Childcare factored significantly in President Biden’s American Rescue Plan and is included in his proposed American Jobs Plan. The provisions reflect a growing acknowledgement that affordable, accessible childcare is critical for low-income and women-led households and their young children.
“Many low-income families struggle to pay for childcare and housing, and many are forced into lower-quality or less stable childcare arrangements and housing that is overcrowded, substandard, or located in neighborhoods with fewer opportunities for parents and children,” according to the Center on Budget and Policy Priorities.
Because of inadequate funding, only one in six children eligible for federal childcare assistance receives it, the Center says. More than 1.3 million children receive federally subsidized childcare, but numbers have continued to decline. Funding in 2018 was $1 billion below the funding level in 2001.
Research has shown that pre-K childcare contributes to healthy childhood development and subsequent performance in school. Affordable, accessible and reliable childcare can relieve a major source of stress on frontline and essential worker households, where two adults or a single parent work outside the home.
Affordable, accessible and reliable childcare can relieve a major source of stress on frontline and essential worker households, where two adults or a single parent work outside the home.
The COVID-19 pandemic disrupted the economy, but many frontline and essential workers continued to leave home for work, sometimes for long or extended shifts at hospitals, food banks, fast food restaurants and grocery stores. Low-income households faced the Hobson’s choice of working for less money than it took to pay for childcare. Data shows childcare expense can consume as much as 30 percent of a low-income household’s take-home pay.
American Rescue Plan
The American Rescue Plan (ARP), signed into law in March, builds off funding in the CARES Act, which Congress approved in March 2020 when the pandemic was declared. The ARP provides $39 billion in one-time funding – $15 billion for childcare assistance with no income limits and $24 billion a grant program to help childcare providers remain viable.
ARP’s childcare assistance provisions apply to families already eligible for assistance, while also authorizing assistance to health care sector employees, emergency responders, sanitation workers and other essential workers. Childcare stabilization funding provides grants to qualified childcare providers, including in US territories and on tribal lands, to sustain operations and offer tuition payment relief for families unable to afford childcare. Grant funds may be used for salaries, recruitment, rent, facility maintenance, personal protective equipment, goods and services, updated equipment and mental health supports for children and employees.
Perhaps the most far-reaching childcare provision in the ARP is the one-year enhancement of the Child Tax Credit, which was established in 1998. According to the Tax Policy Center, more than 90 percent of families with children will receive an average benefit of $4,380 per year from the tax credit. Low-income families will receive benefits on par with middle- and higher-income families.
The maximum tax credit goes from $2,000 for each child under age 17 to $3,000 for children between 6 and 17 years of age and $3,600 for younger children. The tax credit is fully refundable, even for low-income parent who don’t work. Under the ARP, families would begin to receive advance payments of the tax credit as early as July. The Internal Revenue Service will publish rules on how to apply for up to half of the tax credit.
Childcare advocates have hailed the enhanced tax credit as a pathway to reduce child poverty and racial disparities in childcare assistance. They say the temporary enhancement should serve as a model for a permanent refundable childcare benefit.
American Jobs Plan
Biden’s ambitious plan, which faces challenging prospects in Congress, treats housing, public schools, community colleges and childcare facilities as critical infrastructure alongside roads, bridges, rail and waterways. The plan seeks $25 billion to upgrade existing childcare facilities and incentivize creation of facilities in areas with high unmet need.
“Lack of access to childcare makes it harder for parents, especially mothers, to fully participate in the workforce,” says the White House briefing paper on the American Jobs Plan. “In areas with the greatest shortage of childcare slots, women’s labor force participation is about three percentage points less than in areas with a high capacity of childcare slots, hurting families and hindering US growth and competitiveness.
A Child Care Growth and Innovation Fund would be established so states could issue grants to increase the supply of childcare facilities in high-need areas. The plan also would expand a tax credit to encourage businesses to build childcare facilities in workplaces by paying 50 percent of the first $1 million in construction costs.
The briefing paper says, “These investments will provide safe, accessible, energy efficient, high-quality learning environments for providers to teach and care for children. Public investments in schools and childcare improves children’s outcomes – the foundation for future productivity gains.”
The Centers on Budget and Policy Priorities (CBPP) tie childcare investments to housing investments, a view reflected in the American Jobs Plan with a proposed $213 billion investment to “produce, preserve and retrofit more than 2 million affordable and sustainable places to live.”
“Stable, affordable housing and high-quality, affordable childcare are essential to families’ economic stability, parents’ ability to work, and children’s healthy development,” the CBPP says.
“There is a severe shortage of affordable housing options in America,” according to the American Jobs Plan briefing paper. “Millions of families pay more than half their income on rent, and home energy costs are a significant concern for American renters as well. And, across the country, people are struggling to purchase their first home.”
Inclusion of childcare and other forms of non-traditional infrastructure in the American Jobs Plan has ignited criticism from political conservatives. It also has raised the gender issue.
“If we were to look at the traditional definition of infrastructure, which includes construction jobs and production occupations and some installation and repair, those tend to be traditionally male,” says Nicole Smith, chief economist at Georgetown’s Center on Education and the Workforce and co-author of a new report. “Nine in 10 traditional infrastructure jobs have historically gone to men.”
Mark Zandi, chief economist at Moody’s, estimates that men would only get 60 percent of the jobs generated by the American Jobs Plan, an improvement, but not enough to satisfy some advocates who believe more investment is needed in the ‘care-economy’.
The care-economy is expected to play a central role in the American Families Plan, which Biden will unveil in coming weeks.