Child Care Affordability
Raising a child in the US is expensive, given the cost of diapers, clothes, food, and quality child care during the work day and at off hours. Since 2017, the annual cost of child care for two young children has increased by 40 percent, straining family budgets. Currently, the US child care system relies on a market-based model and provides limited funding for subsidies for families who cannot afford the full price of child care. However, this model has not created a sufficient supply of quality child care. The loss of federal COVID-19 relief funds means that states are struggling to maintain policies and investments that improve the affordability of care for those receiving subsidies—a challenge that will become even greater if further reductions take place.
Without affordable, high-quality care, parents may decide to leave the workforce, which could limit their earnings and hurt overall affordability. Investing in a stronger child care system and child care workforce carries economic benefits for employers, families, and taxpayers, but to reap these benefits, policy solutions must expand supply, access, and affordability.
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- Target investments based on data and community input. Even as child care costs have climbed nationwide, specific barriers to affordable care vary by local community. To provide affordable options that meet community needs, local policymakers should survey providers, analyze enrollment trends, and listen to parents, as policymakers did in Washington DC. Similarly, policymakers in Hartford, Connecticut, invested in their child care workforce by creating new staff trainings and providing financial support to centers facing funding gaps.
- Streamline overlapping regulatory requirements. Regulations protecting the health, safety, and development of children in child care are essential. At the same time, some local regulatory entities such as health departments, child care licensing agencies, and fire marshals may have conflicting or duplicative requirements that can be challenging for providers to navigate and that can increase the cost of opening and operating child care programs. Taking steps to review, align, and streamline these requirements, while keeping child well-being as the primary goal, can help expand the supply of care available to parents.
- Target investments based on data and community input. Even as child care costs have climbed nationwide, specific barriers to affordable care vary by local community. To provide affordable options that meet community needs, state policymakers should survey providers, analyze enrollment trends, and listen to parents, as policymakers did in Washington DC. Similarly, states such as Georgia have gathered information from their own systems and from families, providers, and experts to identify ways to improve child care services to better meet the needs of children, families, and providers.
- Offer universal child care. Recently, New Mexico became the first state in the country to offer universal child care at no direct cost to families. Although more research is needed on the full benefits and costs of this approach, previous analyses have shown that alleviating child care expenses from family budgets increases mothers’ ability to work and increases long-term earnings. Consistent enrollment in quality child care also shows clear benefits for children including better academic and social outcomes.
- Implement universal pre-K. Research has found that enrollment in a high-quality preschool is associated with a greater degree of elementary school readiness. By creating universal pre-kindergarten options for 3- and 4-year-olds, local jurisdictions can not only lessen child care cost burdens for families with children of those ages but also generate better educational outcomes for those children. In Washington DC, a universal pre-K program for children starting at age 3 has proven extremely popular and may entice more families to stay in the city.
- Support efforts to expand the supply of child care, particularly for underserved populations. Without adequate affordable child care, some working parents report forgoing work shifts and additional education or training. There are shortages of care for many families across the country, and some families have an even harder time finding affordable quality care, such as parents with nontraditional working hours, parents of infants and toddlers, parents of children who have disabilities, and parents living in rural areas. State policymakers can encourage the supply of additional child care options by offsetting the costs of setting up or operating programs through grants and low-interest loans, providing funding to improve pay and workforce conditions, investing in the construction or renovation of buildings to serve as child care centers, and providing training to support business practices. State policymakers can also take steps to support relatives and other in-home caregivers who may be the preferred form of care for some families.
- Simplify access to child care subsidies. With funding from the federal Child Care and Development Fund, states have autonomy to design child care subsidy systems to help families with low incomes pay for child care while they work or attend school. However, many state subsidy systems have policies and practices that create challenges for parents seeking assistance and can limit the providers parents can access. To address these challenges, state policymakers can assess their subsidy systems, take steps to simplify their eligibility processes for parents and providers through coordinated intake systems, and ensure that families can use a full range of providers. For example, policymakers in DC streamlined the child care subsidy application process by creating an online application and tweaking the documentation requirements, making the application easier for both parents and subsidy caseworkers.
- Support workforce development and higher wages for people providing child care. Although subsidies help keep child care costs low for some families, many child care facilities lack the resources to adequately pay staff, leading to high rates of turnover and facility closure. State policymakers can invest in child care workforce development to increase the number of qualified child care staff and to raise wages, which can increase the number of child care options available. For example, Maryland used pandemic-relief funds to pay retention bonuses to child care staff if they stayed at their employer for an additional eight months. And a wage enhancement program in Washington DC, reduced staff turnover and kept facilities open. By increasing the supply of qualified child care workers, center-based care can become more reliable, making it a more attractive choice for families weighing the cost and quality of different child care options and for parents who might otherwise stay home and forego earnings.
- Expand child care assistance for all children. Much like programs at the state and local levels, federal programs that invest in making child care assistance available to all children can reduce costs for families and—if sufficient to support high-quality child care options—lead to better educational and long-term earnings outcomes for children. For example, a prior legislative proposal that included a prekindergarten program offering free early education to all 3- and 4-year-olds and that changed child care subsidies to an entitlement program that would reach middle-income families who struggle to pay for care was estimated to make child care more affordable for around 26 million children each year. Additionally, greater access to and affordability of child care can allow parents to return to work, which can increase a family’s earnings and help alleviate budget pressures.
- Fully fund the Child Care and Development Fund. Child care subsidy programs like the Administration for Children and Families Child Care and Development Fund help ensure children’s healthy development while keeping costs low for families. Yet with current funding, the Child Care and Development Fund program can only serve 15 percent of those eligible under federal law. Research from 2019 found that expanding funding for this program so every family eligible under their state rules and with an income below 150 percent of the federal poverty level could receive a subsidy if they wanted one would double the number of children receiving a subsidy nationwide, raising almost 400,000 children out of poverty.
- Fund Head Start and Early Head Start programs so every eligible child can access services. The Head Start and Early Head Start programs provide services centered on early learning and development, health, and family well-being to children in families with low inc But only about one third of eligible children receive Head Start services, and there has been discussion of reducing funding for this program. Fully funding Head Start and Early Head Start programs would help address shortages in early care and education programs, including for children with disabilities, children in rural areas, and infants and toddlers.
- Support higher wages and workforce development for child care providers, including apprenticeships. An Urban Institute analysis found that wages for Head Start educators varied significantly by state. Federal policymakers can increase staff retention by supporting higher salaries for teachers in federally funded programs such as Head Start, which can increase the number of child care options available. Further, federal policymakers can support early care and education apprenticeships and research about the outcomes of this workforce development strategy.