Nancy Harvey, who runs a daycare service out of her home in Oakland, California, plays with children on May 19, 2017.

Nancy Harvey, who runs a day care service out of her home in Oakland, California, plays with children on May 19, 2017.

(Photo: Michael Macor/The San Francisco Chronicle via Getty Images)

3.2 Million Kids Could Be Thrown Off 'Childcare Cliff' in September—Unless Congress Acts

"Without congressional action, the childcare crisis will become a catastrophe," a new report warns.

Congress has 100 days to prevent more than 3 million kids from losing access to childcare and more than 230,000 childcare workers from losing their jobs, according to a report published Wednesday by The Century Foundation.

In what they describe as "the first-ever economic analysis of the looming childcare cliff," TCF researchers project what is likely to happen if federal lawmakers fail to renew pandemic-era aid that is set to expire on September 30.

The consequences of inaction would be devastating and far-reaching, as the report explains:

  • More than 70,000 childcare programs—one-third of those supported by American Rescue Plan stabilization funding—will likely close, and approximately 3.2 million children could lose their childcare spots.
  • The loss in tax and business revenue will likely cost states $10.6 billion in economic activity per year.
  • In addition, we project that millions of parents will either leave the workforce or reduce their hours, costing families $9 billion each year in lost earnings.
  • The childcare workforce, which has been one of the slowest sectors to recover from the pandemic, will likely lose another 232,000 jobs.
  • In six states—Arkansas, Montana, Utah, Virginia, West Virginia, as well as Washington, D.C.—the number of licensed programs could be cut by half or more. In another fourteen states, the supply of licensed programs could be reduced by one-third.

"Our findings underscore the urgent need for immediate funding and long-term comprehensive solutions at the federal level that offer safe, nurturing, and affordable childcare options to every family," says the report.

A strong majority of people in the U.S. "are concerned about the looming childcare cliff and overwhelmingly prefer candidates for office who champion policies to expand quality, affordable childcare," the report notes, citing a public opinion poll conducted this month by Morning Consult on behalf of TCF. According to the survey data released Tuesday:

  • Nearly two-thirds (64%) of adults are worried about the imminent loss of federal childcare funding;
  • Among parents who regularly pay for childcare, more than half (54%) say it would take them longer than one month to find a suitable alternative if their current program were to close; and
  • 70% of voters say they are more likely to back congressional candidates who support expanding affordable childcare options.

"The families who were able to afford childcare, providers who were able to keep their doors open, and businesses who held onto staff will all tell you: Investing in childcare works for families, communities, and our economy," Julie Kashen, director of Women's Economic Justice at TCF, said in a statement.

"As our report makes clear, without congressional action we are headed toward a funding cliff that will leave parents paying more or losing access to childcare altogether, as childcare providers are forced to raise rates, cut staff, and close their doors," said Kashen. "We need immediate action from Congress to avoid this cliff and we need to put in place long-term solutions to finally fix childcare for our nation's families."

Congress allocated $52.5 billion in emergency funds to prop up the nation's privatized, market-based childcare sector during the deadly Covid-19 pandemic. A pair of bipartisan relief measures enacted in 2020 provided states with $13.5 billion in Child Care and Development Block Grants (CCDBG). The American Rescue Plan, passed by congressional Democrats and signed into law by President Joe Biden in March 2021, disbursed an additional $39 billion, with $15 billion in CCDBG and $24 billion in Child Care Stabilization Grants.

"Congress must take action to tackle the childcare crisis now."

Of that money, $37.5 billion is set to run dry on September 30. Meanwhile, the $15 billion in CCDBG from the American Rescue Plan is set to expire one year later, on September 30, 2024.

"When Senate Democrats passed the American Rescue Plan, we kept 220,000 providers' doors open and saved childcare slots for nearly 10 million kids across our country," said Sen. Patty Murray (D-Wash.). "But with much of the funding we provided expiring this fall, it's more important than ever that we take comprehensive action to prevent the childcare crisis from going from bad to worse."

"The coming cliff could force providers to lay off staff or shut down, force parents to leave work when they lose their childcare, and take a wrecking ball to our economic recovery—unless we take action," Murray said. "The childcare industry holds up every other sector of our economy—so 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 childcare crisis now."

Last month, Murray joined Senate Health, Education, Labor, and Pensions Committee Chair Bernie Sanders (I-Vt.) in warning that a failure by Congress to reauthorize the expiring funds would push the nation's already lagging childcare system "closer to the brink of collapse."

Murray also recently reintroduced the Child Care for Working Families Act, which would stabilize the childcare sector, increase access to high-quality options, and ensure that all of the poorly paid workers who take care of the nation's kids finally receive a living wage. If enacted, "the typical family in America will pay no more than $10 a day for childcare—with many families paying nothing at all—and no eligible family will pay more than 7% of their income on childcare," according to the senator's office.

Last week, Sens. Ron Wyden (D-Ore.) and Elizabeth Warren (D-Mass.) reintroduced the Building Child Care for a Better Future Act, another proposal to create "a stronger, more robust, and more equitable childcare system."

As Kashen and three colleagues from the Center for Economic and Policy Research detailed in a 2022 report, the childcare and universal pre-kindergarten policies that passed the Democratic-led House in late 2021 as part of the Build Back Better Act would generate more than $130 billion in economic benefits nationwide, all while reducing entrenched inequalities.

By the time Congress approved the watered-down Inflation Reduction Act last August, those and many other transformative provisions had been stripped from the legislation at the behest of Sen. Joe Manchin (D-W.Va.) and other right-wing Democrats.

Nevertheless, the impending funding shortfall is still entirely preventable. As TCF's new report makes clear, "Without congressional action, the childcare crisis will become a catastrophe."

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