Many sectors are reeling from massive labor shortages — but few affect families more intimately than what is happening with child care. With lengthy waiting lists and soaring costs, the scale of the crisis is obvious. Less clear is how the country can quickly fix it.
First, the problem: Like other caregiver industries, child care was hit hard by covid-19. There are nearly 90,000 fewer child-care workers today than in February 2020 — an 8.4 percent reduction in the workforce. According to a February 2022 report by Child Care Aware of America, a nonprofit association, nearly 16,000 programs in 37 states shut down during the pandemic. With birthrates rebounding and millions of workers returning to the office, these closures have placed enormous pressure on parents.
Yet child care was in trouble long before the pandemic. The industry has operated on a flawed business model for decades. Because infants and toddlers require more staffing than other age groups, programs are labor-intensive and costly to run. But imposing higher charges to reflect those costs would make them unaffordable for many families. As a result, centers operate at very slim profit margins, offering workers low wages and few benefits for grueling work. It’s no wonder so many caregivers have left to work in industries such as retail and hospitality.
Moreover, providers are concentrated in higher-income neighborhoods, while communities of color and rural areas are severely underserved. In 2018, the Center for American Progress found that more than 50 percent of Americans lived in “child care deserts” — places where supply was insufficient.
The status quo is plainly untenable. But creating a better model will require creative thinking, collaboration and resources.
Boosting public investment
Without a measure of government intervention, the child-care crisis will almost certainly worsen. Currently, public spending on child care is fragmented, inconsistent and relatively meager: The U.S. government spends about $500 on child care per toddler annually, while the average for the Organization for Economic Cooperation and Development is $14,436. The pandemic relief packages, particularly the American Rescue Plan, were lifelines for the industry at a desperate moment. But those funds are set to lapse in September 2024, leaving states and D.C. with a fiscal cliff of nearly $50 billion. If we do not want American families to bear the financial burden for a sinking industry, government will have to step in.
This could take several forms. The most politically feasible option would be for Congress to bolster the Child Care and Development Block Grant program, which supports low-income families. That would alleviate pressure on the most vulnerable households but would not address the labor shortages. Other possibilities include expanding the Child and Dependent Care Credit — or extending and strengthening the child tax credit for all families. Both would help more families pay close to the real cost of child care, allowing providers to increase wages.
And it should not all fall on the federal government. New Mexico, for example, announced in April that it would provide a year of free child care to families earning up to 400 percent of the federal poverty level, using funds from taxes on fossil fuel production. Though it would be difficult to make that sort of expansive model permanent or replicate it elsewhere, states have room to get creative with revenue streams.
