President Joe Biden's administration released its $1.85 trillion Build Back Better framework on Thursday, which includes key provisions related to child care and the child tax credit. If approved by Congress, the plan’s provisions would benefit some parents by helping to fund the costly child care gap between birth and when kids are able to enter formal schooling.
“There’s no help for the first five years. It’s incredible to me because I really wonder what people are supposed to do,” said Taylor Vaughn Lasley, a TV writer who lives in Los Angeles and has twin boys. “It feels like the ‘Hunger Games.’ If you can make it through the first five years, then we got you. It’s really frustrating.”
Some larger companies are figuring things out on their own because the government has been slow to act.
“Child care costs constitute a large portion of the income families need in order to achieve a modest yet adequate standard of living—and are particularly onerous for workers paid the minimum wage,” according to research from the Economic Policy Institute, or EPI. “High-quality child care is out of reach for working families.”
The U.S. provides relatively little financial support to families for the care of children ages 2 and under, spending just about $200 a year for most families. And, as of 2019, only about 4 percent of employers offer subsidized child care centers or programs, according to a survey from the Society for Human Resource Management.
The proposed Build Back Better framework includes two years of universal free preschool for all 3 and 4-year-olds. It also includes funding for a 6-year cap on child care costs. This means that for families that make up to 250 percent of their state’s median income, child care costs would be capped at 7 percent of their income. Lastly, it provides a child tax credit for households earning up to $150,000 a year with the goal of permanent refundability.
The strain caused by the high cost of child care has only got worse during the pandemic, which has exploited existing issues in numerous parts of society, and has disproportionately impacted low-income families and women.
According to McKinsey’s American Opportunity Survey from May 2021, only 39 percent of people with household incomes below $50,000 said they could afford child care. In the same survey, 43 percent of women and 64 percent of men reported that they could afford child care.
In her search, Lasley found that full-time nannies in Los Angeles ranged from $800 to $1,200 a week and day care centers cost upwards of $3,000 a month per child.
“That’s untenable,” she said. “With twins it’s that much worse because it’s not like you’re going to get a twin discount. It’s a two-for-one at birth but there’s no buy-one-get-one for child care.”
Lasley had hoped her company’s on-site day care center might provide a more affordable option but, after waiting a year and a half to get off the waitlist, was dismayed to find it was also prohibitively expensive: $430 per week per boy.
Lasley is not alone in looking to her employer for child care assistance, according to Rhett Buttle, founder of Public Private Strategies, or PPS, which works with both the private and public sectors to address societal challenges.
“More employees are turning to employers because child care is a broken market,” Buttle said. “Large private employers are figuring this out on their own because the government has been slow to act. They’re trying things like installing facilities in their office or making direct cash transfers to employees to subsidize care.”
Best Buy, for instance, upped its partnership with Care.com to give employees 10 days of emergency back-up child care for just $10. It also started offering a $100 a month reimbursement for tutoring services and expanded its paid leave program to give up to six weeks of paid time off. The company also introduced Wellthy, a concierge service that helps employees handle the logistical and administrative tasks involved in caring for children.
Last year, amid the pandemic, Bright Horizons, the largest provider of employer-sponsored child care in the country, saw increased interest from employers. It added more than 150 clients to its back-up care service.
Smaller companies are often left frustrated because they are concerned about employees but have fewer resources to offer solutions, according to Buttle. He said there’s a strong push for a federal solution and notes that addressing the issues with child care and leave has become a priority for many of the companies he works with.
In the U.S., 16 percent of the workforce, about 26.8 million workers, is dependent on child care to work, according to research from McKinsey & Company.
In August, PPS conducted a survey of 1,060 small business owners across the country. The survey showed that 66 percent of respondents believed “the federal government has a role in supporting universal access to affordable, high-quality child care.” And 64 percent supported “direct, ongoing financial assistance to families for child care services.”
“More employees are turning to employers because child care is a broken market.”
The survey also found that the lack of affordable child care options has been worsened by the pandemic and is beginning to cause problems related to hiring, productivity and growth. Interestingly, some of the very companies feeling these effects are child care operators.
From 2019 to 2020, 25 states reported a decrease in the number of center-based programs and 26 states reported a decrease in the number of family child care programs, according to Child Care Aware of America, a nonprofit organization that helps families find child care.
“When Covid-19 was layered onto the already fragile child care system, it shattered,” CCAoA said in a 2020 report. “Today, many providers are in danger of closing their doors because their attendance and enrollment (and therefore their income) plunged and/or their expenses skyrocketed due to pandemic-related costs.”
Lasley saw the potential pitfalls of this route firsthand. At one point, she and her husband considered starting their own home day care program but quickly realized it wasn’t a solution either. Even if her husband took less than minimum wage, they’d have to charge families $300 a week just to break even with the cost of hiring other workers.
Eventually Lasley and her husband settled on a part-time nanny, which would allow them to spend time with their kids while also getting help during work hours.
Still, her search highlighted yet another problem related to the child care sector: For those families who can afford care, the very process of finding it can prove taxing.
Hiring a nanny can involve combing through multiple resumes and references and may require time off from work to conduct interviews. Then there’s day care, which some families have ruled out as too risky because young children remain unvaccinated. Those who do choose this option must often go on physical site tours just to get pricing information.
“It’s been a time,” Lasley said. “It shouldn’t be this hard.”