Major public funding needed for child care

Without it, the reopening won’t get off the ground

MONTHS BEFORE the first documented case of coronavirus became public, an owner of a Connecticut-based child care center suggested a way to demonstrate child care’s critical role in the economy.

“Just shut down child care for a day,” she said. “The economy will come to a screeching halt.”

Her words have proven prophetic.

The essential role of child care in our economy has been bracingly clear from the start of the pandemic. As we approach recovery and reopening, it’s apparent that leaving child care to a mostly private market has placed us in a vulnerable position. In order to resume pre-COVID-19 levels of economic activity, we need a fully functioning, robust child care system that is resilient in a crisis, much like our publicly funded K-12 education system. Instead, we’re facing potentially permanent closures across the sector, even as we erect new and higher barriers to high-quality child care. We don’t have to take this path.

Last month in Australia, the government announced free child care for families, and the government did it for the same reasons we need to protect child care here – to preserve the sector and create bridges to recovery. If we do not consider unprecedented funding increases in child care in the US, we risk an inequitable recovery and a child care sector that’s even more vulnerable during the next crisis.

The key challenges for providers as they look to re-open are maintaining a viable business while offering affordable, conveniently located, quality care that parents can trust.

That challenge existed before the crisis and is now intensified, given months of lost revenues and new Centers for Disease Control guidelines to minimize transmission of the novel coronavirus. Smaller classes, lower child-to-staff ratios, and more rigorous cleaning regimes will often mean fewer slots, limited hours, and higher costs.

Even before the crisis, many parents were priced out of high-quality care or felt obliged to use subpar care. Today, continued inaction and underinvestment have left us with an array of options that cannot be sustained in the new economic reality and still support working parents.

Currently, some federal lawmakers are working to provide funding that would ensure this sector’s future. But to have a real impact, state and federal policymakers should be working together in a nonpartisan fashion toward a greater goal of ensuring that the critical child care sector can thrive. The issue has garnered support from both sides of the aisle in recent years, and several proposals have been offered, but there’s been no significant change. The actions we need to take now could involve dedicating considerable resources, but it would be worth the investment. The benefits to the economy would be significant, both in the short term, from increased work opportunities for parents and higher tax revenues, and in the long-term, from investments in children.

Committing transformative levels of support to child care could also help shift the balance of funding into the public sphere. This could spark the development of new options and offerings that help children and parents. Even support short of transformative levels could help cover losses accrued over the past months, while ensuring providers can meet Centers for Disease Control guidelines that may make doing business cost-prohibitive.

Meet the Author

Marybeth Mattingly

Leadership team, regional and community outreach group, Federal Reserve Bank of Boston
Meet the Author

Sarah Savage

Senior policy analyst, Federal Reserve Bank of Boston
Meet the Author

Marija Bingulac

Senior community development analyst, Federal Reserve Bank of Boston
We urge policymakers to be bold and consider new levels of public funding for child care. Funding that aims only to support re-opening, while critically important, would not fundamentally alter the many flaws in the structure of child care which the pandemic has exposed. Families everywhere must have access to affordable, high-quality child care. Otherwise, the recovery will not be complete or equitable, and the pandemic’s difficult and stark lessons about the essential nature of child care to our economy will be lost.

Marybeth Mattingly is part of the leadership team for the Federal Reserve Bank of Boston’s regional and community outreach group. Sarah Savage is a senior policy analyst and Marija Bingulac is senior community development analyst at the Boston Fed. They have been working closely together over the past year researching childcare needs. The views expressed are their own and not those of the Federal Reserve Bank of Boston, the Federal Reserve System, or its Board of Governors.