Childcare Costs a High Barrier to Access for Low-Income Kids in DC and Nationwide

Picking up where I left off, access to child care is one of the big issues facing parents and policymakers. Low-income children, especially the youngest apparently don’t have equal access to the sort of care that would give them more equal opportunities during the rest of their lives.

So how might we parse access?

In one sense, it obviously means having enough slots in childcare centers, home-based and publicly-funded programs for all children whose parents want them there.

The slots must also, of course, be for their children’s age group and where parents can get their kids to them fairly quickly and at a reasonable cost.

But an age-appropriate slot in a conveniently located program will mean nothing if the parents can’t afford it. Nor if the program doesn’t provide care during the hours they themselves can’t.

We know how costly unsubsidized child care is nationwide and in each state, plus the District of Columbia, which racks up the highest costs of all.

Care for an infant in a local daycare center, for example, cost, on average, $22,631 last year — more than what a single parent, working full time, year round at a minimum wage job earned. Only about $4,790 less for a four-year-old.

The parent is technically eligible for a voucher. But the priority list for awards casts doubt on whether she could get one.

Even if she could, finding a slot could be hard because the District’s reimbursement rates are so low that providers either won’t accept children with subsidies or limit the number they will — a long-standing problem the District still hasn’t remedied.

The District also, however, has Early Start — a spin-off from Head Start for infants and toddlers in families with incomes no higher than the federal poverty line, plus some who may have more, but not enough to get by.

Little hope for poor parents here, it seems. The program enrolled only 12% of eligible children, according recent Census data.

For somewhat older children, the District has Head Start — an enrollment figure reportedly over 100% of those eligible. It also has pre-K programs in its public school system. These, of course, are also free.

But none of the programs operates on weekends or during evening and nighttime hours, when low-income parents must often work. Nor during summer months. So the programs may be accessible, but they don’t fully meet the need.

I’ve focused on the District, but we see generally the same problems in communities across the country — except, of course, for wealthy enclaves. Head Start and Early Start don’t provide nighttime care for children anyplace, for example.

Last year, child care was the single largest family expense, Care.com reports. But that’s only for parents who could scrape up the money — an average nationwide of about $9,775 a year for just one child in a center.

Obviously an access barrier for many others, unless they got vouchers to subsidize child care.The main federal funding sources subsidized care for only 15% of eligible children in 2012, the latest year we’ve got reliable figures for.

More recent figures from CLASP suggest that the gap between need and access has grown since, though we don’t — and to my knowledge, never had — a hard number for this.

We do, however, know that low-income parents must often make do with makeshift arrangements — sometimes parking a child with a relative, sometimes with a neighbor, sometimes just where they can keep an eye on their kids or not even that.

Most such arrangements may keep children safe, fed and the like. But they probably don’t provide the early learning experiences that a high-quality childcare program does. Money isn’t enough for that, but it’s the foundation.

Why Child Care Costs So Much

My recent post on childcare worker wages teed up, but didn’t explore an apparent paradox. While the workers’ wages are typically very low, costs of having a child cared for are formidably high. While these affect all families with kids who need care, they’re especially problematic for low-income families.

They obviously take a relatively bigger bite out of the budgets of low-income families who pay them. But they may also shrink those budgets because a parent decides that she (yes, usually a she) has no choice but to drop out of the workforce — or work less — so she can do the child caring herself.

So it’s worth asking, I think, why child care costs so much and whether public policies have — or could have — an influence, for good or ill.

One of the researchers on the team that assessed the public benefits costs of childcare worker wages suggests that the growth of the for-profit childcare industry might explain it. Spokespersons for a nonprofit that represents childcare centers beg to differ.

They cite stricter caregiver-to-child ratios, which state licensing rules set, more use of labor-intensive infant care and “fluctuating” rates for the reimbursements providers receive when they care for low-income children with subsidies.

This last, I take it, means reimbursements that don’t actually cover the difference between what the children’s parents pay and what providers must spend to cover their costs, with something left over, unless they’re nonprofits by choice.

Gillian White at The Atlantic explores the childcare center perspective by focusing on the owner of a center in Detroit.

The owner employs three lead teachers for nineteen children, some of whom are virtually newborns, some old enough to be spending part of their days in school.

She pays her staff about $9 an hour — even less than the median the Economic Policy Institute reports. But, she says, once she’s paid them, plus rent, utilities and materials, there isn’t much left over.

In some types of businesses, employers hold down labor costs by increasing productivity. They automate tasks, for example, so as to get more output per worker. Well, it’s hard to imagine automating diapering, wiping tears away or working with young children on educational activities.

And as both the center owner and the EPI analysts say, simply boosting the caregiver-child ratio would conflict with the aim of providing high-quality care.

What then could make child care less costly, assuming the owner’s balance sheet is more or less typical?

She sees childcare services as an area where government could do more to both relieve the cost burden on families and, one gathers, on centers like hers, since White’s summary refers specifically to their having the resources to pay higher wages.

The owner cites universal pre-K and income-based subsidies as possibilities. Expanding both would make child care more affordable for low-income families — the former, in fact, free for at least part of the time they need it.

Neither, however, so far as I can see, would make it easier for childcare providers to pay higher wages unless the subsidies, plus the fees families must pay cover higher operating costs.

Reimbursements rates differ not only among states, but within states, depending on various factors, e.g., the age of the child, the type of care, certain quality measures. Generally speaking, the federal government recommends 75% of current market rates, i.e., what providers charge families without subsidies.

Only one state set its reimbursements rates this high last year, though more than half did in 2001, the National Women’s Law Center reports. Some explicitly set their percents lower. Others that adopted the 75% standard hadn’t adjusted their rates — in some cases, for a goodly number of years.

Some states have compensated for this squeeze by increasing the percent of income that poor and near-poor families must pay. That, of course, further squeezes budgets that can barely — if at all — cover other basic living costs.

Co-pays notwithstanding, families may have subsidies, but a hard time finding providers who’ll care for their children. The Center for American Progress reports significant drops in the portion of subsidized children cared for in programs operated by two large, multi-state chains. The head of another chain says that unqualified providers have emerged to fill the care gap.

In short, we have a well-intentioned system that’s not working as it should because, as EPI has said, “high-quality child care is expensive,” and our policymakers won’t pay for it, though some seem far more willing than others.

Nothing unique about this. Surely not among our anti-poverty programs. But given the returns on investment, we as a country surely ought to do better.

 

Childcare Workers Underpaid, While Families Face High Care Costs

A recent blitz of social media communications about how little childcare workers get paid. The engine behind them is Fight for 15 —  a campaign for a $15 an hour minimum wage, originally by and for fast food workers, backed by SEIU (the Service Employees International Union).

Childcare workers joined last March, but they’ve become more vocal — or more precisely, had their voices channeled — only in the last month or so, as a lead up to the Fight for 15 strike on Veterans Day.

The Economic Policy Institute, which has strong organized labor ties, published a report last week showing, from various perspectives, how relatively low childcare workers’ wages are — and predictable consequences.

The report raises larger issues. Some details on the wages first, then a segue into a couple of those.

The median wage for childcare workers is $10.31 an hour — 39.3% less than for all other workers. This, in fact, may understate the difference because the median doesn’t include childcare workers who have no official employer but themselves.

What’s more telling is the pay gap for workers who’ve got at least some college education, as nearly 61% of childcare workers do.

Those with less than a four-year degree get paid a median of $4.88 an hour less than their counterparts in other occupations. For those with a bachelors degree, the per-hour median is $10.78 (44.8%) less.

The pay gap doesn’t simply reflect other demographic differences commonly linked to wage rates, e.g., gender, race/ethnicity, age. The “child care penalty,” as EPI calls it, remains when they’re factored in.

Not surprisingly, childcare workers have a higher poverty rate than all other workers combined — 14.7%, as compared to 6.7%.

The “penalty” doubles for childcare workers with incomes at or below 200% of the official poverty line — a commonly used measure because the line reflects the Census Bureau’s unrealistically low poverty thresholds.

EPI turns to its family budget calculator. The maps its report includes show that the median childcare worker wage falls short of what a single person, living alone needs for basic living expenses in virtually every community in the country.

One of those basic living costs, though not for the single person, is child care, of course. Center-based care for either an infant or a four-year-old costs far more than what the typical childcare worker can afford.

Such care for an infant in the District of Columbia would eat up 89.7% of the childcare worker’s wage — and only 17% less for a four-year-old.

What this means, of course, is no center-based child care unless heavily subsidized — and not only in the District. It often isn’t, especially for parents whose incomes put them above the extremely low cut-offs for states’ Temporary Assistance for Needy Families programs.

The end result for a childcare worker can be no earned income because she’s got to quit her job, as one featured in a ThinkProgress story did when her youngest was put on a subsidy waiting list.

The subsidy did come through. It’s a piece of one of those larger issues — the fact that we taxpayers subsidize employers that pay very low wages because workers perforce turn to public benefits.

A study put hard numbers on this cost-shift in the fast food sector several years ago. Researchers at the University of California, Berkeley, including several from the fast food team, have done the same for childcare workers.

Of those who worked, at least part-time and for at least somewhat over half the year, 46% received benefits from at least one of five “public support” programs — Medicaid, the Children’s Health Insurance Program, SNAP (the food stamp program), TANF and the Earned Income Tax Credit.

Costs of these supports totaled, on average, $2.4 billion a year — about 55% of it for Medicaid and CHIP, since healthcare costs are disproportionately high. But average yearly costs of the EITC (presumably the refundable part) and SNAP totaled more than $1 billion.

“Child care workers’ job quality does not seem to be highly valued in today’s economy,” EPI remarks. Somewhat of an understatement when we consider not only their typically low pay, but the notably few with employer-sponsored benefits, e.g., health insurance.

This too seems a piece of a larger issue. Anne Marie Slaughter argues that we don’t value caregiving. She’s referring to a “workplace culture” that discourages or denies time off for family responsibilities — and to public policies that have thus far done little about this.

But it also applies to wages for professionals in what Professor Cheryl Carleton refers to as “the caring industry,” e.g., teachers, nurses, home health aides.” The fact that they’re historically — and still predominately — “female occupations” goes far to explain this.

And probably wages for childcare workers too, since all but a small fraction are women. But we do, in a way, value their work. Otherwise, parents would just park their kids any old place.

So why do we have childcare workers who’ve got to campaign for $15 an hour — less than 200% of the federal poverty line for a three-person family, assuming (as we shouldn’t) full-time, year round work?

The issue here is somewhat different than for fast food workers. Not that they don’t deserve a decent wage too. But most of the skills their work requires are gained on the job — not skills they bring with them from postsecondary education, specialized training or prior experience.

And fast food restaurant owners claim that they’ve got to control labor costs to keep prices low because they’ll otherwise lose customers. Not letting them off the hook, mind you, but customers do balk at price increases. And owners seem not to have a profit margin they can whittle down much — not, at least, if they’re franchisees of the major chains.

By contrast, childcare costs are dauntingly high — and rising. Professor Deborah Phillips, who worked on the Berkeley study, says “we’ve no idea” where the money is going, since obviously not to wages. Perhaps to other costs, as spokespersons for childcare centers say.

Regardless, we’ve got two big problems — unaffordable child care and a great many childcare workers who can’t afford basic living costs, child care included.

We can’t look to the private market to solve either, I think. As EPI concludes, we’ll need public policies.

And we should have them because they’d serve vital public interests—supporting and suitably rewarding valuable work, ensuring that all our nation’s children have the daily care and experiences that give them a good start in life and more.

 

 

Better Subsidized Child Care, But Could Be for Even Fewer Children

Shortly before the Senate began its extended Thanksgiving vacation, it did a remarkable thing. It again passed, by an overwhelmingly bipartisan vote, a bill to reauthorize the Child Care and Development Block Grant.

The House had already passed an amended version of the original bill on a voice vote, indicating that no member wanted dissents (if any) recorded. So we’ll soon have a generally better CCDBG, for the first time in nearly 20 years.

Not altogether the best bill we could have had, as such things rarely are. Nevertheless, a bill that will do various things to help ensure safe and potentially higher-quality child care.

And it will ensure that low-income parents can afford it for at least a year, even if they lose their jobs, end an education or training program or start earning somewhat more money than their state’s maximum for eligibility.

The hitch, however, is that it won’t add a cent to the block grant, though it does raise the cap on the amount Congress may appropriate by about $400 million over the next six years. Flat funding for the upcoming fiscal year, however.

So parents who manage to get CCDBG-funded vouchers should have fewer near-term worries about how they’ll afford child care — in many cases, the single largest expense in a family’s budget.

They should have fewer worries about their children’s safety because the bill requires, among other things, regular facility inspections, health and safety training for providers and employee background checks focused mainly on convictions for crimes of violence, child pornography and recent drug-related felonies.

And over time, parents should have fewer worries about whether their kids are getting the kind of care that develops the thinking, verbal and social skills they’ll need to be fully ready for kindergarten and beyond.

Under the former law, states had to set aside 4% of their block grant for quality improvements. The new law increases the mandatory set-aside up to 9% by the fifth year it covers. And it adds another 3% to improve care for infants and toddlers, beginning in the second year.

But there will be fewer of these less worried parents if Congress doesn’t also pass a hefty funding increase. Indeed, there already are fewer of them than in the recent past, even though the required set-aside has remained the same.

Preliminary data from the U.S. Department of Health and Human Services indicate that an average of roughly 1.5 million children a month received CCDBG-funded child care in Fiscal Year 2012.

This represents a one-year decrease of 116,400, CLASP reports — and a decrease of about 263,000 since Fiscal Year 2006.

Here in the District of Columbia, CCDBG supported child care for an average of 1,300 children — 54% fewer than in Fiscal Year 2006. And it’s hardly the case that we’ve got fewer low-income families now — or that child care has become more affordable.

The average cost of having an infant cared for in a local center was nearly $21,950 two years ago — about $3,750 more than in 2010.

A single mother earning the median for a family of her type would have had to pay 90.6% of her income for the care, unless it was subsidized. Perish the thought she had two children whose care she needed to pay for in order to work.

In Fiscal Year 2012, states and the District spent a total of $1.5 billion less on child care than they did the year before, in part because they ran out of Recovery Act money and in part because they used more of their Temporary Assistance for Needy Families funds for other things.

Combined federal and state childcare spending fell to the lowest level since 2002, when dollars went a whole lot further. And CCBDG spending, including transfers from TANF was virtually the same last fiscal year.

For this fiscal year, Congress restored the $154 million CCBDG had lost because of sequestration. What it will do for the upcoming fiscal year is a question mark. As I said, the reauthorizing bill provides for level funding. But that doesn’t mean the block grant will get it.

Even if it does, states will have to spend significantly more to comply with the new requirements. They’ll not only soon have to invest more in improving childcare quality.

They’ll have to develop complex new plans, including a process for ensuring that certain low-income families get priority. And they’ll have to collect and make readily accessible several types of information “to promote parental choice.”

So we should have better, more accountable publicly-funded childcare systems. But the requirements could further squeeze the amount states have to spend on subsidies.

Thus,  CLASP says, “Far greater investment — at the state and federal levels — will be needed to reverse this troubling trend” toward fewer and fewer low-income children in child care that wouldn’t bust the family budget.

Those of you who aren’t disenfranchised District residents can urge your Representative and Senators to provide the funding CCDBG needs. The National Women’s Law Center makes this quick and easy with an e-mail you can personalize.