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Biden's newly signed rescue plan will help get parents back to work — by supporting child care

One child care provider said she has to spend about $600 more per month just for digital signature capture and contact-free communication technology.
Image: Nancy Pelosi, CHuck Schumer
Speaker of the House Nancy Pelosi and Senate Majority Leader Chuck Schumer hold the signed American Rescue Plan Act at the U.S. Capitol on March 10, 2021.Olivier Douliery / AFP - Getty Images

Much of the concern about women’s waning labor force participation during the pandemic has been focused on the burden borne by mothers forced to choose between work and the supervision and education of their young children. Far less attention has been oriented towards the companies and workers within the industry itself, until now.

Advocates were cheered by the passage of the $1.9 trillion Covid-relief bill, signed by President Joe Biden on Thursday afternoon. The plan includes measures both specifically targeted to support the child care industry as well as to bolster the resources available to parents for child care.

“The child care sector has lost a significant number of jobs, making it difficult for women to return to work and care,” said C. Nicole Mason, president and CEO of the Institute for Women’s Policy Research.

Roughly 17 percent of child care workers have lost their job since the start of the pandemic, according to data from the Bureau of Labor Statistics, and this burden falls to a huge extent on women. According to a report by the National Women’s Law Center, women comprise 95 percent of the child care workforce in the U.S. Roughly four in 10 of those are either Latina or Black; 17 percent are immigrants.

Many of those jobs vanished when enrollment plummeted. Parents, confined at home with their kids, no longer needed daycare, or were unwilling to re-enroll even with daycare centers’ heightened safety and sanitation protocols. Some child care workers left the field because they were parents with kids of their own who needed supervision and help with remote learning, while others were older and at a higher risk for Covid-19 complications. And despite being on the front lines, many child care workers still struggle financially. As of 2018, the NWLC found that 10 percent of child care workers earn incomes that put them below the federal poverty line.

“One of the things we know families really struggle with is affordability,” said Katherine Gallagher Robbins, director for child care and early education at the Center for Law and Social Policy. “That's also an important part of the picture here.”

This stimulus bill does this by incorporating several supports for child care providers and parents. For parents, an expansion of the child tax credit from $2,000 to $3,000, with an extra $600 supplement for kids five years old and younger, and higher limits on the child care and dependent credit — which lets parents or guardians deduct the cost of caregiving for dependents up to a certain threshold — leaves them better equipped to pay for child care.

It includes $15 billion allocation for child-development block grants, a $1 billion allocation for the Head Start early education program, and a $24 billion stabilization fund for child care providers. The stabilization fund money, which would be distributed at the state level, would provide funds for child care providers to deploy for a diverse array of uses.

Supporters said it was critical that the industry get a pool of dedicated funds, since a significant number of these facilities operate with few staff and on shoestring budgets, which left many unable to access the Paycheck Protection Program or other sources of Covid-19 relief funding because they lacked the overhead or operational staff to complete the paperwork-intensive process.

“There are a lot of smaller child care providers that don't have an operations team or an HR department,” said Julie Kashen, senior fellow and director of the Women’s Economic Justice Program at The Century Foundation. “Because the PPP ended up being a first-come, first-serve thing, the folks who were most well established got it… a lot of child care providers did not get the money when it came through,” she said.

A survey released in December by the National Association for the Education of Young Children found that 56 percent of child care facility owners said they are losing money on a daily basis. “Not only were they forced to close down, but they can’t have the same capacity levels under Covid, so they need something to offset that lack of income,” said Stephen Myrow, managing partner at policy research consulting firm Beacon Policy Advisors.

“For many care providers, PPP and Economic Injury Disaster Loans were out of reach or hardly enough to stay afloat,” Mason said. “The child care stabilization would pump money into the child care sector to ensure centers can re-open safely and ease the financial burden caused by enrollment gaps,” she said, adding that the enhanced child tax credit and child care tax credit would support daycare facilities indirectly by giving parents more resources to pay for child care.

“To incentivize our staff, to be able to pay them more — it’s created a lot more stress for them to provide quality care, and to get quality applicants, we need to be able to compensate them,” said Casey Kennedy, owner of Bloom Academy in Florida, a child care company with two locations in Florida. “We were the only constant for kids in our community,” she said, when schools and workplaces locked down last spring.

Kennedy had to add four staff members to escort children to and from the facilities, since parents are no longer allowed inside. “It pretty much adds four additional staff hours for five hours a day for drop-off and pickup so we have to have all hands on deck,” she said.

She also has to spend about $600 more per month for digital signature capture and contact-free communication technology.

“We need a long-term fix for our care infrastructure."

For businesses like Kennedy’s, “The stabilization fund will provide necessary support to get them through the pandemic,” Mason said, but she characterized it as just the first step. “We need a long-term fix for our care infrastructure,” she said.

Kennedy said that being able to access the stabilization fund would give her the resources to stem staff turnover, which jumped by 20 percent over the past year, and pay her staff members wages commensurate with the heightened risks they face interacting with children and parents on a daily basis during the pandemic, as well as invest more in supplies and equipment to keep her workers and kids safe.

Kennedy has already purchased expensive sanitization equipment, and dreams of being able to upgrade her HVAC to incorporate an air sterilization system, which she estimates could cost $10,000 or more just for a single facility. Unlike public school systems and corporations, which have been able to wrangle contracts and negotiate with suppliers and sellers, Kennedy struggles to purchase enough PPE for her staffers, paying often-exorbitant prices for gloves and masks.

“We’re being held to all of these extra standards for safety as far as gloves and masks… which have become more expensive,” she said. Instead of $2.75 for 100 disposable gloves, she now considers herself lucky if she can find a box on Amazon for $15. “For masks, it’s about a dollar a mask,” she said.

“I do think a lot the most urgent needs will be around the current needs for PPE. We know a lot of providers have gone into personal debt to be able to survive in this period,” Robbins said. Small providers have effectively fallen through the cracks, she said. “They don’t get those efficiencies of scale.”

Including funds from earlier stimulus bills, the child care industry has been bolstered by some $50 billion in support — not including the new bill’s expansion of tax credits for parents and dependent caregivers, but advocates like Kashen say more needs to be done, especially to help families at the lowest end of the income spectrum afford child care. “We still need to build a better system,” she says.

The economic benefits could be far reaching, analysts say. “The child care provisions are a positive development to encourage women to re-enter the workforce,” said Stephanie Kelly, senior political economist at Aberdeen Standard Investments.

“Child care is one thing families need. These investments make a huge difference.”

Kelly added, though, that these facets of the stimulus bill are still stopgap measures that don’t address the much longer-standing challenges facing American parents balancing jobs and the high cost of childcare. “The Covid crisis is just amplifying the ever-present reality that women generally face a care-work trade-off that men simply do not,” she said. “Longer-term policy fixes are needed, not just temporary spending.”

By creating the parental support in the form of tax breaks, albeit temporary ones, Myrow said lawmakers could be laying the groundwork for a longer-term solution, since there tends to be political pressure on lawmakers to extend and grant permanence to temporary tax relief measures. “I think there are a lot of Democrats that hope that will get extended and possibly even made permanent at some point,” he said.

“Child care is one thing families need,” Robbins said. “That’s why it's so important that we have enough money to meet the range of needs. Those investments make a huge difference.”

Bloom Academy’s Kennedy agreed that the government should do more to supplement what parents can afford to pay. “In order for us to raise the wages for early child care workers, there need to be subsidies outside of those for lower-income families,” she said. “I know early childhood workers deserve to be paid more.”