Child care didn't quite fall off a cliff ... yet
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About a year ago, advocates warned that the U.S. was about to fall off a "child care cliff," when pandemic-era funding ran out.
Why it matters: So far the situation doesn't look quite as dire as predicted, but it's deteriorating, according to a new report from the Century Foundation, a progressive think tank.
- The report collects early evidence from providers that suggests the cost of care has risen further, while more are struggling to stay in business.
"The prediction was that first, providers will raise their prices to cover the costs that were being covered by federal dollars, then they will serve fewer kids and close classrooms, and then they will close programs," says Julie Kashen, director of women's economic justice for the Century Foundation.
- "We're seeing the first and second parts right now."
The big picture: Providers are part of the backbone of the economy, enabling parents to work.
- If they struggle to stay open, parents will struggle to remain in the labor market.
- The industry's woes predate the pandemic but were worsened by the crisis.
Where it stands: The end of pandemic-era funding hasn't triggered mass child care closures yet, the report finds. That's partly because a few states stepped into the breach with funding, and some providers were able to tap other sources of federal funds.
- But "even states that made investments in the sector are seeing a downward spiral, happening over time," the authors write.
- They point to a recent survey of child care providers that found nearly half had raised the price of tuition in the wake of the federal funding drying up.
Zoom in: Prices were already rising fast before the cliff. And staffing shortages are also plaguing the industry.
Meanwhile: A separate report from the Federal Reserve Bank of Chicago finds that rising costs are taking a bigger bite out of lower-income families' incomes.
- In 2021, families below the poverty line spent 27% of their income on child care, up from 23% in 2019.
- For those with incomes at 100%–199% of the poverty line, payments were lower relative to income, but they still increased from 12% of income in 2019 to 17% in 2021.
- Higher-income families spent 7% of their income on care in 2021, a number that declined a percentage point from 2019.
The bottom line: Both presidential candidates have been talking about child care lately, and this is why.
