New Child Care Subsidies May Sound Great, but Will Families Be Able To Use Them?

COMMENTARY Marriage and Family

New Child Care Subsidies May Sound Great, but Will Families Be Able To Use Them?

Nov 15th, 2021 3 min read
COMMENTARY BY
Rachel Greszler

Research Fellow in Economics, Budget and Entitlements

Rachel researches and analyzes taxes, Social Security, disability insurance, and pensions to promote economic growth.
We hold fast to the ability to choose the environment that we—not politicians or bureaucrats—believe is best for our children. Maskot / Getty Images

Key Takeaways

A lot of strings are attached to the new program—strings that will drive up costs—and prevent the majority of current child care providers from qualifying.

The administrative burdens required to become “top tier” providers will likely be so onerous as to drive out all faith-based and in-home family providers.

Instead of a one-size-fits-all government program, policymakers should focus on helping families achieve the child care they desire.

One of the more expensive and potentially transformational provisions included in the $2.5 trillion reconciliation package now before Congress: a new child care entitlement that would pay for 100 percent of child care costs for families making less than their state’s median income (about $100,000 nationwide). Families making up to 2.5 times their state’s median would pay no more than 7 percent of their income toward child care.

With subsidies topping out at $429,000 of income for a family of four living in D.C.—and lawmakers removing a provision that would have prevented millionaires from receiving subsidies—nearly every family in America would be eligible.

By establishing a new right to “top tier” child care, it may seem that the program will make child care accessible and affordable.

Not so fast. A lot of strings are attached to the new program—strings that will drive up costs—and, ironically, prevent the majority of current child care providers from qualifying for government subsidies.

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While unlimited taxpayer spending would cover higher costs—potentially leading to new child care programs—few providers would be willing to establish child care programs that would be unaffordable to families once the subsidies run out in 2027. The program’s requirements, including paying a “living wage” that equals over $39 per hour for a single mom in Boston, could double child care costs.

Perhaps the biggest failure of the new child care entitlement is that it treats providers that accept subsidies as recipients of federal financial assistance.

That’s a really big deal because unlike current child care grants, it means that faith-based providers can’t operate their programs or hire their staff based on their beliefs and mission statements. No more prayers of thanks before meals, no talking about the Judeo-Christian account of creation, and no religious foundations included in teaching kids about sharing, telling the truth and being kind to others.

Since the mission of most faith-based child care programs is to practice their core beliefs in service to parents and children, few providers will be willing to compromise their missions to become subsidized providers.

Moreover, the physical changes and administrative burdens required to become “top tier” providers will likely be so onerous as to drive out all faith-based and in-home family providers. Most congregations and in-home providers won’t have the capacity or willingness to transform their buildings and homes to meet new space requirements, buy new equipment and furniture, and conform to new green energy standards.

Already, the burden of existing child care regulations has contributed to a 52 percent decline in the number of small in-home providers between 2005 and 2017. And licensed in-home providers who already spend 51 hours a week caring for children and another 18 hours on administrative care don’t have time for even more “top tier” child care regulations.

It’s not surprising that a universal pre-K program is “strangling” private day-care providers in Chicago, or that New Jersey’s program is fraught with political favoritism and an accountability crisis.

The crowding out of faith- and family-based providers will be bad news for parents whose preferences don’t match certain politicians’ visions of state-run child care utopias.

According to a recent Bipartisan Policy Center survey, only 31 percent of working parents use center-based child care, and among them, 53 percent use faith-based child care programs. That means only 15 percent of working parents are currently using secular, center-based child care programs that are likely to become subsidized providers.

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Contrary to stated goals, the new child care entitlement will disproportionately benefit high-income, city-dwelling parents where secular, center-based providers can more readily conform to subsidized providers. Meanwhile, most lower-income and rural families will receive nothing and could be left with even fewer child care options than before.

Affordable child care is a really difficult issue because paying for child care means you have to make more than the person caring for your children. But as parents, we dearly value the people who help care for our children. And we hold fast to the ability to choose the environment that we—not politicians or bureaucrats—believe is best for our children.

Instead of a one-size-fits-all government program, policymakers should focus on helping families achieve the child care they desire. That includes removing barriers to more flexible and affordable options and allowing parents to use existing Head Start funds at a provider of their choice.

This piece originally appeared in The Sacramento Bee