American Childcare Is In A Death Spiral. Here's How We Fix It.
Fortunately, we already know the solutions.
I don’t have kids, but every conversation I’ve had with a parent eventually reaches the same conclusion: childcare is ridiculously expensive. If you have children of your own, then I’m preaching to the choir. But if you’re not a parent and are unaware of the paycheck-consuming blackhole that is American daycare, then buckle in for some disturbing facts.
The U.S. Department of Health and Human Services considers childcare “affordable” if it costs less than 7% of household income. However, a recent study found Americans are spending an average of 24% of household income, meaning childcare is 300% more expensive than what the government deems affordable. Given the exorbitant cost, it’s no surprise over one-third of American families (35%) are dipping into their savings to afford this basic necessity. Despite what parents pay, the average childcare worker makes only $13.71 an hour (according to the Bureau of Labor Statistics), which puts them within striking distance of the federal poverty line. Low wages force many would-be workers to leave the industry, which lengthens daycare waitlists. Currently, the average wait time for a typical daycare is around six months, meaning new parents must claim their spot before their child is even born if they want the necessary coverage.
While America’s childcare system has always been problematic, like other aspects of American society, it was pushed to the breaking point by COVID. If the problems worsened by the pandemic aren’t resolved, the American childcare system is at risk of spiraling out of control.
The Childcare Cliff
Approximately 10% of childcare facilities closed during the pandemic, putting more strain on the already struggling system. Facing the complete collapse of this necessary industry, the federal government allocated $24 billion for childcare providers in the 2021 American Rescue Plan. By all accounts, the program worked. The national rate of childcare center closures slowed, and in some states, the number of centers returned to pre-pandemic levels. But relief was only temporary, as the funds were set to expire on September 30, 2023. After that, daycares, and the American families who relied on them, were on their own. This has colloquially become known as The Childcare Cliff. Families and providers alike watched the dreaded date creep closer like a condemned man approaching execution. Even when warned that The Childcare Cliff would close over 70,000 childcare centers and lay off 232,000 childcare workers, the federal government let the funding expire. While it’s too early for conclusive studies to measure the effects, anecdotal evidence tells us the pre-cliff predictions were true. Individual states are scrambling to pass local solutions, and the Biden Administration has released messaging indicating it wants to make solving the childcare crisis a campaign issue.
While exorbitant costs are a problem on their own, the harm of the childcare crisis extends beyond individual families. Faced with unaffordable tuition, many parents (typically the mother) are leaving the workforce with far-reaching economic effects. The Century Foundation estimates that due to this lost productivity, Americans will lose $9 billion in wages, states will lose $300 million in tax revenue, and the national economy will lose $23 billion in economic activity. These forfeitures will only multiply each other, as decreasing economic activity and tax revenue means less money to fund public childcare programs, which will increase daycare prices, which Americans can’t afford because they have less income. Absent drastic action, this death spiral will leave America unable to adequately raise the next generation. Fortunately, we don’t need to theorize about potential solutions. Rather, we can simply reinstitute the public programs of yesteryear to save American childcare and create a better society.
Proven Solutions
There are two potential solutions to solve America’s childcare crisis, both of which have been proven to work.
The first solution is to reintroduce the American Rescue Plan’s Refundable Child Tax Credit (RCTC), which paid families to raise their children on a sliding scale basis proportional to household income. As many parents are currently having to leave the workforce to do exactly this, it would make sense for the government to restart (and increase) the RCTC payments. Not only did the RCTC cut child poverty in half, but it was also a direct method of ensuring childcare workers (in this case parents) were paid for their labor, avoiding the loss in wages, tax revenue, and economic activity caused by The Childcare Cliff. When the RCTC was ended in 2021, it wasn’t because it was found to be ineffective or unaffordable, but because Joe Manchin claimed recipients would “spend the government’s money on drugs,” a statement that forces us to wonder if Joe Manchin is spending his government salary on drugs.
The second solution to the childcare crisis is to restart the vast public network of childcare centers that the U.S. used during World War II. I’ve previously written about this program at length (below), so I’ll give the short version here.
In 1940, Congress passed the Defense Housing and Community Services Act, a.k.a. The Lanham Act. This created 24-hour childcare centers that supervised children while their mothers were at the factories and their fathers were in the military. The government childcare centers worked so well that, in addition to helping defeat the Nazi Empire, a public letter-writing campaign kept the centers open after the war ended. Unfortunately, the centers were closed in 1946 and Richard Nixon vetoed an attempt to restart the program in 1971.
Regardless of which method is preferred, it is self-obvious that the solution to the American childcare crisis lies in collective, government-provided programs. For close to a century, the system of for-profit childcare has been inching towards collapse, propped up only by taxpayer-funded initiatives. Like many things I write about, the American childcare crisis is not a natural phenomenon. It is the product of the decisions of our Senators, Congresspeople, and Presidents, who, by all available data, have made the wrong choices. The longer they delay in reenacting these proven public solutions, the longer American families will suffer.
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Thanks - Joe
If you or someone you know is struggling with the current costs of childcare, I’d love to hear your story in the comments.
This is entirely anecdotal, but within the last month I've had three separate people tell me their spouse stopped working to take care of their children. All of them said it was a net loss to continue working what sounded like reasonably-paying jobs.
Thank you for bringing this important topic to your readers. The facts and figures you present give merit to what we hear anecdotally. In addition to rising costs and lack of facilities, the breakdown of the extended family and an increase in divorce over the decades has helped to land us here. Now the sad trend is to delay or forfeit having children because of financial restraints and the increase in social isolation leading to delay or forfeit dating and marriage. A decade from now these things may lead to less of a need for childcare but at what a terrible cost!