September 24, 2021

Parents are the most important people in the lives of young children. Roughly 15 million parents in the U.S. today have children under the age of 6. While some parents are able to stay home and care for their children, millions of American families rely on child care to facilitate work outside the home. For this reason, high-quality, affordable, and accessible child care is important for working parents and children during the most formative period of their development.

Child care is an essential plank for businesses to ensure that they can meet their workforce needs. COVID-19 has prompted policymakers to rethink child care in America. With nearly $40 billion in federal aid being allocated for child care, states have many decisions regarding how best to align and utilize those funds. Unfortunately, the families hit hardest by the pandemic are the same families that struggled with low-quality and inadequate care for their children before the pandemic.

Historically, the child care industry in the United States has been fragmented and typically has varying governing structures that fund programs instead of families. The child care market includes a diverse set of for-profit and nonprofit businesses, including large child care centers run by national or regional companies; child care provided in the owner’s home, often referred to as family child care or home-based care; care provided in faith-based settings; and individual caregivers. Child care is different from the K-12 system in that there is no federal involvement in overseeing standards. Child care licensing standards and reporting requirements are managed individually by states within multiple agencies, and states have the freedom to change and deregulate as needed.

Research has provided some evidence of how childcare costs affect the labor force participation rate for working families, especially women. For example, one study finds that a 10 percent increase in child care costs is associated with a 7.4 percent decrease in workforce participation by married mothers. With child care expenses on the rise, pro-family policies are more crucial than ever before to boosting labor force participation. Also, research has shown that high-quality child care has significant benefits for low-income children, especially those from single-parent households. Of the 13.6 million children eligible for child care subsidies in 2015, only 15 percent received subsidies. The Biden Administration has proposed universal childcare, which will create administrative structures that feed the child care industrial complex rather than feeding the needs of families and children. Additionally, the current administration’s approach to the Child Tax Credit (CTC) transforms it from support for working families to a welfare entitlement that paves the way toward universal basic income. Previously, families had to have at least a small amount of earnings to qualify for a CTC refund when they filed their taxes The Biden CTC is a monthly government check that goes to everyone regardless of their work status. Although currently set to expire after 2021, Congress may make this CTC transformation and the accompanying liberal philosophy of separating income from work permanent in the pending reconciliation package.

The American First Policy Institute fundamentally believes that the funding currently flowing into states provides an opportunity to rethink the current child care environment to ensure high-quality care that benefits children and working families. Simply providing more money and government subsidies to existing programs is not the answer. The challenge of our time is how better to align the dollars available to benefit those who need it most while not punishing hard work and increased financial opportunity for parents. Below are some of the best practices in child care reform:

  1. Increase the Availability of High-Quality Child Care Across Settings
  2. Ensure Common Sense, Aligned Regulations for Child Care Providers
  3. Explore New Incentives for Businesses Looking to Offer Child Care Benefits to Their
  4. Employees
  5. Promote Innovation and Modernize the Child Care Business Model
  6. Address the Child Care Workforce Shortage

Policies pursued under the Trump Administration, like doubling the child tax credit while maintaining its pro-worker design, ushering in the largest ever expansion of early child care funding, eliminating or reducing waitlists for families in need, and establishing for the first time ever 12 weeks of paid parental leave for the federal workforce is what makes a long- term impact for American families and sets a good example of how the U.S. child care system serves a vital economic purpose as a source of support for the workforce. Recognizing that children learn at all times and in all places, policymakers can engage parents in designing policies and strategies that support families’ needs for child care and ensure they do not create more government dependency for child care. Stated best by Nobel Prize winner in Economics, Professor James Heckman, “To foster the skills of American children, we have to help America’s families.”