The blog of the Urban Institute
July 22, 2019

More Than 250,000 Mothers Could Start Working through Expanded Child Care Subsides

In a recent survey of American mothers, 81 percent said that child care factors—including cost, availability, flexibility, and trust—make a relatively strong or critical difference in deciding whether to be in the workforce. Indeed, other research shows that child care costs are related to lower parental employment.

Recent Urban Institute analysis of a hypothetical expansion of child care subsidies through the Child Care and Development Fund (CCDF) found that an additional 270,000 American mothers—including 132,000 mothers of children younger than 3—would join the workforce knowing they could receive a subsidy.

The hypothetical expansion would give all families earning less than 150 percent of the federal poverty guidelines who are working and meet their state’s other eligibility rules a subsidy if they wanted one. The authors produced both national and state-by-state estimates.

The impact of the proposal on maternal employment varies significantly across states. Four states are estimated to have more than 10,000 mothers enter the workforce (California, Florida, Michigan, and Texas), and another 15 states would have between 5,000 and 9,999 mothers enter the workforce (Alabama, Arizona, Arkansas, Georgia, Illinois, Indiana, Louisiana, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and South Carolina). The estimates depend not only on the size of the state but also on other factors, including the cost of unsubsidized child care in the state relative to the subsidy program’s copayments.

More mothers working, fewer children in poverty

The analysis also found that having more mothers in the workforce would reduce the number of children in poverty and increase family incomes.

The analysis used a modified version of the official poverty measure that subtracts child care expenses from cash income. The policy scenario would reduce the number of children in poverty by an estimated 385,000 children, or 3 percent. This would reduce the national child poverty rate from 19.1 to 18.6 percent (using the modified definition of child poverty).

The proposed policy would reduce the number of children in poverty by 6 percent in four states (Alaksa, Arkansas, Minnesota, and Montana) and 4 to 5 percent in nine states (Colorado, Connecticut, Idaho, Iowa, Louisiana, Michigan, Nebraska, Utah, and Virginia).

The extent of these changes would vary across states partly because of variation in states’ existing eligibility rules and funding approaches.

Another Urban analysis of a potential expansion of CCDF subsidies, conducted for the Children’s Defense Fund (CDF), found that 400,000 unmarried mothers and 29,000 married mothers would start to work under a different scenario.

The estimate of new employment was higher in that analysis because the CDF policy also exempted all families below 150 percent of the federal poverty level from paying a copayment, creating additional incentives to join the labor force. That analysis also projected higher family incomes and a decrease in child poverty.

As the national conversation continues to include the cost of child care, we can use this evidence to paint a clearer picture of how expanded child care subsidies could benefit families, their children, and the broader economy.

Photo by Peter Muller/Getty Images.

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