POLICY PAPER: CHILDCARE

 

The need for affordable, high-quality childcare is one that many American families are familiar with. The average cost of full-day child care in the U.S. is $9,589 a year, or 18% of a median household income, and two-thirds of income for individuals earning minimum wage. The financial burden for families living below the poverty line is even worse, with child care costs amounting to an average of 30 percent of their yearly earnings. This pattern holds true in Maryland, where families spend between 17-28% of their income on childcare. Furthermore, 50% of 3- and 4- years olds  in Maryland are not enrolled in any  pre-k, nursery school, or child care center. 

Table of annual wage rate information for teachers and childcare providers in Maryland. Public school teachers salary average, $70,463. Nonpublic school teacher average, $56,552. Family child care provider, $39,884. Child care center director, $40,891. Center senior staff/teacher, $25,860. Center aide, $18,068. Source: MSDE, Jan 2019.

Childcare workers face their own financial constraints because they are inadequately  compensated. In 2020, the median annual pay for childcare workers was $25,460. Undocumented childcare providers are particularly vulnerable to unfair compensation practices by employers who take advantage of their citizenship status. 

COVID-19 has exacerbated many of these challenges by forcing working parents and caregivers to leave their jobs. According to research done by the First Five Years Fund, one in five working-age adults have been unemployed during the pandemic due to disruption in their childcare arrangements. These employment challenges have disproportionately impacted younger women between the ages of 25 to 44, who are almost three times more likely than men to stop working due to child care demands. 

At the same time, operating costs for childcare providers have increased by almost 47%, partly due to costs incurred in order to meet new health and safety guidelines created by state and local entities. A March 2020 survey administered by the National Association for the Education of Young Children (NAEYC) found that 48% of Maryland childcare providers were losing income because families could not pay, and another 15% of providers were losing their income because they are reimbursed by the state based on attendance rather than enrollment. This crisis has contributed to renewed efforts to unionize the industry in some states, with California becoming the latest state to allow for collective bargaining for childcare workers in 2020. Union members are now advocating for a livable wage that will likely require a significant boost in government funding towards subsidized child care. Advocates note that significant change will require greater recognition of the importance of childcare providers for individual children and families.

While the Coronavirus Aid, Relief, and Economic Security (CARES) Act has provided states with vital financial support for childcare, this economic relief is temporary. About half of U.S. childcare providers are at risk of closing permanently if large-scale policy changes are not enacted. This will not only have a devastating impact on small business owners, but on the families they serve and their ability to work while caring for their younger children. As Maryland families continue to navigate this crisis, state and local leaders must consider creating funding streams that will guarantee all Marylanders access to affordable and quality childcare programs that fairly compensate their employees. 

Legislative History

Local & State Level

In lieu of a state or national affordable childcare initiatives, local governments and voters have taken action to institute early childhood education programs through ballot initiatives. In 2020, St. Louis voters approved a plan to increase property taxes by 6 cents per $100 of assessed valuation in order to create an annual $2.3 million fund for early childhood education. Multnomah County, Oregon, which includes the city of Portland, created a universal early childcare education program that will provide all children ages 3 and 4 with free preschool in public and private preschools, as well as access to home-based child care centers. Connecticut’s Care 4 Kids Child Care Subsidy Program is administered by the Connecticut Office of Early Childhood and helps low- to moderate-income families pay for child care expenses. Program participants can use public or private childcare providers that work in a daycare facility, family home, or group home that is licensed by the Office of Early Childhood. Close family relatives, such as grandparents, aunts or uncles, or siblings that live outside the family home, also qualify as providers. 

Federal Level

The Child Care for Working Families Act (CCWFA), sponsored by Sen. Patty Murray (D-WA) and Rep. Bobby Scott (D-VA), would provide all American families with affordable childcare and access to early childhood learning by instituting a mandatory funding structure that would guarantee all eligible families childcare benefits, similar to Medicaid. Childcare co-pays would be determined through a sliding scale, with families ultimately paying no more than 7% of their income towards child care. Advocates say that by disentangling childcare benefits from congressional appropriations and expanding eligibility requirements, the CCWFA would help the childcare system to grow and adequately serve families’ needs. The bill would also increase the quality of, and compensation for, early childhood educators by allocating more funding for professional development and educational credentials; requiring states to pay early childhood educators comparable wages to elementary educators with similar experience and qualifications, as well as create a sliding pay scale that would compensate educators with more experience accordingly; and basing payments to childcare providers on enrollment rather than daily attendance. The CCWFA was first introduced to Congress in September 2017 and was reintroduced in April of 2021. It is currently in committee.

Maryland

The Blueprint For Maryland’s Future (SB1000/HB1300) is based on the recommendations of the Kirwan Commission and includes initiatives to support early childhood care, early learning, and families. This includes funding for additional Judy Centers that provide comprehensive early childhood education services to children 0-5 years old and support to their families. Family Support Centers (now called Patty Centers) will provide services to improve parenting skills, develop the family as a functioning unit, and promote the growth and development of their children. The law notably also provides full funding for universal pre-K for three and four year-olds through a mixed delivery, full-day instruction system. The Blueprint was passed in the 2020 legislative session and vetoed by Governor Hogan, but the legislature overturned the veto in the 2021 legislative session.

In the 2021 legislative session, the Maryland General Assembly also passed HB 944/SB711, the Growing Family Child Care Opportunities Pilot Program. In an effort to increase the number of childcare providers and their overall longevity, the program authorizes the State Department of Education to partner with the Maryland Child Care Resource Network to establish grants for “pilot programs,” or local jurisdictions/child care licensing regions that participate in the program across the state. In turn, these pilot programs must target the allocation of these funds to “increase the supply and ensure the sustainability of family child care providers in areas with above average rates of poverty and unemployment or areas with a lack of available child care providers.” Among other requirements, grant recipients should also provide multilingual outreach and technical assistance for new and established child care providers. The bill calls for the governor to appropriate $450,000 for the program in fiscal years 2023 and 2024. The program was sponsored by Delegate Jared Solomon (D-Montgomery County) and Senator Nancy King (D-Montgomery County) and was signed by Governor Hogan on May 30, 2021.

Alternative Solutions

Leverage Philanthropic Resources

In June 2020, a cohort of private foundations established the D.C. Child Care Reopening Fund to provide four months of financial support for 115 licensed, home-based child care programs. St. Mary’s Center of D.C. allocated $1 million in targeted support to childcare providers from the fund for personal protective equipment (PPE), health and safety supplies, as well as cash and technical assistance. While this fund effectively addressed immediate and urgent financial needs brought on by COVID-19, we know that childcare providers required support before the pandemic. Temporary assistance should not be confused for effective and long-term policy solutions at the state or federal level.  

Research the Success of The Birth to Three Programs Under the Harlem Children Zone

The Blueprint for Maryland’s Future addresses childcare programs by recommending universal pre-k for all students, but does little to address children from birth to age three. The Harlem Children’s Zone is a 100 block community program that offers schooling and community resources for children and families in Harlem. It includes programs like The Baby College and the Three-Year Old Journey, which educate parents on child development and prepare them to raise their families. Policymakers should consider investigating the Harlem Children’s Zone effectiveness and how a similar program could be implemented in Maryland under the Blueprint for Maryland’s Future.

Make Increased Eligibility for Child Development Credit Permanent

The American Rescue Plan includes the largest child tax credit ever, increasing from $2000 to $3000 per child for families with children over the age of six and $3600 per child for families with children under the age of six. This applies to working families that make up to $150,000 or to single parents making up to $112,500. The previous structure of the child tax credit excluded approximately 27 million childrendisproportionately Black and Latinowho lived in households that earned too little to qualify for the full $2000 credit. Experts anticipate that the expanded credit will move 4.1 million children over the poverty line. If the expanded credit is made permanent, it could help qualifying families access high-quality child care options that they could not afford otherwise. 

Increase Wages for Childcare Workers

As part of the American Families Plan, the Biden administration has proposed setting a minimum wage that would increase hourly pay for childcare workers from the current median salary of $12.24 an hour to $15. This would differentially impact childcare workers across the U.S. based on current wages at the state and local levelsin eight states, the median hourly wage for childcare workers was less than $10 per hour. Such a significant increase in pay could be passed to parents to offset increased expenses for small business owners. Policymakers need to identify how to fund pay for childcare workers without making childcare services unaffordable for parents and families that need them.

BACK TO MEMOS