Our Childcare Crisis Is an Economic Crisis

Sheryl Gray was excited to find out her new promotion meant earning a higher hourly wage, as well as more hours. The single mother of two taught behavior plans to parents at a social-services organization serving families in Charlotte, North Carolina. She reported her new income information to the North Carolina Division of Social Services, who oversees the state’s child care subsidy and financial-assistance program, and her excitement soon changed to distress when she found out the agency was drastically decreasing their child-care assistance payments to her provider.

“This made the tuition increase by almost 50 percent,” Gray said. “My childcare provider was then demanding payment that week and charging late fees. I couldn’t afford it, so I brought my child to work with me until I couldn’t anymore.”

Losing such a substantial portion of her child care assistance payments set off an arduous chain of events. At the same time, she was struggling to afford childcare for her toddler, her other child was suspended from school. How was Gray to manage working the 35 hours per week granted by her promotion with two small kids with no place to go during the day? She could no longer afford her car payment, and without reliable transportation, she was forced to resign.

So Gray applied for jobs. She even had job offers—but the hourly wage couldn’t cover her expenses. Like many Black working women with children in America, she found herself penalized for working and unable to afford to keep doing so—and that was before the coronavirus pandemic.

For parents in the U.S., the lack of access to quality, affordable childcare was an economic crisis before the threat of COVID-19 shuttered business and left 6.85 million women unemployed. Nationally, the cost of lost earnings, productivity, and revenue due to the child care challenges totals an estimated $57 billion a year, and we’ve yet to see how that number will grow for this year. When women, in particular, can’t work because of shrinking funding for childcare subsidies, long waitlists for public preschool programs, and lack of affordable childcare, the economy suffers. According to a recent report by Council for a Strong America, insufficient childcare for children younger than age 3 costs parents a total of $37 billion per year in lost wages. That’s $37 billion that’s not going back into the economy. Businesses are losing $12.7 billion in productivity, and they are also gradually losing a workforce of women.

In 1999, women’s labor force participation rate peaked at 60 percent and has been on a steady decline since, which has a direct effect on the economy. When women entered the workforce in the 1950s, it boosted national economic growth. Since 2000, as women started leaving the workforce, improvements in our standard of living has slowed. Women’s personal long-term earning capability and financial stability are also greatly at risk here, some more so than others. Now, the devastating impact of the coronavirus pandemic on the already fragile state of child care in the U.S. has helped push more than 865,000 women out of the workforce, compared to the 216,000 men who left according to a new report. With the highest unemployment rate, Black women still in the workforce—who already work more and yet earn less—are in an especially precarious position.

Black women have historically had the highest rates of workforce participation of women across age groups and marital status. In 1880, 73 percent of single Black women and 35 percent of married Black women were in the workforce. At the same time, only 7 percent of married white women and 24 percent of single white women participated in the workforce. Despite these higher workforce rates, Black women are only paid 62 cents for every dollar a white man makes (white women are paid 79 cents). They are also more likely to be the breadwinners, defined as single working mothers whose family is dependent upon for financial support or married mothers who earn as much or more than their husbands. According to statistics by the Center for American Progress, more than 84 percent of Black mothers are the breadwinners of their households. Black women are key to the workforce and the economy, yet discriminatory employment policies and societal views of Black women as mothers hinder their economic opportunities. This issue is compounded by American society historically placing Black women as caregivers to white children while devaluing them as mothers to their own children.

Our culture places the childcare burden squarely on the shoulders of mothers, whether they are single or married—and consequently they get penalized for it in the workplace. Women need affordable and quality care for young children, but with childcare costs ranging from $4,000 to $22,600 annually and the motherhood wage gap costing them $16,000 a year in lost wages, women are forced into a cycle of financial sacrifice. Our economy cannot function without women and without a sustainable childcare system that ensures not just the wealthy have access to caregiving for young children. Low-income women cannot escape poverty, especially Black women for whom upward mobility is mostly a myth, when they are struggling to find quality care for their children so they can work—and then struggling to pay for it when they do.

The unequal division of labor between men and women—that sees women doing more than twice the number of hours of unpaid care work than men—is not just the storyline to a conversation between girlfriends over drinks. It’s part of a greater inequality. It’s a complicated issue that requires a national conversation focusing on the gender pay gap, discrimination in the workplace, and childcare affordability directly.

Megan Carolan, director of policy research for the Institute for Child Success, says, “We know childcare costs too much for parents and yet pays too little to its employees who are overwhelmingly women of color. The economics of childcare are messy. It’s simply an expensive service to provide because of the adult-child ratios needed, but the current model leaves parents stressed and providers burned out.”

Public support programs like childcare vouchers that are offered directly to providers, according to Carolan, are not available to nearly enough families. Rob Moore, public-policy analyst at Scioto Analysis, says such childcare subsidies and vouchers can be an effective tool in addressing these inequities when “smartly deployed.” With the average cost of childcare in the United States at $11,666 per year, a subsidy that works by covering the costs of care for families is worth more than the average Medicaid benefit of $6,000, earned income tax credit of $3,000, and SNAP (or food stamps) benefit of $3,000. “That is, on average, a larger benefit than any other major safety net benefit in the United States,” Moore said.

Moore adds that childcare subsidies are also an answer to a problem at the root of the childcare crisis: intergenerational poverty. Black Americans born into poverty are much less likely to move up and out of poverty than those in other racial groups. “High-quality early childhood education has been shown in experimental settings to have wage benefits down the road for low-income children in particular,” he said. Because stable employment has been touted as the way out of poverty, the lack of affordable quality child care in the U.S. must be addressed as a contributing factor to poverty.

Democratic presidential nominee Joe Biden has stated support for universal preschool but no plan for children under the age of 3. Moore says there’s an even more flexible option. “Many advocates for childcare access and affordability advocate for unrestricted cash transfers that allow parents to choose between childcare or home care for their child,” he said. That doesn’t solve the issue of quality childcare programs though.

Kristen Broady, Ph.D., economist and dean of the College of Business at Dillard University, says high-quality early childhood education programs are going to be necessary in the long term for families affected by systemic poverty who are most vulnerable to the childcare crisis. “Early childhood or pre-kindergarten education for disadvantaged children can significantly increase their cognitive abilities and lead to increases in educational achievement and school success in the long-term while reducing future participation in criminal and delinquent activity,” Broady said.

Currently, working women have few options for quality child care, she says, and the options will continue to grow slimmer. According to a recent survey by the National Association for the Education of Young Children, two out of five childcare providers believe their business won’t survive the pandemic and they’ll close permanently “without additional public assistance.” With the burden of unpaid child care falling disproportionately on women, the fight for workplace gender equality takes several steps backward while we wait for a solution from governmental policies.

“Basically the debate comes down to whether policymakers are willing to spend the extra dollars required for universality,” Moore said. What’s clear, however, is that high-quality affordable childcare is an investment that should be well worth it for the United States and the solution must be as comprehensive as the issue is complex—and it’s about time policymakers make it a real focus instead of a passing talking point. And when the lawmakers running for office who are mothers can’t even afford to pay for childcare, we officially need to wake up to the systemic barriers the childcare crisis is perpetuating. What we’re seeing are not the effects of a months-long economic downturn. It’s the result of a decades-long failure to invest in a public child care system that benefits working families and protects the economic progress of a generation of Black women in the workforce hoping to move upward.