WILL NEW CHILD CARE SUBSIDIES BE USABLE?
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% 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% 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.
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 faithbased and in-home family providers.
Already, the burden of existing child care regulations has contributed to a 52% 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.
According to a recent Bipartisan Policy Center survey, only 31% of working parents use center-based child care, and among them, 53% use faith-based child care programs. That means only 15% of working parents are currently using secular, center-based child care programs that are likely to become subsidized providers.
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.
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.
Rachel Greszler is a research fellow in economics, budget and entitlements in the Grover M. Hermann Center at The Heritage Foundation.