or leave the workforce entirely to care for their children. That will result in a $9 billion annual loss in family income. In addition 232,000 childcare workers will also be out of work.
For states, lost tax revenue and economic activity will total $10.6 billion a year, according to Century Foundation estimates.
Why is this happening now?
The American Rescue Plan Act (ARPA) provided $24 billion dollars in federal childcare funding. However, that funding will end September 30. The money was allocated during the pandemic to bolster the childcare industry and help working families.
Childcare providers have used ARPA funds to cover operational costs such as rents, utilities, and classroom supplies. In addition, many providers increased wages and benefits.
Some States Pitch In
In Minnesota, a survey of providers found that 96 percent said stabilization grants helped them stay open. The state required that 70 percent of those funds were spent on wages and benefits.
In addition, the same survey found that 84 percent of childcare facilities reported that the money helped in staff retention. Further, 61 percent said it helped recruit new staff. As a result, the state is stepping into the breech left by the end of ARPA. The legislature has appropriated $750 in new funds for childcare.
Other states have also seized the initiative in addressing under funded childcare. Michigan, for instance, created a Tri-Share Program. It splits the cost of childcare between parents, employers, and the state. As a result, according to the state, retention of early childhood educators has improved 80 percent.
Eyeing Michigan’s success, North Caroline is working on its own tri-share program.
New Mexico amended its constitution to allow funds from the state’s Land Grant Permanent Fund to go to childcare.
Set Back For Mom
However, most states are not plugging the hole left by the end of ARPA funding.
Children are not the only ones impacted. The end of ARPA funds threatens to rollback gains made by women in the workforce.
A brief recession in 2020 widened the workforce gender gap. However, since that time, women have reduced the economic divide. As a result, labor force participation by women 24 to 54 rose to an all-time high in February. It was 77.6 percent in May, according to the Bureau of Labor Statistics (BLS).
The BLS expressed concerns about maintaining levels of working women.
“This group’s recovery comes after worries of lower labor force participation for women as they cared for children home from school during the pandemic or other relatives,” noted the report.
Of children under age six with employed parents, 65 percent are in care, according to the Annie E. Casey Foundation.
American Cheapskates
Americans celebrate everything from Olympic wins to the killing of Osama Bin Laden with chants of, “we’re number one.” However, in ranking government spending on childcare as a percentage of GDP – America is at or near the bottom, according to the Organization for Economic Cooperation and Development.
Other wealthy countries spend an average of 0.7 percent of GDP on toddler care while the United States only spends 0.2 percent.
Conclusion
The pandemic laid the childcare problem open and the nation responded with emergency funding, tuition waivers, stipends as well as direct payments to parents and providers. However, the end of the pandemic is not the end of the problem.
While some states enact measures to address the issue, many childcare providers will not survive without federal funding. However, with the largest daycare in the country – the House of Representatives – unable to avoid yet another government shutdown, that seems unlikely.
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Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.
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