Thursday, September 1, 2016

Child Studying During the run-up to a presidential election we expect to hear campaign promises about national security, trade agreements, debt, budget cuts, and other perennial hot topics. This year, however, a seemingly small potatoes topic has emerged: the high cost of child care. Both Republican candidate Donald Trump and Democratic candidate Hillary Clinton have pledged to address child care costs in their presidential aspirations (Paquette, 2016; Riccardi & Lerer, 2016). Why has child care been elevated to a topic of national importance?

Why is child care so important?

  • Millions of children are spending time in child care every week. There is no question that child care is big business in the United States. Child care emerged as an industry of national importance with the advent of emergency nursery schools, established in 1942, to provide child care for American women who joined the workforce during World War II. These federally-funded schools served roughly 130,000 children each year between 1943 and 1946 at a total cost of what would be approximately $1 billion if measured by today’s dollar values. This initiative was abruptly terminated after the end of the war (Cohen, 2015). Today an estimated 11 million children under the age of five are in child care in the United States, spending an average of 36 hours per week in care (Child Care Aware of America, 2015). More than three-quarters of US children between the ages of 3 and 5 receive care from someone other than their parents or guardians, including formal center-based day care, informal home-based day care, and other arrangements such as nannies (Greenberg, 2016).
  • Child care enables parents to be in the workforce. Reliable child care arrangements allow working parents to return to work before a child is old enough to qualify for public education; this is especially important, as households are increasingly reliant on both parents’ incomes. More than half of all mothers with young children are in the workforce, including 64% of women with children under age 6, 61% of women with children under age 3, and 58% of women with infants (US Department of Education, 2016). Data collected by Child Care Aware of America outlines the positive effects of child care on worker productivity: employees experience fewer missed days and schedule disruptions when they have secure child care in place (2015).
  • Child care improves school readiness. In addition to allowing parents to return to the workforce, high quality child care—child care with teachers who have received training in early development and who focus on elements like language stimulation—can also benefit the child. The benefits of early education, including quality child care, are well established: children’s early learning environments dramatically shape their learning, emotional, and social skills well before kindergarten. Access to high quality child care can be an important link to improved school readiness and future academic success and, with more and more parents finding it necessary or choosing to work, the need for quality child care is growing (National Research Council and Institute of Medicine, 2000). Studies show that  children who attend center-based care get a head start on school readiness due to the emphasis on reading and math skills in formal, licensed day cares (Greenberg, 2016), and that investing in early childhood development, including child care for children in disadvantaged families, makes financial sense (Child Care Aware of America, 2015). Improved school readiness has benefits for the larger community: the estimated real internal rate of return for one Minnesota preschool program was 16% after accounting for increased efficiencies in k-12 education and increases in participants’ earnings and employee benefits along with decreases in public adult education services, crime, and welfare payments (Grunewald & Rolnick, 2003).

Why is child care a national debate?

Although the benefits are clear, high costs have placed center-based child care out of the reach of many families, particularly families with the strongest needs.

High costs are limiting access to child care. Over the past decades, the cost of child care has grown out of the reach of many working parents. Child Care Aware of America compared the average cost of full-time care in a child care center to the state median income for married couples with children and for single parents with children. The US Department of Health and Human Services has set a benchmark that to be considered affordable, the cost of care cannot exceed 10% of family income. This study found that there are no states where center-based infant or toddler care is considered affordable for a single parent and that, nationwide, the average cost of center-based infant care exceeds 24% of the median income for a single parent.  For a married couple with children, only 13 states have affordable infant care and 27 have affordable toddler care, when measured against the Department of Health and Human Service’s benchmark. Child care costs are often as large a proportion of a household budget as housing, and outpace transportation, food, and health care costs (Child Care Aware of America, 2015).

Child care is especially unaffordable to families making minimum wage, even though these families may be most likely to need affordable child care. According to the Economic Policy Institute, annual child care costs for a 4-year-old as a share of minimum wage worker’s full time earnings range from 30.6% to 80.9%. For an infant, these costs range from 32.2% to 102.6%. Costs for a 4-year-old’s care exceed the average cost of an in-state college tuition at a public 4-year institution in 24 states and Washington, DC and infant care costs exceed tuition in 33 states and DC (Gould & Cooke, 2015; Paquette, 2015).

There are disparities among racial/ethnic groups and nontraditional workers. There are other disparities as well. According to the Center for American Progress, African American parents face a double bind: they are more likely to work outside the home but earn 40% less on average than white parents. Leaving the workforce, even temporarily, to care for children is also a sacrifice: by leaving the workforce for five years, a hypothetical 27-year old African American woman making the US median income would lose more than half a million dollars in wages, wage growth, and retirement savings and benefits (Madowitz, Rowell, & Hamm, 2016; Malik & Hagler, 2016).

There is also a need for child care that covers workers who don’t have 9 to 5 jobs. Over a fifth of parents with children under age 13 work nonstandard schedules and have difficulty finding child care that operates during these hours (Child Care Aware of America, 2015). About half of low-income parents who are enrolled in education and training are also working, which means they must find child care to cover both training and working hours (Spaulding, 2015). In addition, there is a growing need for culturally and linguistically diverse child care providers (Child Care Aware of America, 2015). The US Census Bureau’s National Projects predict that the foreign-born population will increase in the US over the coming decades, growing from 13.3% in 2014 to 14.3% in 2020 and 15.8% in 2030. Of the 196.6 million births projected to occur between 2014 and 2060, more than 20% will be to foreign-born women. In addition, the US will become more racially and ethnically diverse in the coming years, with pronounced growth in citizens identifying as two or more races, as Asian, and as Hispanic (Colby & Ortman, 2014).

The child care workforce also needs support. Affordability is only part of the child care puzzle. The child care workforce itself is frayed, suffering from low wages and the inability to attract the high quality talent needed to prepare children in care for academic success. Despite the high costs of child care, members of the early learning workforce earn notably low wages, sometimes at or near the Federal poverty line. Low wages fuel high turnover and make it difficult for child care centers to attract qualified and quality staff, both detrimental to learning and school readiness (Deruy, 2016). A report from the Department of Education found that in 2013, center-based teachers and caregivers with no college degree earned $9 to $9.30 per hour on average. Teachers and caregivers with an associate’s degree earned $11.00 per hour and those with more advanced degrees earned $14.70 on average. Caregivers working with the youngest children—birth to 3 years—earn on average about 70% of what caregivers working with 3 to 5 year olds earn. In 32 states, the median annual earnings for a child care worker is below the Federal poverty line for a family of three, and in the remaining states the median annual earnings are below 150% FPL (US Department of Education, 2016). The question of how to increase wages for the child care workforce without further increasing costs to families remains open.

What kind of help is available?

There are existing programs to help families afford child care. However, these programs currently fall short of the need. In the United States about 60% of the funding for child care comes from parents. Another block of funding comes from the Child Care and Development Block Grant (CCDBG), Temporary Assistance for Needy Families (TANF), and the Social Services Block Grant (SSBG), as well as Head Start/Early Head Start programs (Child Care Aware of America, 2015). The CCDBG provides federal funding for child care subsidies for low-income families. Analysis from the Center for Law and Social Policy found that child care assistance spending from both CCDBG and TANF was at its lowest level since 2002 at $11.3 billion dollars in 2014. This lag in spending plus the increasing cost of care meant that the number of children receiving CCDBG-funded child care was at a 16-year low in 2014 with about 1.4 million children receiving care in an average month (Matthews & Walker, 2016).

Even accessing subsidized care can be a daunting task. In Washington, DC, for example, a lack of caseworkers and complicated eligibility paperwork means parents must wait in long lines for a chance at scarce slots at preschools that accept the vouchers. In 2013 the CCDBG was able to cover only 1 in 6 eligible children. Waiting lists for child care subsidies can be as long as two years (Schulte, 2013). The Workforce Innovation and Opportunity Act (WIOA), which was signed into law in July 2014, identifies the lack of quality child care options as a barrier to vocational success for low-income adults and youth. The WIOA encourages states to seek solutions and includes space for child care agencies to partner with state workforce development boards. However, low funding levels, competing priorities, and an underfunded and limited child care system remain barriers (Spaulding, 2015).

What are the candidates saying about child care in 2016?

The affordability of child care is not a new topic in recent US politics. President Obama has pushed to increase the child care credit in the past several budget cycles, most recently looking to triple the Child and Dependent Care Tax Credit up to $3,000 per child for the 2017 fiscal year (Office of Management and Budget, 2016). However, despite these efforts and the elevation of child care as an issue of national importance in his 2015 State of the Union address, there has been little movement on child care affordability (Office of the Press Secretary, 2015).

Both of the 2016 presidential candidates are promising to address this issue in their own ways. Donald Trump mentioned the issue in an August economics speech, pledging to allow families to deduct the average cost of child care spending from their taxes (Riccardi & Lerer, 2016). His campaign’s economic vision includes an above-the-line child care exclusion, capped at the amount of average care costs in the family’s state of residence. Low-income taxpayers would be able to take this deduction against payroll tax (Donald J. Trump for President, Inc., n.d.). An analysis by the Associated Press notes that only families that owe taxes to the federal government at the end of the year would benefit from this tax deduction. A tax credit would be more of an advantage for the 40% of taxpayers who do not make enough money to owe taxes (Riccardi & Lerer, 2016).

Hillary Clinton’s plan includes increased funding for the Early Head Start-Child Care partnership program and tax relief for working families similar to proposals by President Obama (Lulsi & Ng, 2016). Her official economic plan includes infrastructure investments and capping child care costs at 10% of a household’s income. An analysis by the Washington Post notes that Clinton’s plan will most likely involve a tax credit targeted at low- and middle-income families that is paid directly to qualified child care centers (Paquette, 2016).

No matter which way the 2016 election goes, the high cost of child care will remain an issue of national and bipartisan concern. Improving access to child care, allowing working parents to return to the workforce, and helping more American children get ready to enter kindergarten with important academic and social skills will require efforts on multiple fronts including tax credits or deductions to help low-income families afford care, and training and support for the child care workforce.

Works cited


All postings to the Health Policy Forum (whether from employees or those outside the Institute) represent the views of the individual authors and/or organizations and do not necessarily represent the position, interests, strategy, or opinions of Altarum Institute. Altarum is a nonprofit, nonpartisan organization. No posting should be considered an endorsement by Altarum of individual candidates, political parties, opinions or policy positions.