The Covid-19 pandemic not only revealed weaknesses but also resilience within the American economy, particularly in the child care sector. With daycares closing, schools transitioning to remote learning, and parents struggling to balance work and childcare responsibilities, the impact was significant. While the employment rates in the child care sector have returned to pre-pandemic levels, there remains a shortage of workers and available slots for children in some areas. This shortage is putting pressure on the sector and causing costs to rise for families.
According to a February report by Bank of America, the average child care payment per household saw an increase of between 15% and nearly 30% year-on-year during the fourth quarter of 2023. Families with annual incomes between $100,000 and $250,000 experienced the most significant spike in costs. This surge in prices is creating a financial burden on many families, particularly in a time when the economy is still recovering from the effects of the pandemic.
A report released by ReadyNation in 2023 estimated that the U.S. loses around $122 billion annually due to the infant-toddler child care crisis. This figure has almost doubled since 2018, highlighting the severity of the situation. The lack of action and the exacerbation of the crisis during the pandemic have led to significant economic losses in terms of earnings, productivity, and revenue. This crisis not only affects families directly involved in child care but also has consequences for the broader economy.
ReadyNation emphasizes the importance of supporting the “workforce behind the workforce” in the child care sector. This includes ensuring that child care providers have access to benefits, such as healthcare and high-quality child care for their own children. Adequate training and education programs for child care providers are also crucial in improving the quality of care provided. Investing in the early childhood workforce is essential for addressing the current crisis and creating a more sustainable child care system.
California faces some of the most significant economic challenges related to child care, with an estimated economic toll of $17 billion due to lost earnings, productivity, and revenue. Although child care jobs in the state have rebounded, the Child Care Providers United union reports that many providers struggle to make ends meet. Child care providers in California earn an average of $7 to $10 an hour, with some reporting no take-home pay at all. The union is advocating for better reimbursement rates to ensure the dignity of their work and attract more providers to the field.
Lawmakers, such as State Senator Nancy Skinner, continue to advocate for increased funding and support for the early child care and education sector. The California Women’s Caucus pushed for a $2 billion increase in spending over the past two years, totaling $6.5 billion towards early care and education. However, challenges remain, especially with maintaining steady reimbursement rates for child care providers as the state deals with budget deficits and competitive wage pressures from other sectors.
The child care crisis in the United States has shed light on the vulnerabilities within the economy and the long-term impacts of inadequate support for child care providers. Addressing these challenges requires a multi-faceted approach that includes increased funding, better support for providers, and policies that prioritize the importance of early childhood education. Failure to address these issues could have far-reaching consequences for families, businesses, and the economy as a whole.