By Max Altman, SEF Director of Research and Policy
During the COVID-19 lockdown, many parents and caregivers suddenly found themselves at home full-time with young children who had previously been in early care or early childhood education programs.
The experience likely reinforced for many Americans that caring for young children can be a full-time job, one that is nearly impossible to do while also working, even remotely. Many also discovered that child care is a far more difficult job than they may have thought, and the professional child-care providers who do this work are extremely important.
For others, however, this was nothing new. Many families lacked access to affordable child care even before the pandemic. This reality raises a key question: Why was child care a problem even before the pandemic?
The answer is twofold: Child care is incredibly expensive – far too expensive for many to afford – and child-care workers are paid incredibly poorly. Together, these issues mean our nation faces a legitimate crisis. If parents and guardians must choose between work and taking care of children, the absence of affordable child care leaves many parents with no decision at all, but expanding access to high-quality, affordable childcare will be difficult when the pay for these caregivers barely exceeds minimum wage.
In SEF’s Economic Vitality and Education in the South report from 2022, we detailed how many parents and caregivers struggle to afford child care. The U.S. Department of Health and Human Services considers child care affordable if a married couple spends no more than 7% of their combined income for one child. But across the 17-state SEF region from Texas to Delaware, the average cost of infant care for one child prior to the pandemic was more than double the affordable rate – 16% of the median married couple’s income.
But those numbers do not fully put into context how expensive child care is. The Economic Policy Institute’s recent comparisons of the average costs for infant care and child care for four year olds were striking:
- The average annual cost of infant care is more than half the salary of a full-time minimum-wage earner in 39 U.S. states, including 11 of the 17 SEF states.
- The average annual cost of infant care is higher than the average annual rent in 21 U.S. states and at least two-thirds the average rent in all but two SEF states.
- In 23 U.S. states, the median annual salary for child-care workers is less than twice the cost of annual infant care for a single child.
- The average cost of infant care is higher than the average cost of in-state college tuition in 34 U.S. states, including 10 of the 17 SEF states.
In other words, in more than half of the states in the SEF region (and two-thirds of all states), in-state college tuition is less expensive than child care for a single infant. Wages for child-care workers are low despite the price of child care: The average cost of infant care is more than half the median wage for child-care workers in nearly half of the states.
By 2018, more than half the U.S. population lived in child-care deserts (areas with three times as many children as licensed child-care slots). In 2019, each state lost between $479 million and $3.5 billion in economic activity due to inadequate child care. Wages are low despite the high price of child care: The average cost of infant care is more than half the media wage for child-care workers.”
Capping child-care costs at 7% of household income would produce an estimated $56.4 billion in new economic activity and enable 512,000 parents to go back to work in the 17 SEF states alone.
The child-care crisis is not just an inconvenience. It is a calamity that costs the U.S. billions of dollars a year and keeps hundreds of thousands of Americans from working if they wish. Relatively small investments in child-care subsidies and steps to increase pay for child-care workers could help produce huge economic gains out of thin air and provide millions of additional children with knowledge, skills, and behaviors to help prepare them for school and improved outcomes in the future.
Leaders in some southern states are looking for ways to address the child-care shortage. A proposal in Tennessee would direct some tax revenue from sports betting for state child-care scholarships for low- and middle-income families. Louisiana and Maryland already use some sports betting or gambling revenue for a variety of early childhood programs.
Taking steps to curb the costs of child care and increase child-care worker pay can be not only a winning strategy, but one with appeal across the political spectrum that can boost the economy, enable children to develop skills they need for school, work, and life, and expand access for children in rural places such as Saxapahaw, NC, suburban places such as Grand Prairie, TX, and urban locations such as Montgomery, AL. It is key that we move forward on this issue.