One misconception about child care is that it’s a search problem; set people up with the right connections, and quality child care is within reach.
The reality is that it’s a supply problem: there simply aren’t enough spaces for the families who need them. Give people a search tool, and all you’re doing is providing the hope of finding a child care center, without a guarantee that a spot is available.
And supply is getting harder to find.
“Across the country,” reads a report about the state of child care since 2023, “the share of households who could not access care increased from 24% to 31%.”
What’s behind the worsening situation? The recent government report says it’s the end of Child Care Stabilization Funding. The COVID-related program, part of the American Rescue Plan (ARP), was instrumental in the early days of the pandemic, providing billions in supportive funding to keep child care programs afloat. Unlike subsidies that go directly to families, these funds addressed the supply side of child care, supporting hundreds of thousands of centers to help cover operational costs such as wages, benefits, rent, and utilities. The results were profound. At a time when child care centers couldn’t afford to stay open and the economy needed workers, the program created a ripple effect of more child care supply and so more people able to work. Today, with funding in the rearview mirror, developments are unfurling in reverse. “Our results,” reads the government report, “suggest an overall slowdown in progress.”
The advent, says the report, has created a cascade of impacts.
Child care is getting more expensive: The rising cost of child care has always been a barrier. And a hallmark of the ARP funds period was its ability to mitigate tuition cost increases – even during a volatile economic period. Money that supported child care centers became savings passed on to families. But that’s changed with the government reporting a “stagnation” in price declines. “This stagnation,” reads the report, “could restrict access to child care for low-to-middle-income families.”
Women’s labor participation is slowing: The theory behind the child care funds was clear: if you make child care more affordable, more parents will come. “If parents and families are constrained in their ability to participate in the labor force by their inability to find and/or pay for child care,” writes the report authors, “then the increased supply of child care enrollment slots and lower prices resulting from an influx of federal funds such as the ARP stabilization funds should have a positive impact on the labor market outcomes of mothers with young children (under the age of 6).” And indeed, that’s exactly what occurred. But today, the end of financial support is having a dampening effect. “Labor force participation among mothers of kids under 6,” reads the government report, “has slowed significantly.”
Child care needs are not being met: The number of parents who can’t find child care is up 29% over 2023, something the government connects to a contraction of growth in the child care industry following the expiration of funds. Survey data shows exactly this, with a growing share of parents of children under age 5 “unable to find child care in the last four months due to issues with cost, distance, safety, or supply.”
The sum total is a crisis for families. But the effects stretch to the economy as well. Employers rely on a robust labor force. And parents – notably women – represent a critical source of employees. Pointing people to child care is key. Yet if there’s no supply at the ready, search tools and concierge programs offering to connect parents to providers are no answer. So what is?
Data suggest there’s opportunity in beefing up supply. As proof, the report looked at post-expiration stopgaps, measures enacted by states to fill the holes left by expired funding. Eleven states plus the District of Columbia launched such programs. After federal funds ran out, families in states without stopgap measures were more likely to report trouble finding care. There were similar effects on women’s labor participation – fewer women participating in states without post-expiration funds. Together such results suggest that bolstering supply can have transformative impacts.
“The ill-effects of expiring ARP funds will stall progress without further action,” reads the report, “and underscores the importance of child care providers, not only for children and families, but for the economy at-large.”
Read the full report, here.
