- Worker departures, capacity limits, and low pay creating challenge in the child care industry
- High costs, low availability are causing working parents to consider whether to leave the labor force to provide full-time care
- Biden administration, businesses pursuing options to help workers meet care needs
Summary by Dirk Langeveld
Caregiving responsibilities have been a more pressing issue during the COVID-19 pandemic, with working parents struggling to balance their careers with raising their children. The issue has only grown more acute as child care providers are coping with an increased rate of worker departures, raising the possibility of daycare closures and more limited child care options.
Many businesses have complained about a shortage of workers as the United States recovers from the economic impact of the pandemic. While there are numerous factors keeping people out of the labor force, ranging from skills gaps to dissatisfaction with compensation or working conditions, child care responsibilities have been a major deterrent – especially among women.
The Biden administration is seeking to address this issue as part of a major bill on social policy and environmental initiatives. However, this legislation is being pared back from its initial $3.5 trillion price tag in an effort to win over moderate lawmakers, and it remains to be seen what child care support will survive in the final draft.
Interlocking challenges
Child care providers are experiencing a variety of interlocking problems that threaten their ability to expand caregiving options for working parents. Some have been forced to close, further limiting such options.
During the early months of the COVID-19 pandemic, child care facilities were forced to suspend operations due to government-mandated shutdowns. When these sites reopened, workers had often departed for other opportunities, finding higher-paying jobs in other fields or leveraging their experience with children to find employment in school systems. Compared to pre-pandemic numbers, there are 108,700 fewer workers in child care positions.
Low pay has been a major factor driving child care workers out of the industry, especially as other businesses ramp up their compensation, signing bonuses, and other perks to try to fill job openings. A survey from the National Association for the Education of Young Children finds that four out of five daycares in the US. are understaffed, with a similar share saying low pay is making it difficult to attract workers.
A decrease in the number of child care professionals is also affecting how many children can be accepted into these programs. Child care providers must abide by capacity limits, which only allow a certain number of children per employee. This, in turn, is limiting the number of available daycare spots amid high demand, with waiting lists sometimes lasting for months.
Child care workers have suggested improved benefits, such as better paid time off and health care options, but raising compensation is a challenge for the industry. In order to offer workers higher pay, child care providers would have to increase tuition – a step that could make care unaffordable for many families and result in a decrease in enrollment. Moreover, families are typically locked into annual contracts that limit a provider’s ability to increase prices.
Worker and business responses
Working families are encountering difficulties in finding open child care slots or paying the tuition for such programs. An NPR poll found that about one in three working families were struggling to find child care. Forty-four percent of families with minor children were facing financial difficulties, with the share jumping to 63 percent for Black families and 59 percent for Latino families.
During remarks made earlier this year at the Capitol Child Development Center in Hartford, President Joe Biden said the average family with two children puts 26 percent of their income toward child care. Commerce Secretary Gina Raimondo has criticized the idea that low compensation for child care workers is necessary to keep child care affordable, saying it has only compromised the industry’s ability to hire and retain workers even as low- and middle-class earners already struggle to pay for the service.
The high cost of child care is forcing some families to consider whether it is more cost-effective to have both parents continue working and put a significant share of household income toward child care or to have one parent leave the labor force to focus on raising their children. Those opting for the latter option tend to be women, who have left the workforce in massive numbers during the pandemic.
COVID-19 is also continuing to affect child care services, with facilities sometimes forced to shut down temporarily due to concerns about the virus. This has made child care a less reliable option, and potentially causes some families to withdraw children due to concerns that they’re paying a considerable sum for sporadic service.
Businesses have become more cognizant of the child care challenges facing employers. Some have built child care options into their benefits, including flexible scheduling, remote work options for caregivers, subsidies to cover the cost of babysitters or tutors, or even on-site care facilities.
White House proposals
The Biden administration has argued that improved child care is necessary to promote the economic recovery and make the U.S. more competitive. Biden has set the goal of having families pay no more than 7 percent of their income on child care, and has offered solutions that include tax credits for businesses that establish on-site care, universal pre-kindergarten, and an extension of the child tax credit.
Raimondo suggests that an increase to the federal minimum wage could help boost child care workers’ salaries, but efforts to do so have so far fallen flat. The administration is also looking to provide billions of dollars in federal funding to provide child care subsidies for both providers and qualifying parents.
This proposal aims to offer funding that can support more robust wages for child care workers while keeping tuition rates stable. At the same time, subsidies to lower-income parents would help make child care more affordable.
One left-leaning think tank has criticized the proposal, suggesting that costs would be shifted onto middle-income families and that these households could potentially be burdened with thousands of dollars in extra tuition costs each year. Democratic lawmakers have pushed back on this claim, saying the proposal would reduce child care costs for the vast majority of families.
