Congress Must Secure Our Country's Critical Childcare Industry
The child care industry is a critical part of the infrastructure that supports the entirety of the U.S. economy. There is a wealth of economic data that shows that there is a direct, strong link between child care and economic growth and development. This fact was reaffirmed this week when the U.S. Center for Disease Control and Prevention (CDC) and Federal Emergency Management Agency (FEMA) declared “community settings where children are cared for” as our nation’s “first priority” in their “Framework for Reopening America,” their blueprint to begin the United States’ economic recovery.
Unfortunately, under the weight of the current COVID-19 crisis, this critical infrastructure is straining and quickly reaching a breaking point.
Across the country, child care is among the few businesses being designated as essential to remain open to serve health care workers, emergency responders, food service workers, truckers, utility sector workers, and other parents in essential industries. In the best of times, child care providers operate on very slim margins. Most providers do not have the liquidity to stay shuttered for longer than two weeks. However now, in this time of crisis, extended closures and decreased enrollment over multiple weeks or months could potentially put them out of business for good.
Our nation’s ability to provide care for those in need during this crisis, and essential services for a nation sheltering in place, requires our vital child care infrastructure remaining intact to serve those who must remain on the job, including the 3.5 million medical professionals needing child care.
In major cities across the country, many of which are experiencing the highest rates of COVID-19 illnesses and therefore the highest levels of need for essential workers, accredited centers are a central source of child care. These centers have adapted to ensure children of first responders are well cared for, to the extent that they have been able to remain open. Unfortunately, many have not. In fact, over 75% of facilities across the country have been forced to shut their doors, many of which may never reopen. Already, 70% of child care teachers have been laid off or furloughed. And all these numbers are growing, setting up a potentially larger child care crisis that could slow any economic recovery when our country is ready to return to work.
The economic impact of these centers closing for good will be immense and widespread if they are not provided the necessary federal support. This includes a loss of over 6,000 centers and job loss for over 175,000 educators. The broader economic impact will be far greater, as the market-based child care industry has a total direct and indirect economic impact of $99.3 billion, including wages of $39.85 billion and over 2 million jobs.
Congress missed this vital, much needed sector in the recently enacted stimulus bill despite the critical role it plays in fighting COVID-19. Restaurants and the hospitality industry were covered through small business loans, securities, and other supports included in previously passed legislation, but mid-size to large child care providers have not been able to obtain this relief. However, it’s not too late.
Congress and the Administration should act now to implement policies to mitigate the current crisis and ensure that working parents are able to return to the labor force after shelter-in-place orders are lifted. Relief in the form of childcare stabilization measures for mid-to-large providers would provide access to capital to address liquidity shortfalls. In addition, centers need additional relief through SBA loans, similar to the relief provided to restaurants and hospitality industry.
Congress should also provide substantial assistance for families who have experienced a decrease in wages due to COVID-19. This can be addressed by increasing eligibility and assistance through the Child and Dependent Care Tax Credit, increasing contribution limits to DCAP FSAs, providing incentives for companies to provide childcare assistance to employees, and considering the creation of a Child Care Tax Credit.
Child care and early child education centers will also need assistance once they reopen. The economic recovery will happen in waves. Families will not return at the same time since timelines will very state-by-state. Centers may need to operate programs that are not at full capacity to accommodate parents who return to work during the early stages of economic recovery. Operational costs may exceed revenue for a few months and recovery funding will be necessary to help centers pay overhead costs. Additionally, centers may need to invest in changes to curriculum to accommodate children who have not had access to an educational setting in months.
If the child care industry is not provided crucial support now, there will be no one to take care of the children of working families, both during and after this crisis. If this industry does not survive, the high-quality child care infrastructure in the U.S. will collapse, threatening U.S. economic recovery. As Congress continues to craft additional stimulus packages, the child care industry must be prioritized, for our nation’s working families, the care of our children, and for our economy.