U.S. hurtles toward ‘child care cliff’ as federal funding runs out

A US$24-billion lifeline for child care centres in the U.S. is running out on Saturday, threatening the futures of thousands of spaces across the country and creating a crisis for families.

The funding was passed by Congress in 2021 as part of the American Rescue Plan, a US$1.9-trillion economic stimulus package that aimed to help the U.S. recover from the COVID-19 pandemic. Democrats fought to include money that would help child care facilities that were forced to close, and were already facing financial hardship beforehand.

Without new funding to replace the expiring relief, more than 70,000 child care programs may shut down immediately, according to a June report from the Century Foundation — affecting roughly 3.2 million children.

“It is going to be really problematic,” said Taryn Morrissey, a professor at American University in Washington, D.C., who studies the impact of public policy on children and families.

“Child care (is) essential infrastructure, just like transportation. If you don’t have reliable, affordable transportation, you can’t get to work. And that’s the same for child care for working parents.”

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Saturday marked the final day that federal funds distributed by states could be spent. The funding helped more than 220,000 programs, often being used to pay staff or cover rent and utilities, according to the U.S. Department of Health and Human Services.

The Century Foundation report, which calls the impending crisis the “child care cliff,” says many of the millions of parents who lose access to child care services will be forced to reduce their working hours or leave their jobs altogether, resulting in a combined US$9 billion annually in lost earnings.

The closures are also anticipated to impact 232,000 jobs in the child care industry, which the report notes has been one of the slowest to recover from the pandemic.

Arkansas, Montana, Utah, Virginia, West Virginia and Washington, D.C., are at risk of seeing half their licensed programs close, the think tank reported.

Morrissey says child care facilities and programs have historically found it difficult to turn a profit or even break even. The number of providers in the U.S. has been on the decline for years as workers fled the industry and its persistently low pay.

Yet demand has remained high, pushing programs to raise prices and, in some places, resulting in child care “deserts” where demand far exceeds available spots.

COVID-19 further exacerbated the industry’s struggles. The Century Foundation says about 20,000 programs closed in the first two years of the pandemic, roughly the equivalent of 10 per cent of pre-pandemic levels.

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The average annual price for U.S. child care in 2022 was US$10,800 per child, according to Child Care Aware of America, a nonprofit advocacy group. That’s up 15 per cent from 2017, though it marks the first time in four years that the annual increase didn’t outpace regular inflation, which hit recent record levels last year.

Care.com, an online service that connects American families to child care and other services, estimated in a June report that those families are spending more than a quarter of their annual income on average on child care.

U.S. families are already facing a poverty crisis after another pandemic-era measure, the expanded child tax credit, was allowed to expire by Congress at the end of 2021. Over the ensuing year, the share of American children in poverty more than doubled from a record low of 5.2 per cent in 2021 to 12.4 per cent, according to U.S. Census Bureau data released this month.

Congress failed to get an extension on the child tax credit expansion included into a federal spending package last year. Legislation has been introduced to make the expansion permanent.

Democratic lawmakers are also seeking to restore child care funding, introducing a bill earlier this month that would provide US$16 billion a year over the next five years, awarded as grants to help child care programs cover everyday costs.

“Failing to extend these critical investments from the American Rescue Plan will push child care even further out of reach for millions of families and jeopardize our strong economic recovery,” said Democratic Sen. Patty Murray of Washington, a sponsor of the bill.

Other sponsors include Independent Sen. Bernie Sanders of Vermont and Democratic Rep. Catherine Clark of Massachusetts.

The bill has failed to gain Republican support, and a looming government shutdown — thanks to Republican infighting over spending cuts — makes the passage of further funding unlikely.

The situation is a far cry from the current situation in Canada, where the federal government is looking to codify provincial agreements that cap child care costs at $10 per day.

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Morrissey said Congress has typically been reluctant to spend more money on policies that support families.

“I think traditionally, the United States has had ambivalence toward working mothers, particularly mothers with young children,” she said.

“We make it really difficult for families to be working or to be a single parent who is working, yet our social safety net policies are inherently tied to work,” she added, pointing to work requirements for benefits like food stamps that Republicans have long sought to toughen.

The Biden administration has sought to work around Congress as best it can to provide relief to families. In July, Vice President Kamala Harris said the government plans to put a cap on how much families pay for child care as part of the Child Care & Development Block Grant program. The move followed President Joe Biden’s executive order in April that directed agencies to find ways to bring down child care costs.

In 2016, the government established seven per cent of family income as the standard for affordable child care, but only 14 states follow that guidance in their offerings through the block grant program.

Without a legislative fix, experts say such orders will only have a limited impact. The program that would cap costs would only impact about 80,000 families.

“It’s really money that the system needs, and Congress needs to provide that,” Morrissey said.

— with files from the Associated Press