Providing Affordable, Accessible, and High-Quality Child Care

Child care is work that supports all other work: It enables parents to participate in the workforce. Among parents who are not working full time, 3 in 5 say that they would choose to do so if they had access to affordable child care.¹ Mothers, who do the bulk of the caregiving,² weigh the care options that they have: They can stay home or reduce their paid work hours to provide care for their own children, which is nearly always unpaid; they can arrange formal child care, which can be so expensive it may not be financially worthwhile in the short term to continue to work;³ or they can find informal care from a neighbor, close friend, or family member.⁴

Then there are the more than 1 million workers employed in the formal child care sector, which refers to care provided in a licensed or regulated setting, such as centers, preschools, family child care, and more. These workers are almost exclusively women,⁵ the vast majority of whom receive extremely low wages.

A 2023 survey from First Five Years Fund finds that 93 percent of voters “believe it is important for working parents of young children to be able to find and afford quality child care programs.”⁶ Investing in the formal child care sector will pay economywide dividends by expanding the overall supply of labor, mostly through increasing maternal labor force participation, by boosting the economic security of mothers and paid child care workers, and by enhancing productivity.

Today, however, child care in the United States is a classic example of a market failure; the market is not allocating the sufficient amount of goods or services for the population. That is why government intervention is needed. Federal and state policymakers have a fundamental role to play in creating an affordable, accessible, and high-quality child care sector that is filled with good-quality jobs.

Doing so is also extremely popular, as demonstrated in the survey data above. This chapter of the “Playbook for the Advancement of Women in the Economy” details the current issues facing the child care sector; describes the benefits of creating affordable, accessible, and high-quality child care for the U.S. economy; and includes policy recommendations for federal and state policymakers, such as investing much more in the federal Child Care and Development Block Grant (CCDBG) program, enacting the Child Care for Working Families Act, and expanding on a number of state-level child care initiatives that are already proving successful.

The problem

The child care landscape in the United States does not provide the options or support that allow parents—particularly mothers—to balance their work and familial care responsibilities in the ways they most prefer. Attentive, responsive caregiving is critical for children’s health, safety, and development across all stages of childhood,⁷ although children’s specific needs vary significantly by age.

Because of these developmental and safety needs, families’ demand for care is unresponsive to price or availability: All children need care. Yet the price and availability of formal child care significantly affects other choices that families make, such as whether to work and pay for formal care or to stay home, forgo earnings, and care for their own children. It can affect which job to take, career advancement, where to live, and whether to have more children.

Formal child care is expensive and difficult to find, with the most challenges during the infant and toddler years, which require the most intensive care.⁸ There are significant challenges on both sides of the market: Families cannot always find formal child care or afford to pay what it costs, and providers operating on very small profit margins cannot afford to care for all the families who need it.⁹

Sixty percent of child care providers report having less than one month of operating costs available,¹⁰ while the U.S. Chamber of Commerce recommends that all businesses have three to six months of cash on hand.¹¹ These challenges exist because of a lack of sustainable public investment. In fact, as a share of gross domestic product, the United States invests less in child care and early education than nearly every other peer member nation of the Organization for Economic Cooperation and Development.¹²

There are four distinct problems facing U.S. families when they seek out formal child care options: accessibility, affordability, job quality issues in the child care sector, and the lack of public investments in child care overall.

Accessibility

Formal child care options are often unavailable to parents who want it. More than half of the U.S. population lives in a child care desert, where there are three or more children for every licensed child care slot available.¹³ An even higher proportion of rural and Latino communities are classified as child care deserts.¹⁴ On average, maternal labor force participation rates are 3 percentage points lower in areas that are child care deserts than those that have adequate child care.¹⁵

Informal or unlicensed child care, also known as Family, Friend and Neighbor (FFN) care, provides another option for families, but it is difficult to track due to the lack of recent and robust data.¹⁶

Affordability

The lack of sustainable public investment has kept the cost of child care too high for families, and there is little room to cut costs without directly affecting the quality of care provided. In 32 states and Washington, D.C., the cost of child care exceeds in-state college tuition costs; in 41 states and Washington, D.C., child care costs exceed the average monthly mortgage payment.¹⁷

The U.S. Department of Health and Human Services’ Administration for Children and Families recommends a child care affordability threshold of 7 percent of a family’s income,¹⁸ but high costs mean that low-income families often spend more than one-third of their income on child care.¹⁹ Many mothers can neither afford to stop working, relying on those earnings to support basic needs, nor afford the large cost of paying for child care.

Child care workers

Child care workers play a fundamental role in children’s health and development. Their expertise is directly related to the quality of care provided,²⁰ and the majority of mothers have reported that quality is the most important factor in choosing their child care arrangement.²¹ Significantly, the child care workforce—overwhelmingly comprised of women and disproportionately women of color,²² many of whom are themselves mothers—suffers from an ongoing shortage of good jobs.

This is best exemplified by the fact that child care remains one of the lowest-paid occupations in the United States.²³ As a result, today’s paid child care sector struggles to attract, retain, and develop its workforce.²⁴

Policy landscape

Currently, the federal government funds the CCDBG program, which provides money to states for child care subsidies for low-income children, and Head Start, a comprehensive preschool program that serves children in poverty. While these are significant programs that provide deeply needed support for families, they serve less than 15 percent of those eligible.²⁵

Additionally, the CCDBG program relies on the existing private child care market in order to provide that care. However, the number of participating providers has been decreasing for years,²⁶ and the program does not address supply-side challenges that prevent child care providers from maintaining an adequate workforce to meet the demand of families in search of care.

States have taken many different approaches, with significant variation across the country. Many states’ subsidy payment rates are too low to cover providers’ cost of caring for children, although some states have adopted cost estimation modeling in order to improve their rates.²⁷ For example, New Mexico has dedicated permanent funding and established a guaranteed right to child care in its constitution,²⁸ and Vermont passed a payroll tax that will help expand the number of families eligible for a subsidy, reduce copayments, and increase reimbursement rates.²⁹

Many states are also increasing their subsidy eligibility and reimbursement rates.³⁰ For example, California agreed to raise reimbursement rates and shift to cost estimation modeling in a historic collective bargaining agreement with the union representing child care providers who receive subsidies.³¹

The economic benefits

Child care is essential for strengthening the U.S. workforce across all occupations. A recent report found that the infant-toddler care crisis incurs a $122 billion cost to the U.S. economy as a result of foregone earnings, lowered productivity, and lost tax revenue.³² Whether in the form of paid formal care or unpaid informal care, this high cost falls disproportionately on women.³³ The immediate economic benefits of sustained public investment in accessible, affordable child care are clear. It would help working mothers rejoin the workforce or increase paid work hours; provide the funds to recruit, retain, and train more child care professionals in a predominantly female workforce; and support the health and well-being of children.³⁴

Labor force participation rate and hours worked

In 2022, fathers of children younger than age 6 had a labor force participation rate 26.5 percentage points higher than mothers of children in the same age range.³⁵ In June 2023, the labor force participation rate of mothers of children ages 0 to 4 years was at its highest level ever—70.4 percent—and yet was still 7.4 percentage points lower than women’s overall participation rate.³⁶

Labor force participation is lowest for mothers of young children who do not have education beyond a high school diploma, which correlates with significant opportunities for greater employment.³⁷ Nearly 60 percent of parents who are not working full time say that if they had access to affordable, quality child care, they would choose full-time work.³⁸

There is a strong connection between child care affordability and availability and maternal labor force participation rates. A comprehensive review of the existing literature finds that a 10 percent reduction in the cost of child care can lead to a 0.25 percent to 11 percent increase in maternal employment.³⁹ The “availability” and “generosity” of child care subsidies can increase low-income mothers’ hours of work,⁴⁰ and more robust subsidies increase the likelihood of mothers working full time by 1.65 times.⁴¹

Economic security

Increased maternal employment facilitated by access to affordable child care has far-reaching economic benefits. Among them are enhanced personal consumption expenditures, reduced reliance on safety net programs, and a greater ability to save and manage the excess risk exposure that women face compared with men in the U.S. economy.⁴² Indeed, there are deep economic consequences for taking time away from work—over a 15-year period, women who took just one year off work had earnings that were 40 percent lower than women who did not take time off.⁴³

Furthermore, the economic costs of leaving the workforce even temporarily can harm mothers financially for years in the form of lost retirement savings and other benefits.⁴⁴ The accumulation of these costs result in more difficulties for women later in life, with widespread consequences felt across the U.S. economy.⁴⁵

The policy recommendations

It is important for federal and state policymakers to invest in creating a more affordable, accessible, and high-quality child care sector. Investments should focus on the core needs of the sector, such as building the supply of high-quality child care, helping families access and afford child care, and supporting a well-compensated, qualified workforce.

Federal policy recommendations

At the national level, the U.S. Congress and specific executive branch agencies can boost the provision of affordable, accessible, and high-quality child care. Specifically, the federal government can:

• Pass the Child Care for Working Families Act: This proposed legislation addresses the underlying market problems in child care by lowering costs for families and supporting the workforce to grow the supply of child care.⁴⁶ The legislation provides no-cost care for families making below 85 percent of state median income while capping costs at 7 percent of income for those earning above that threshold. At the same time, it provides funding through grants to states that will support higher wages and better benefits for child care providers, addressing the supply side of the crisis.
• Invest in the Child Care and Development Block Grant program: This program is the bedrock support for access to child care among low-income families. Yet according to the U.S. Government Accountability Office, the proportion of eligible children served in each state ranges from 5 percent to 32 percent, with no state serving even one-third of its eligible children at current funding levels.⁴⁷ Providing greater funding for the CCDBG program would allow it to serve more children.
• Build out the supply of child care: More than half of Americans live in a child care desert.⁴⁸ Addressing access to child care must include investments that increase the supply of child care. In particular, support for improved wages and workforce benefits⁴⁹ would help attract and expand the necessary workforce. Alongside workforce investments, this must also include providing access to capital for formal child care providers’ startup or expansion costs.⁵⁰ Support for technical assistance can also help expand the supply of child care.⁵¹
• Support progressive work-family policies: Establishing paid family and medical leave, paid sick days, and fair scheduling requirements—the latter through the Schedules that Work Act—will help mothers balance their work and care responsibilities.⁵²

State policy recommendations

Some states and Washington, D.C., are leading the efforts to improve the accessibility and affordability of quality child care. Policymakers in these and other states have much to learn from each other about policies they can enact. Specifically, states should:

• Improve reimbursement rates for subsidy programs: States have broad authority to implement their own child care subsidy programs. Today, few states reimburse child care providers participating in the federal CCDBG program at levels that reflect the true cost of providing child care. This means that providers who accept federal subsidies serve those families at a financial loss.⁵³ Given the narrow profit margins at which they operate, low state reimbursement rates can drive providers to increase the cost of care for families not receiving CCDBG subsidies or forego needed workforce and infrastructure investments in order to remain financially viable. States should use cost estimation models to set their reimbursement rates in order to pay providers in line with the true cost of providing high-quality child care.⁵⁴
• Support early educators’ compensation: States should sustain and rebuild the child care workforce by supporting early educators’ economic security, which will also ensure providers can meet the needs of families seeking care. Many states have stepped up to provide direct investment in their child care workforces.⁵⁵ Minnesota, Maine, and New York created programs to support compensation for child care workers, and Washington, D.C., is providing free health insurance to child care workers and their families.⁵⁶ Kentucky is providing free child care for child care workers.⁵⁷
• Establish grants to expand the supply of care: There are many geographic areas with insufficient child care slots. In the absence of federal action, states can step in. Specifically, states should provide funding that targets opening or expanding child care in those areas in order to increase the supply of child care⁵⁸ while providing the technical assistance needed for a provider to start or expand their business.

Conclusion

A lack of affordable, accessible, and high-quality child care often forces parents—particularly mothers—to leave the U.S. labor force, reduce their paid work hours, or pass up promotions or professional development opportunities—all of which harm their own economic security and their families, too. It is up to federal and state policymakers to ensure that the child care sector works for parents and its workers. Investing in child care does not just directly benefit families but also the broader U.S. economy, particularly by boosting the labor supply of mothers and improving their economic security.

The author would like to thank Anna Lovejoy, Hailey Gibbs, Rose Khattar, Sara Estep, Madeleine Shepherd, Emma Lofgren, Lily Roberts, and Jared Bass for their assistance.