Saving Child Care Means Preserving Jobs and Supporting Working Families and Small Businesses

A woman and her child attend a food distribution in New York City in August 2020.

As the coronavirus crisis has intensified over the past several months, many of the harsh realities that Americans faced early in the pandemic have resurfaced. A massive surge in cases has led many governors to reinstitute mitigation measures as COVID-19 takes its toll on overwhelmed hospitals and health care facilities. One thing that hasn’t changed: Child care is an essential service for parents, especially those who are health care workers, first responders, transit workers, and other front-line personnel.

Moreover, many economists agree that once parents can safely return to the workplace, “quality, affordable child care is an essential precondition for a successful economic recovery.” But an alarming new study from the National Association for the Education of Young Children finds that more than half of child care centers in the United States say they are “losing money every day that they remain open,” with 2 out of 5 child care providers saying that they are covering costs by using personal savings or charging supplies to their own credit cards. This is because most child care providers currently have fewer tuition-paying families at the same time as their operating costs have increased, on average, by nearly 50 percent.

The coronavirus relief bill that Congress passed in late December 2020 includes $10 billion for child care. If funds are distributed quickly and efficiently, they will help many providers make it through the next few months. But without further relief and the promise of sustained investment in the child care sector, America could be facing a child care shortage so severe that many parents may not be able to rejoin the workforce, hindering an economic recovery. This column analyzes the latest labor force data from the Bureau of Labor Statistics (BLS) to show, in three simple charts, why the child care industry needs continued relief and why emergency paid family and medical leave is more important than ever. Saving the child care industry and passing a permanent, comprehensive paid family and medical leave policy will help revive the economy, both during and after the pandemic.

America’s child care and labor force crisis in three charts

The Center for American Progress examined two data sources from the BLS: the Current Population Survey (CPS) and the National Current Employment Statistics (CES). These two surveys are the basis for the monthly jobs report, with the CPS providing the monthly unemployment rate and the CES providing the number of new jobs created. The surveys also disaggregate job numbers by industry sector and include questions about whether child care problems have caused job disruptions.

Figure 1 shows that during the pandemic, the estimated number of American workers who missed at least one day of work due to child care problems increased sharply. From September through November 2020, the pandemic led to a 144 percent increase in child care-related work absences compared with the same period in 2019, including an all-time high of 93,900 absences during a single week in October. Without the full complement of their workforces, major manufacturers have reported that child care-related absences are a key reason they are struggling to increase output from assembly lines. On the other side of the equation, working families are worried that a lack of child care could threaten their employment and income security.

Figure 1

Additionally, there are many parents whose child care problems have forced them to leave the labor force entirely, something that the unemployment rate doesn’t capture. While prior studies have estimated the number of parents who have left the labor force due to pandemic-related school closures, Figure 2 shows that there has been a significant drop in labor force participation among parents with children who are not school-age. A CAP analysis of the most recent BLS data finds that there are around 700,000 fewer parents with a child under 5 in the paid labor force than there were one year ago. This includes parents who were laid off but have given up trying to find work due to caregiving responsibilities, as well as parents who gave up their jobs because of child care issues.

This means that hundreds of thousands of working parents will need reliable, affordable child care before they can even look for a job after the pandemic. Research shows that once a parent exits the labor force, they can find it hard to rejoin it. In the long term, time out of the labor force can result in a dramatic loss in lifetime earnings and benefits. If a 27-year-old woman making $50,000 per year spends three years out of the labor force, CAP estimates that her total income loss will eventually grow to nearly half a million dollars in lost retirement assets, benefits, and wage growth. Economic decisions that policymakers make today have real, lasting impacts on millions of working mothers and fathers.

Figure 2

It’s important to note that most of the decline in labor force participation is among mothers, as the nation experiences the worst recession for women in decades. Even mothers who have kept their jobs are paying a price because they are more likely than fathers to reduce their working hours or pass up new opportunities because of child care considerations. Between the disproportionate level of home child care responsibilities that women shoulder and the heavy job losses among employment sectors dominated by women, some are now calling this the first “she-cession.” However, fathers with young children have also experienced a significant decline in labor force participation. (see Figure 2)

Figure 3 shows how many jobs the child care industry lost in 2020. At the beginning of the coronavirus pandemic, the sector lost more than 350,000 jobs in a single month. Half of those jobs have not yet returned, and in recent months, the sector has barely added any jobs. Unfortunately, there is reason to worry that the child care sector may have lost jobs in December, based on a real-time analysis of child care job postings. Prior to the pandemic, many communities across the country were child care deserts, especially in rural, low-income, and predominantly Hispanic neighborhoods. A dwindling number of child care providers means that these communities will have even greater child care shortages, leading to prolonged economic hardship for young families.

Figure 3

The COVID-19 pandemic has hit the child care industry very hard, just as the industry’s very essential role in the nation’s society and economy have been demonstrated under duress. In the absence of substantial relief funds, many providers have cut back on staff and enrollment, but many of their fixed operating costs remain. These conditions are not sustainable for the industry, especially as COVID-19 cases surge across the country.

Conclusion

Each of these data points calls for continued relief for the child care sector. The new $10 billion in relief is a good down payment, but the industry needs greater support so that the post-pandemic child care system is ready and able to power America’s economic recovery. This means further relief in the near term, as well as structural changes over the long term in order to increase the wages and benefits of child care educators who have been undervalued and underpaid for years.

Last year, Congress passed the Families First Coronavirus Response Act (FFCRA), which required many employers to provide workers with emergency paid leave for COVID-19-related reasons and reimbursed employers through tax credits. The emergency paid leave law program included up to 12 weeks of paid leave for parents of a child whose school or care provider was closed or unavailable due to reasons related to COVID-19. But the new coronavirus relief bill removes the guarantee of paid leave for workers and only extends the tax credit provisions for self-employed workers and employers who voluntarily provide emergency paid leave. Research suggests a change such as this will dramatically reduce the number of working parents with access to paid leave. As shown in Figure 1, there is enormous need for emergency paid leave due to child care problems during the pandemic, as well as for permanent, comprehensive paid family and medical leave to support working parents in the future.

Providing ongoing funding to the child care industry, along with reinstating and extending the emergency paid leave guarantee, is critical to reviving the economy; saving hundreds of thousands of child care jobs; and bringing 700,000 parents with young children, who will need to work and provide for their families, back into the labor force. America has had a child care crisis for decades now; it’s time to build back the child care sector even better, which means making even larger future investments in the child care workforce and providing quality, accessible, affordable child care for all.

Rasheed Malik is a senior policy analyst for Early Childhood Policy at the Center for American Progress.

The author would like to thank Diana Boesch, Katie Hamm, and Michael Madowitz for their helpful review and feedback.

To find the latest CAP resources on the coronavirus, visit our coronavirus resource page.