Why We Should All Care About the Fate of Child Care

December 9, 2020

Child care teacher working on puzzles with a group of students

Child care is like a lifeboat. If you don’t need it, you don’t think about it. When you do, it’s one of the most important things in the world.

So why is child care so often overlooked? Child care blurs the lines between parenting, education, and small business; it encompasses all of them without fitting squarely into any of them. And child care providers are traditionally underpaid or low-wage women of color, who are often forgotten and undervalued.

Whatever you call it, child care matters. It enables parents to work. It enables child-care providers to work. It’s an entire industry that does the critical job of raising children.

If we want this country to thrive, we must all care about child care. So, let’s talk about why child care matters, how the pandemic poses new threats to the child care sector, and how to support it.

Why child care matters

Child care enables parents to work. In 2019, parents with children under 18 represented nearly one-third of the workforce (32%). Sixty-seven percent of children under age six in the U.S. have all available parents in the labor force.

Child care enables women to work. In 2017, 64% of mothers in the U.S. contributed at least a quarter of total household earnings compared to 28% of mothers five decades ago. Women in particular are more likely to not work—or to quit work—if they can’t afford child care.

Child care enables women of color to work. The majority of children under 5 are now people of color. Many parents of color, particularly Black women, face the challenge of seeking child care while having lower earnings to pay for it.

A new threat to the child care sector

Before the onset of COVID-19, the child-care industry was undervalued. Today, faced with the coronavirus pandemic, child-care centers are in danger of being closed for good. A national survey of child-care providers conducted in late June found that nearly 2 of every 5 respondents are certain they will close permanently without additional assistance. This imminent closure was reported for over half of child-care businesses owned by people of color, underscoring how communities of color are disproportionately affected by the pandemic.

If the child-care industry collapses, three things will happen.

  1. Thousands of child-care workers will lose their jobs.
  2. Millions of parents will lose the service that enables them to hold jobs.
  3. The whole country will feel the ripple effect.

Most parents already struggle to afford child care. Nationwide, families making the median average income for their state spend on average 18% of their income for infant center-based care, and 13% for a toddler. Low-income families are estimated to pay over one-third of their income on child care.

So what do we do now?

If we want to reduce gender and racial disparities in this country, and if we want to nurture all children and enable their success, we must value child care, support the sector, and help it thrive.

How? Here are three ways, just for starters.

Recognize child care as a small business and support it accordingly

Because a child-care center is indeed a small business, it could use more business support. For example, an employee stock ownership plan may be a promising approach to reduce turnover, provide benefits to staff, and enable profit sharing.

Invest in child care to promote community prosperity

Greater public and private investment can create a child-care system that pays living wages while ensuring that child-care providers can be resilient in the face of disasters such as the current pandemic. Investing in the sector will also enable more workers, particularly women of color, to achieve financial security.

Engage new partners in strengthening the child-care industry

Assistance can come from every sector. National fiscal support has been and will continue to be critical in this time of crisis, but many state and local actors can also play a role.

On the state level, revolving loans can support child-care facilities with renovation and repair, as well as the purchase and lease of child-care facilities. Many states, including California and Washington, have such funds.

Local jurisdictions can implement development impact fees. In San Mateo, CA, the city collects a fee of $1.08 per square foot on commercial developments that exceed 10,000 square feet. Over $2 million from these impact fees were recently provided as forgivable loans to create new child-care spaces.

Community development financial institutions can provide funding, technical assistance, and small business consultation. Philanthropy can enable systemic change.

But not all support needs to be financial.

Local colleges can offer early childhood degree programs. Local community groups can donate time or services. Community development organizations can provide business expertise.

In the midst of the challenges that the COVID-19 crisis has raised, we can imagine new possibilities for child care, and we can develop a robust child-care industry for our current and future economy.

For more information, read our research brief “Child Care, COVID-19, and our Economic Future”.

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The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.