Minnesota child care providers are struggling to keep their electricity on and their doors open. Families are struggling to pay for their services. It’s a chicken-and-the-egg scenario for many providers: If they pay their workers more, the cost for families will go up and they’ll lose business. If they pay their already low-wage workers less, they’ll lose workers and the ability to take care of all of their enrolled kids.
Democrats are looking to solve — or at least help solve — this child care dilemma as part of the Build Back Better Act, their $3.5 trillion federal spending bill. Among a host of new policies and programs in the bill are several new federal funding streams aimed at providing what advocates are calling “universal child care.”
The plans are ambitious. “This is the biggest thing to happen to the early childhood field ever in our country’s history, that [universal child care] is even being debated right now at this scale,” said Clare Sanford, government relations chair for the Minnesota Child Care Association.
But the child care industry is complicated. What, exactly, do Democrats mean when they say they’re delivering universal child care to American families?
How will Congress achieve universal child care?”
In general, the plans outlined in the Build Back Better Act achieve “universal” child care by significantly increasing the amount of funding provided by the federal government to states to subsidize citizens’ child care costs. The funds appropriated for this program are so far expected to be $20 billion for fiscal year 2022, $30 billion for 2023, and $40 billion for 2024 to remain available through 2027.
While most states, including Minnesota, already have programs that subsidize child care for low-income families, the Build Back Better Act creates new programs that subsidize child care for all families.
“The money is not going into existing programs that states already have. It is creating new funding streams,” said Sanford, who has been working with lawmakers on some child care sections of the Build Back Better Act. “There are existing government structures that federal money flows through to families and child care providers at the state level. But the way this bill is written, those will be vastly overhauled and two brand new funding streams will be created at the federal level.”
[image_credit]MinnPost photo by Craig Lassig[/image_credit][image_caption]Rep. Ilhan Omar[/image_caption]
As for what types of child care is eligible for the programs, the bill would cover both large institutional child care and family-based child care programs, according to Minnesota Sen. Tina Smith, a long-time advocate for expanded child care who is following the legislation in the House closely.
“This was designed specifically to not push out family providers, specifically to recognize and respect the crucial role that they provide,” Smith said.
[image_caption]Sen. Tina Smith[/image_caption]
There is other child-care related spending in the bill’s current form, as well, including a permanent expansion of the Child and Dependent Care Tax Credit and an expansion of the Child Tax Credit, $15 billion for child care facilities, and the establishment of a Child Care Wage Grant program to increase wages for child care providers, among other investments that support working families.
During the House Ways and Means Committee’s markup of the bill, chairman Richard Neal (D-MA) said that this bill would “help raise the floor for child care provider pay” by investing in child care wage grants for small businesses.
The Build Back Better Act outlines a grant program that reserves nearly $1.5 billion for awarding grants to qualifying child care providers who need the funds to offset operating costs and provide “competitive wages, benefits, and other supportive services, including transportation, child care, dependent care, workplace accommodations, and workplace health and safety protections.” A grant awarded under this program will last for 3 years, and can be renewed.
Is it enough?
All that new spending might still not be enough to meet child care needs, according to the Minnesota Child Care Association’s Sanford. Even if every family is able to afford child care thanks to the subsidies, there will not be enough spots at child care facilities to keep up with the new demand.
A report by the Minnesota Center for Rural Policy and Development found that “most rural regions” in Minnesota are “child care deserts,” meaning that there are not enough providers to fulfill the demand for child care in those areas. Providers and advocates are hoping that the Build Back Better Act will give enough money to states so that providers can raise wages for their workers and cover operating expenses. Some say that grants from earlier this year — both for providers and for families — have already run dry.
“A lot of families had gotten off waiting lists [for scholarships] this spring, but it was like if your application happened to be at the top of the pile you got funding,” said Christina Valdez, director of Listos Preschool & Child Care in Rochester. “Now, they’re back to long waiting lists again.”
For now, the economics of the child care industry are tough for providers. Valdez said that the caregivers at Listos, a bilingual child care provider, make around $18 per hour, and the company is unable to sponsor health insurance.
“If you’re not getting health care through your spouse, it’s really hard to get good health care…so it really puts you in a hard position,” Valdez said.
Mary Solheim, director of Playschool Child Care Center in Maplewood, said that Playschool has been operating at a loss for the last two years.
“We’ve done a lot of decreasing of the excess expenses,” Solheim said. “Payroll is the thing we always pay first, and everything else becomes what we try to prioritize.” Solheim said her Playschool location has had to put off paying essential bills like electricity in order to pay their workers.
These providers expressed hope that with more federal money in the system, conditions could improve for families and workers alike.
“I just really feel like we have a true opportunity right now to make huge changes,” Valdez said. “We know that spending money on children ages zero to five is going to have a lifetime, positive impact. We know that. I mean, it’s a good investment. And so I want to see real, true changes being made that will really benefit families, children and early educators.”
There is another alternative that doesn’t seem to be discussed – direct payments to a parent to take care of their children in their own home. How many parents would choose to stay home to take care of an infant if they were given a monthly stipend? This could cost less than subsidizing child care facilities, have less bureaucracy involved and potentially have better outcomes. To sweeten it you could add free health care through Medicaid for the parent and child up until age 3.
You’re missing one of the key points that a program like this is even being considered, it’s that we don’t have enough people currently in the workforce. Paying people to stay home with their own children creates even more of a disincentive for people to return to the workforce.
Why should inefficiency be the goal? If I pay you to watch my kids and you pay me to watch yours we’re both “working” but we’re going to be less satisfied than if we each stayed home and watched our own children.
Good idea, no great idea.
Never happen
I have friends in Norway who were able to make use of a similar program – they could choose to have both parents paid to stay home for the first year, or one parent for two years. And then preschool was free after that. It was a marvelous system that I profoundly wish we had here.
As a corollary, I think we would do a lot of good if people could get monthly stipends for doing the work of direct care for their loved ones. Having an ill or elderly parent or spouse shouldn’t require bankruptcy in order to get assistance. How can we have a caring society if people go broke by simply caring for their loved ones?
Government got involved in housing, price of houses went up. Government got involved in college loans, price of college sky rocketed. Government gets involved in childcare…. Wonder what will happen?
Government has been involved in child care for over a century.
Government got involved in housing; homeownership rates rose. Government got involved in college; college participation & graduation rose.
Current state of childcare: it’s expensive (very expensive in MN). People who can’t afford it sometimes have to choose between taking a job or caring for their child. For younger people it can mean not getting an advanced education. We might say “you made your choice, now deal with the consequences.” Or we can do the math & see that helpnig people with childcare has a huge societal ROI. A stable childhood (i.e. when parents have a stable job) improves education outcomes. Improved education reduces liklihood of turning to crime. Lower crime rates improve everyone’s quality of life & lowers prison costs. So we have more productive members of the workforce, lower expenses, meaning lower needs for tax revenue. But conservatives think it’s a bad idea. Go figure.
We generally think cradle-to-grave nanny statism is a bad idea. I had a guy working for me who had two young kids. He mentioned that if his wife ever got pregnant with a third, it would be cheaper for the family if she just stopped working. And sure enough, she got pregnant with a third child and she quit her job to stay home. They made their decision based on their priorities and didn’t want or expect the government to subsidize their choice. That’s what it’s like to live in a free society.
Not sure who the “we” is to which you refer since you’re arguing against a focus group political meme, aka straw-man. To encapsulate, what you’re saying is the wife was being paid so little that dropping out of the workforce was more cost-effective. Yes, “free society” has merit in a community, but is mediocracy the goal then? Not striving to do better through collective action?
I too have enjoyed the privelege of choosing whether a parent stays home vs paying for childcare. Unfortunately, not all families have that option; often due to low wages; or not having two wage earners in the household.
Government got involved with housing, it caused market bubbles and a Great Recession. Government got involved with college, it is causing an ever increasing college loan bubble.
Let’s go even further, government got intensely involved with health care, out of pocket costs for everyone went through the roof.
Government may have helped child care in the past. But Biden’s ‘Better’ plan will put it on steroids and it will be completely out of whack permanently.
The more government gets involved with anything, it just costs so much more and makes this so much more complicated.
I’d say it was the lack of government involvement that contributed to the housing bubble. Remember the tranches? How financial whiz kids “eliminated” risk by rebundling loans? That was all made possible by deregulation.
How exactly did ‘government involvement’ result in me and my wife having to pay $600/week in daycare costs in 2019? That seems more like a complete lack of any government involvement.
You have it completely backwards. It was the lack of government regulation that caused those things.
It was the huge decrease in government support of public universities that caused the increased tuition costs driving the increase in student loans. We used to pay taxes that kept down the price of tuition. Now our taxes are lower but we’re paying higher tuition AND paying interest on the student loan to the federal government. This is a benefit only to people wealthy enough to avoid paying loans at current tuition costs. Everyone else who attends college after high school would have been better off with slightly higher taxes.
The free market failed at providing housing for for poor, the government was forced to step in, the free market failed at providing higher education for basically everyone but the wealthy, the government was forced to step in…perhaps if the free market did a better job at not abandoning everyone but the wealthy, we wouldn’t need the government to step in?
Yeah, this is pretty much right on. Good comment Matt.
I don’t believe the government was forced to do anything. The nanny state stepped in, the most inefficient and unaccountable system around.
The problem is that “efficiency” leaves some people homeless and starving.
It seems like there are two opposing groups on this forum. Those who think government should provide most things, and those who think it’s everyone for themselves. It would be nice to see ideas that were closer to the middle. I’m not sure what those are.
I would say that if you don’t have much money, don’t have kids. Or at the very least have one.
“I would say that if you don’t have much money, don’t have kids.”
Go eat cake instead.
It isn’t just a matter of “not having much money.” Ordinary working people, who make up what we like to think of as “middle class” find it difficult to afford child care.
“Or at the very least have one.”
That makes no sense.
That’s nonsense, and it’s not even very good nonsense. The private sector is plenty “inefficient,” unless we rely on the glib libertarian definition of “efficiency” as “the allocation of wealth and resources to those who already control wealth and resources, without regard to externalities or the best use of those resources or wealth.” Inefficiency and blundering by private enterprise is shrugged off with a “it’s not my money, so what do I care?”
A private business is accountable only to its owners, and its only function is to produce profit for them. It is “accountable” to others only if there is meaningful competition. Even then, the accountability is limited to somehow meeting the competition. With most markets being dominated by a small number of participants, the customer who doesn’t like it can go take a flying leap.
See Matt’s comment below. And consider when individualism becomes toxic. We are a community.
There may be no other way to increase the GDP and that is what govts. most care about.
Just a few observations.
First, once again our erstwhile economic professors from the Republican stable are promoting stereotypes over reality. Government “involvement” didn’t create housing and tuition bubbles. On the contrary, it was the withdrawal of government in the form of financial deregulation that blew up housing and tuition prices. The housing catastrophe was entirely a product of private sector white collar crime waves that the government failed to prevent and actually encouraged. The tuition explosion was the product of privatized student loan programs that were part of the largest privatization program in US government history (Remember, Al Gore and his “re-inventing government” program?)
One nice thing about this proposal is that it completely unmasks the Libertarian dysfunction that turns Republican politics into a pile of garbage. Here again we see the erstwhile champions of “family values” failure to contain their natural instincts to attack, damage, and otherwise punish the very people they claim to represent. Few other proposals reveal the libertarian/Republican hostility to American families like this one. Sure, they’re great champions of “life” as long as it stays in some woman’s womb… but once that baby breaths air they can’t wait to inflict death, disease, and poverty upon them.
Finally, we can only hope that these efforts to realign our national budget away from military spending eventually succeed. Once we start talking about diverting military spending into priorities like this, rather than simply wringing our hands over how much this costs… we’ll know we’ve finally made some real progress.