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Our Plan for a $50 Billion Child Care Bailout

Senator Tina Smith
Apr 15 · 6 min read

By Senators Tina Smith (D-MN and )Elizabeth Warren (D-MA)

The coronavirus pandemic is causing a crisis for the nation’s child care providers and working families. Following the advice of public health experts and government officials, businesses have shuttered and families across the country are staying home to stay safe and to mitigate the spread of the virus. But this has pushed child care providers to the absolute brink: forced to either close their doors to stop the spread of the virus, or stay open around the clock to provide emergency care for children of essential workers.

Meanwhile, as unemployment claims have skyrocketed to historic levels and incomes have dropped, many families with children at home can no longer pay the tuition fees necessary to keep child care providers in business.

As the government provides hundreds of billions of dollars in funding to support small businesses and laid off workers, we must not forget about the critical sectors of our economic system that will fuel long-term economic recovery and prosperity.

Here’s the stark truth: when the time comes, we will not be able to rebuild our economy if this country’s child care system has collapsed beneath the economic burden of this pandemic. When the economy can start to safely get back on track, millions of parents will not be able to return to work or reopen their own small businesses if they cannot find safe, affordable, and reliable care for their children. And if child care providers must close their doors for months, we risk permanently reducing the supply of child care in this country.

That’s why we’re calling for a $50 billion child care investment to stabilize the child care system, keep providers in business, and ensure parents are able to go back to work when it is safe to do so.

Families in America already faced a serious child care crisis before the coronavirus pandemic. This country has long neglected our responsibility to invest in child care. Even before this pandemic, the challenge of finding affordable, high-quality, safe, and nurturing care has been a massive burden on families.

In more than half the states in the country, including Massachusetts and Minnesota, the cost of a year of child care is more than a year of in-state college tuition. The average cost of child care for a single child is between 9% to 36% of a family’s total income, and that share increases dramatically with multiple children. For single parents, the cost of center-based infant care could easily eat up between 27% to 91% of their average income. And even before child care providers started laying off workers and closing their doors due to coronavirus, more than half of all Americans lived in child care “deserts” — communities without adequate child care options. This was especially true in rural, Native, and Latinx communities.

Even when their classrooms were filled before the pandemic, providers struggled to stay afloat on the thinnest of margins. Despite high tuition fees, many child care workers — who are often women and women of color — are paid just above minimum wage. The math just doesn’t add up: providers must hire a lot of workers to care for a relatively small number of children to ensure safe, quality care. As a result of this low pay, providers already struggled to find, train, and retain staff — and that was before this most recent crisis.

But coronavirus is pushing an already fragile market to the brink of collapse. One early survey of providers revealed that half of them have closed their centers completely due to the virus. Another 15% are closed to everyone except children of essential workers, significantly reducing their enrollment and tuition revenue. The survey also revealed that nearly half of providers will not be able to survive a closure of more than two weeks without emergency funding. Providers across the country have made it clear: if they do not receive emergency funding, they will be forced to lay off staff and permanently cease operations in the coming days and weeks. Some providers have already made this gut-wrenching decision.

Congress provided only $3.5 billion in emergency funding to child care in the CARES Act. While this was a critical first step, child care is a $99 billion a year industry with over 2 million paid workers. State child care officials and local providers are in need of substantially more assistance if they are to weather this crisis. The latest estimates indicate that the child care sector will need at least $50 billion in emergency federal funding to stay afloat. Here is how we propose to spend that money:

  • Emergency funding to keep child care available to frontline and essential workers: Many providers across the country are risking their own health to provide emergency care for the children of essential workers, including doctors, nurses, grocery store workers, and first responders. These providers are faced with the double whammy of increased costs (due to longer operating hours and the need for more intensive and frequent cleaning), and less revenue due to significantly reduced enrollment. Our plan provides emergency funding to child care providers that need to stay open for our brave frontline and essential workers. We would also provide increased paid leave and hazard pay for child care workers risking their own health to remain open and totally eliminate fees for essential workers to access child care during this crisis.
  • Aid to keep providers in business and all workers on payroll: Closures necessary to prevent the spread of the virus have left tens of thousands of child care providers without revenue to pay their workers or their basic operating expenses. And families cannot afford to pay for care they aren’t receiving, which means revenue for providers has essentially dried up overnight. Our plan provides emergency funding to save the sector from collapse and to prevent more unemployment. Providers could use these funds to fully pay their staff, cover their mortgage or rent payments, provide employee benefits, and other operational expenses. Our plan also ensures that providers have the funding necessary to train workers on new health and safety procedures and to provide families with virtual learning opportunities and mental health support.
  • Long-term investments to prepare the child care market for when Americans can get back to work: Beyond the immediate need to keep the industry afloat during this emergency, our plan helps rebuild the system to ensure that more families have access to high-quality, affordable child care when the pandemic ends. This includes improving child care infrastructure and increasing wages for child care workers, which would further boost our economic recovery when this pandemic is over. These structural investments are key to ensure the sector is prepared to care for the children of all Americans trying to get back to work once we are beyond this crisis.

Our plan would funnel these federal funds through the existing Child Care Development Block Grant, to ensure that every state, territory, and tribal nation gets needed funding quickly, in order to get money out the door to providers. Our plan would also provide states with the flexibility necessary to immediately meet the needs outlined above, and to gradually get the child care system up and running again once parents return to work through an incremental approach that funds providers by classroom capacity rather than by child attendance.

Finally, we’ve heard directly from child care providers that they are facing significant obstacles to accessing loans from the Small Business Administration’s Paycheck Protection Program, established in the CARES Act. Right now, many child care providers have struggled to find a lender prepared to process their application, even though the loan program is fully guaranteed by the federal government. So it’s clear that key improvements to the program are needed so that child care providers and all small businesses involved in caring for children and supporting families, including afterschool programs and summer camps, can use it. That’s why our plan would fully fund the Small Business Administration’s Paycheck Protection Program, so that any qualifying small businesses and nonprofits involved in caring for children and supporting families can easily access it.

When we were young moms, our kids were always our first priority — only when we knew they were safe and cared for, could we then become working moms and fully participate in the economy. Our country was in need of a massive federal investment in child care before this coronavirus pandemic, which is why we introduced universal child care legislation or co-sponsored legislation to provide access to and improve early learning and care before this crisis.

We have only two options as a country: we can either do what is needed to stabilize the child care system, or we can watch child care providers collapse, one by one in our communities, leaving families with fewer options and hamstringing our economic recovery. We have a bold plan to save child care and ensure that it can be an active engine in our economic recovery. We are prepared to fight in Congress to save this system from collapse and strengthen it for the challenges ahead.

Senator Tina Smith

Written by

U.S. Senator Tina Smith of Minnesota

Senator Tina Smith

Written by

U.S. Senator Tina Smith of Minnesota

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