Vadym Buinow | Moment |
The Covid-19 pandemic exposed both the cracks and the resilience of the American economy, putting child care front and center as daycare centers closed, classes moved to remote learning, and parents tried to juggle child care with their jobs.
While employment in child care has returned to baseline levels following the pandemic, a shortage of workers and available childcare spaces is weighing on the sector in some areas, according to the latest data from the Bureau of Labor Statistics.
Costs are also rising for families. A February report from Bank of America showed that the average cost of child care per household rose by 15 to nearly 30 percent in the fourth quarter of 2023 compared to a year ago. The largest increase was seen among households with median incomes between $100,000 and $250,000 per year.
Proponents of policy action argue that child care, including that of infants and toddlers, is an economic problem that affects all Americans, not just those with young children.
Last fall, billions of dollars in stabilization funds from the American Rescue Plan Act intended for the child care sector expired, which could lead to additional costs for families or the closure of facilities.
ReadyNation, an advocacy group of more than 2,000 business leaders, lobbies at the state and federal levels to support policies and programs that strengthen the workforce and economy, including child care.
The group released a report in 2023 that found that the crisis in infant and toddler care costs the U.S. an estimated $122 billion in lost earnings, productivity and revenue each year, up from $57 billion in 2018, before the pandemic exposed and exacerbated gaps in the system for working families and the businesses that rely on them.
ReadyNation's study concluded that a combination of “Covid-19 and inadequate policy responses has now significantly worsened the crisis.”
“All taxpayers are affected by this. We need to be clear that taxpayers are losing $1,470 per working parent each year because of less income tax paid and lower sales tax due to the lack of purchasing power of the unemployed,” said Nancy Fishman, national director of ReadyNation.
Part of the nationwide solution is supporting what the group calls the “workforce behind the workforce”: early childhood care providers.
“Supporting early childhood education workers could include things like ensuring that child care providers have access to benefits. We all know how important benefits are, whether it's health insurance benefits or the ability to find quality child care for their own children,” Fishman told CNBC. “Programs that support additional training and education for child care providers are also important.”
Solutions in the Golden State
In California alone, ReadyNation predicts the economic damage from lost revenue, productivity and sales will be an estimated $17 billion. The organization estimates that this is more than any other state in the country.
While the number of child care jobs in the state has rebounded to 2020 levels since this spring, according to an analysis by the Center for the Study of Child Care Employment, other states have seen larger employment gains following the pandemic.
Some child care providers in California joined together in 2019 to form Child Care Providers United, which now represents more than 40,000 licensed and unlicensed friend-and-family child care providers who work in the home. The providers are part of California's state subsidy program, and the union is a partnership of SEIU Locals 99 and 521 and UDW/AFSCME Local 3930.
The group received its first contract in 2021, giving it access to the country's first retirement benefits.
The union says child care workers are currently reimbursed a percentage of the costs of providing care in the state. The average hourly wage for child care workers is between $7 and $10, and many care workers have no take-home pay, it says.
Providers are currently lobbying through the federal budget process to recover the full cost of providing care in order to add dignity to their work, keep providers open, and attract new providers to the job market.
Deborah Corley-Marzett runs a subsidized care nursing home in Bakersfield, California. She told CNBC she would like to hire more staff to support herself and the children, but it's difficult to find the right staff and offer competitive wages in this environment. Low-wage workers in the state's fast-food sector, for example, just hit a historic minimum wage of $20 an hour, putting pressure on other sectors to keep up.
“I have a staffing problem. I literally can't afford to hire someone to work with me in the mornings right now. I can't afford that,” Corley-Marzett said. “I don't have enough kids right now. But I physically can't take on any more kids.”
Lawmakers argue that while progress has been made, much remains to be done. Democrat Nancy Skinner, who represents parts of the Bay Area and is chair of the California Women's Caucus, said the group continues to place emphasis on early childhood care and education. The group advocated increasing state spending on early childhood care and education by $2 billion over the past two years, for a total of $6.5 billion.
The caucus' current focus is on maintaining stable reimbursement rates for child care facilities as the state struggles with 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 can't fill that job that's unfilled and waiting for you.”
