ENSURING AFFORDABLE CHILD CARE
As we continue the pandemic recovery, the inability to find or afford child care was listed as the number one reason for not returning to work by unemployed respondents in a recent poll – ahead of any health-related concerns or disincentives caused by augmented unemployment insurance benefits. Given the drastic increase in costs over the last 30 years, child care has become unaffordable for an increasing number of Marylanders. Between 1985 and 2011, the cost of child care went up by more than 70 percent, significantly outpacing middle class workers’ salary gains. In fact, one study found nearly two million parents have “had to quit a job, not take a job, or greatly change their job because of problems with child care.”
We must take “an all of the above” approach to child care, including:
- Lean into child care and other family support measures included in the Build Back Better plan, leveraging federal dollars to make child care more affordable and accessible.
While the outlook for the Biden administration’s Build Back Better agenda – which includes the many provisions of the American Families Plan that benefit children and families – remains uncertain, its passage would make many of the below investments in pre-kindergarten education and child care more immediately feasible, reducing the financial burden on the state and expediting the timeline for implementation. While precise details and funding levels could still change, the $250 billion for child care and $200 billion for universal pre-k education that are included represent “a once-in-a-generation opportunity for comprehensive investment in our nation’s young children.”
In addition to extending crucial tax credits – including the recently-expanded child tax credit and the Child and Dependent Care Credit, which can reduce child care costs for families by thousands of dollars annually – the legislation also would include significantly augmented block grants to states to enhance, improve, and expand high-quality child care offerings; and limit annual child care costs for low- and middle-income families. It also would substantially ease the transition for the state toward implementing a truly universal pre-k program for all Maryland 3- and 4-year-olds.
- Provide full-day universal pre-K for 3- and 4-year-olds, allowing kids to enjoy long-term success and security, and allowing parents to work.
The District of Columbia has offered full public funding for full-day pre-k education to all 3- and 4-year-olds, regardless of family income, for over a decade now. While the program has been expensive, the investment has been worthwhile; some 73% of 3-year-olds and 84% of 4-year-olds in the city participating, creating a “diverse group of students” that benefits everyone. Universal pre-k there has also had “a large positive effect on maternal labor supply –comparable in magnitude to the impact found in studies of universal preschool programs in other countries”; other benefits could include “faster growth in gross domestic product (GDP); stronger financial security for young families; and fewer career sacrifices by women, who assume a disproportionate share of their families’ care responsibilities.”
The Biden Administration is also on board, including in the American Families Plan a proposal to offer “free, high-quality, accessible, and inclusive preschool to all three-and four-year-olds.”15 Maryland’s pre-k expansion to more low- and middle-income families over the coming years should be seen as a step toward an ultimate goal of providing “free, high-quality, accessible, and inclusive” pre-k – not just for all Maryland 2030 participants, but for all 3- and 4-year-olds in the state.
- Increase child care capacity statewide by offering tax credits to participating employers who provide on-site child care and ensuring providers are paid promptly.
Employers of all sizes are well-aware of the important role access to affordable child care plays in the career success of their employees – and the COVID-19 pandemic has only made this issue all the more urgent. A June 2021 poll, for example, showed that, among adults receiving unemployment insurance benefits, child care obligations were the leading reason for turning down a job offer during the pandemic, outpacing COVID-19 itself, health limitations, or the effects of augmented unemployment benefits. Employers have taken note, with some now offering subsidies to employees to make child care more affordable; and others offering on-site child care programs of their own, with impressive results in terms of employee retention and work engagement. (Though unlike private employers in many ways, the military has become a national model for child care, offering high quality, relatively low-cost services to families with young children on military bases; today, it is “the largest employer-sponsored child care program in the United States.”
At the federal level, employers can claim tax credits for doing just this, incentivizing them to provide on-site care in a way that doesn’t break the bank for small businesses; many states have similar provisions in their own tax codes as well. (Patagonia, the clothing company, has utilized the federal credit to the maximum amount for years while providing on-site child care to all employees; they have estimated that the benefits more than make up for the cost to the company.
Maryland should enact such a credit in order to boost on-site care, which also will serve to enhance overall availability statewide. Boosting funding for public child care programs can improve quality and increase capacity, but the timing of funding also plays a role. Many child care providers are small businesses, with few employees and limited cash to cover payroll. By having the state ensure that all providers, public and private, receive payment quickly, easily, and, if needed, up-front, we can help more providers keep their doors open, thereby increasing child care availability and building capacity statewide. The benefits of increased capacity and greater financial security for providers statewide more than outweighs the limited fiscal risk taken on by the state in enacting this policy
- Provide participating workers with subsidies to make child care more affordable.
The Biden administration’s American Families Plan calls for covering the cost of child care for children up to the age of five from low-income families entirely; and for limiting the cost of child care for children up to the age of five from middle-income families up to those earning 1.5-times the state’s median household income to 7% of their income by providing tax breaks. (In Maryland, the median household income in 2019 was $86,738; 1.5-times the median household income was $130,107.23) Regionally, the District of Columbia, in 2018, passed the Birth to Three Act to expand eligibility for child care vouchers and ensure that no family spends more than 10 percent of household income on child care.
Depending on action at the federal level, Maryland should either pursue this policy at the state level (limiting child care costs for low- and middle-income families to 7% via tax breaks or subsidies); or supplement the federal policy to further reduce child care costs, for example, by limiting families’ costs to just 5 percent of household income – a policy objective that would have dramatic positive effects on countless Maryland families, and that would be far more affordable to the state without federal legislation getting us part way there. This program could begin with all Maryland 2030 participants, with the goal of eventually expanding to all Marylanders in coming years.
- Ensure child care is not a barrier for any Maryland 2030 participant engaged in upskilling.
Between a statewide expansion of pre-k education under the Blueprint for Maryland’s Future, new state incentives for employers to provide on-site child care services, enhanced state subsidies for Maryland 2030 participants to be able to afford public or private child care, and the potential for action at the federal level to make care more affordable and increase the number and improve the quality of providers, many more working families will be covered. But we need to ensure that no participant – or potential participant – in Maryland 2030 is unable to get the skills and job training they need, and pursue the career of their choice, because child care remains a barrier, whether it be an issue of affordability, accessibility, or quality. We will work with stakeholders, providers, private employers, and non-profits to fill any gaps that remain. And as the state expands both child care and pre-k options and increases funding levels, we will work to ensure that all Marylanders have access to high-quality, affordable child care.