Democratic lawmakers warn of child care crisis with historic federal funding set to expire in September

WASHINGTON - A potential crisis is looming for the U.S. child care industry as one of the last pandemic-era funding programs that has helped keep millions of businesses afloat is set to expire in September. Now, lawmakers on Capitol Hill are calling for action to prevent the loss of critical services that millions across the country rely on. 

Over the past couple of years, child care providers have received historic investments from the federal government as part of several coronavirus relief packages, the most recent of which came in October 2022 when the White House announced its $24 billion Child Care Stabilization Program as part of the American Rescue Plan. Much of that money was used to increase teachers’ pay, purchase supplies and pay bills that kept the lights on for an estimated 220,000 providers. Now, with the funds set to expire in September, many worry that tuition hikes, layoffs and closures will follow. 

In fact, 43% of child care center directors and 37% of family child care providers said their program will be forced to raise tuition for working parents, according to a survey from the National Association for the Education of Young Children.

The same survey revealed that 27% of child care center directors and 29% of family child care providers said their program will cut wages in an industry where the median average wage hovers around just $12. 

The Bipartisan Policy Center reports that when the funds expire, all 50 states plus D.C. will face a funding cliff of over $48 billion. It’s forcing states to reconsider how to subsidize an already fragile industry that, for years, has been working under razor-thin profit margins, leading to low wages for skilled workers and a high turnover rate. 

"We have a child care crisis in America that we have got to address," said Sen. Bernie Sanders, Chair of the Senate Health, Education, Labor and Pensions (HELP) Committee. "Not only do we need to renew these funds, we need to make sure that every child in America receives the high-quality child care they deserve and that every child care worker in America makes a living wage. In the richest country in the history of the world, that is not a radical idea." 

Last month, the HELP committee released a report detailing how the funding has stabilized the industry. They say the cash infused by the American Rescue Plan "saved the child care sector from collapse" amid the pandemic and kept child care slots open for 10 million children nationwide as well as one million child care jobs.  

Sens. Bob Casey, D-Penn., Tim Kaine, D-Va. and Mazie Hirono, D-Hawaii — all co-leads of the Child Care for Working Families Act — joined Murray and Sanders Wednesday in urging Congress to address the ongoing crisis. 

According to a report from the progressive think tank The Century Foundation, child care could be disrupted for more than 3 million children and roughly 70,000 childcare programs could shut down — an estimated $10.6 billion annual loss in tax and business revenue.

Along with that, The Century Foundation estimates that more than 232,000 jobs could be slashed from the childcare workforce.

"If Congress does not act by September 30th to renew these funds, millions of working families with children will be at risk of losing the quality care that they need. We cannot allow that to happen," Sanders said. 

The senators argue that this presents a widespread economic danger because less access to childcare means more parents staying at home with kids and working fewer hours.

Polling by The Century Foundation and Morning Consult shows that roughly two in three Americans are concerned about the impending fiscal failure.

"The coming cliff could force providers to lay off staff or shut down, force parents to leave work when they lose their child care, and take a wrecking ball to our economic recovery," Murray said. "We can’t afford to kick this can down the road, leaving families and our economy in the lurch. Congress must take action to tackle the child care crisis now." 

While Americans have long voiced concerns about the growing costs of childcare, the delicate industry was hit particularly hard by the pandemic and inflation has only exacerbated the challenges families face when it comes to accessibility and affordability. 

The cost of child care in the U.S. has risen by 115% since 2000, bringing the average to just under $10,000 per year, according to the latest data compiled by the World Population Review. And a January analysis by the Department of Labor estimates that child care for a single child can eat up anywhere between 8% and 19% of the median family's income while a Care.com survey shows that half of parents spend more than 20% of their household income on child care.

Democratic lawmakers say the stark numbers illustrate just how overwhelmed families and providers are and continue to push for new legislation to help steady the precarious child care sector and guarantee care for millions of children. 

Even Treasury Secretary Janet Yellen has said it’s a textbook example of a broken market and called on Congress to pass laws to ensure equitable access to quality child care, calling it "the single most important thing we can do to build a stronger economy over the next several decades."