Home » Business » Pandemic Worsens U.S. Child Care Crisis, Costs Billions

Pandemic Worsens U.S. Child Care Crisis, Costs Billions

Pandemic Worsens U.S. Child Care Crisis, Costs Billions

The COVID-19 pandemic has exposed both the vulnerabilities and resilience of the U.S. economy, with child care becoming a central issue as daycares closed, schools transitioned to remote learning, and parents struggled to juggle their jobs with caring for their children.

According to the latest data from the Bureau of Labor Statistics, while employment in the child care sector has returned to pre-pandemic levels, a shortage of workers and available child care spots in some areas continues to strain the market.

Families are facing rising costs as well. A February report from Bank of America indicated that the average child care payment per household increased by 15% to nearly 30% year over year in the fourth quarter of 2023, with the most significant rise seen in households earning between $100,000 and $250,000 annually.

Policy advocates emphasize that child care, including for infants and toddlers, is an economic issue affecting all Americans, not just those with young children.

Billions of dollars in stabilization funds from the American Rescue Plan Act, designated for the child care industry, expired last fall. This expiration could lead to higher costs for families or the closure of child care centers.

ReadyNation, an advocacy group of over 2,000 business executives, supports policies and programs at both state and federal levels that foster a strong workforce and economy, including child care.

The group’s 2023 report revealed that the nation’s infant-toddler child care crisis costs the U.S. an estimated $122 billion annually in lost earnings, productivity, and revenue, a significant increase from $57 billion in 2018, highlighting the pandemic’s impact on the system for working families and the businesses that rely on them.

ReadyNation’s study concluded that “Covid-19 and insufficient policy action have now significantly worsened the crisis.”

“All taxpayers are impacted by this. We need to realize that the loss of taxpayers is $1,470 every year per working parent because of lower income taxes being paid and lower sales taxes because of lack of purchasing power from people that are unemployed,” said Nancy Fishman, national director of ReadyNation.

Part of the solution involves supporting early child care providers, described by the group as the “workforce behind the workforce.”

“Supporting the early childhood workforce could include such things as making sure child care providers have access to benefits. We all know how much benefits matter, whether it’s health-care benefits, or the ability for them to find high-quality child care for their own children,” Fishman told CNBC. “Programs that support additional training and education for child care providers are important as well.”

Solutions in California

In California, the economic impact, including lost earnings, productivity, and revenue, is estimated at $17 billion, according to ReadyNation, higher than any other state.

While child care jobs in California have returned to 2020 levels as of this spring, other states have seen larger post-pandemic job gains, according to the Center for the Study of Child Care Employment.

In 2019, some child care workers in California organized with the Child Care Providers United, which now represents over 40,000 home-based licensed and license-exempt child care providers. This union is part of the state subsidy program and includes partnerships with SEIU Locals 99 and 521, as well as UDW/AFSCME Local 3930.

The union secured its first contract in 2021, gaining access to first-in-the-nation retirement benefits.

Currently, child care providers in the state are reimbursed at a percentage of their care costs, with average pay ranging from $7 to $10 an hour, often resulting in no take-home pay.

Providers are advocating through the state budget process for full reimbursement of care costs to enhance their work dignity, keep providers open, and attract new providers to the workforce.

Deborah Corley-Marzett, who operates an in-home center for subsidized care in Bakersfield, California, expressed her challenges in expanding support and offering competitive salaries. She noted the pressure from the state’s fast-food sector, which recently secured a historic $20 an hour minimum wage.

“I have a staff shortage problem. I literally can’t afford to hire someone to come in and work in the mornings with me right now. I can’t afford it,” Corley-Marzett said. “I don’t have enough children right now. But I can’t physically take on any more children.”

Lawmakers acknowledge progress but recognize that more work is needed. State Senator Nancy Skinner, a Democrat representing parts of the Bay Area and chair of the California Women’s Caucus, said the group continues to prioritize early child care and education. The group advocated for a $2 billion increase in state spending over the past two years toward early care and education, totaling $6.5 billion.

The Caucus’ current focus is maintaining steady reimbursement rates for child care providers as the state faces a budget deficit.

“We have low unemployment, but many sectors of the economy are looking for workers,” Skinner told CNBC. “If your family is in a situation where you can’t go to work because you don’t have adequate child care, or you can’t afford child care, then you cannot fulfill that job that’s sitting there, vacant and waiting for you.”