Child Care Crisis Looming as Federal Funding Ends, Hurting Latino Families

Starting September 30, federal child care relief funds will come to an end. Leaving nearly 70,000 child care programs to most likely close their doors and 3.2 million children to lose their child care spots, according to a report by the independent think tank, The Century Foundation.

The American Rescue Plan passed in 2021, included $39 billion in new child care funding, including $24 billion for child care stabilization grants to providers and $15 billion in supplemental Child Care and Development Fund (CCDF) Discretionary Funds. A much-needed lifeline for many child care providers. The loss of funding would have states losing an estimated $10.6 billion a year in economic activity. The report goes on to state that it estimates a loss of 232,000 jobs and will affect millions of families, forcing many parents to leave the workforce and costing families $9 billion annually in lost earnings.

"Ask any parent, any provider or any business in just about any part of this country, and they will tell you: We have a child care crisis in America," U.S. Sen. Patty Murray said in a news conference. "And that crisis could soon go from bad to worse as essential relief for the sector expires at the end of this month."

The already vulnerable child care sector was struggling and during the pandemic was about to be pushed over the edge. But federal funding was able to keep 220,000 child care providers afloat, enabling child care services for up to 9.6 million children, according to the Department of Health and Human Services (HHS). Funds have also been used to help with operational costs like wages and benefits; rent and utilities and more.

With no federal funds many parents will have to reduce work hours or leave their jobs entirely due to a lack of affordable child care. One study found that women's labor force participation contributes $7.6 trillion to the GDP every year, but the lack of affordable child care can hinder mothers' ability to go to work.

According to a report by the Annie E. Casey Foundation,16% of Latino kids ages 5 and under lived with a family member who had to quit, change or refuse a job because of child care issues in 2021. Latinos are also more likely to live in areas with fewer child care centers and they work lower wage jobs with irregular hours that are not adaptable to traditional day care centers.

"But we also do know that many Latino families are paying a lot out of pocket to purchase child care, which I think does show that commitment to staying in the workforce," Julia Mendez, a professor of clinical psychology at the University of North Carolina at Greensboro and researcher at the National Research Center on Hispanic Children & Families told Axios.

According to an analysis by the national network Child Care Aware of America, the average annual cost of care for one child in America was $10,600 in 2021 — one-tenth of a couple's average income or more than a third (35%) of a single parent's income.

While federal funds have worked to make child care more accessible, retention of child care workers has been stagnant adding more difficulties to child care providers to keep their doors open. Child care workers are among the lowest-paid workers in the U.S. According to a report by The Annie E. Foundation, 24% of child care workers identify as Hispanic/Latino, while 14% identify as Black and 4% as Asian.

HHS estimates that more than 650,000 child care workers received a form of increased compensation through COVID relief funds. States took a variety of approaches, using funding to provide wage increases, stipends or bonuses, essential worker incentive pay, recruitment and retention bonuses, mental health services, insurance, and professional development support. An example is the state of New Mexico, which increased wages for child care workers to $15 an hour for entry-level employees and $20 an hour for lead teachers.

According to a survey conducted in October 2022 by The National Association for the Education of Young Children it reports that 43% of child care center directors and 37% of family child care providers have said they would have to raise tuition once grants end on Sept.30. The report also states that 27% of child care center directors and 29% of family child care providers responded that they will cut wages or be unable to sustain wage/salary increases.

Democratic lawmakers have urged legislation calling for $16 billion in mandatory funding for child care each year for the next five years in an effort to prevent a child care crisis.