Child care cliff: 3.2 million kids could lose access beginning this fall 


June 23, 2023

As many as 3.2 million kids could lose access to child care beginning this fall and 70,000 child care centers across the U.S. could close, according to a disturbing new report released this week.  

The report, released by The Century Foundation, warns of the consequences of the loss of billions of dollars authorized by Congress as part of its pandemic-era aid. In many states, the aid expires on September 30. The report warns that these disastrous child care losses will have “ripple effects” that go far beyond the child care industry, which already was in dire straits even before the pandemic hit. 

Back in 2021, as part of the American Rescue Plan, Congress approved $24 billion in spending to help prop up child care centers – an unprecedented investment. Roughly 80 percent of licensed facilities received grants through the program; funds were often used to increase the meager salaries of child care workers, whose median national income is about $12 an hour. Funds also  were used to pay for supplies and mortgages or rent.

The Century Foundation’s findings are stark. Some painful specifics: 

  • In five states – Arkansas, Montana, Utah, Virginia, West Virginia, as well as Washington, D.C. — “the number of licensed programs cut be cut by half or more. In another 14 states, the supply of licensed programs could be reduced by one-third.” 
  • More than 70,000 child care programs will likely close nationwide, and about 3.2 million children could lose their child care spots. That is almost one-third of the number of children currently in child care. 
  • Millions of parents will be impacted; the report says many will leave the workforce or reduce their hours. Their combined loss in earnings will be $9 billion a year going forward. 
  • The loss in tax and business revenue “will likely cost states $10.6 billion in economic activity per year.” 
  • The child care workforce, which still has not come close to recovering from the hit it took during the pandemic, will lose an additional 232,000 workers.

“Our findings underscore the urgent need for immediate funding and long-term comprehensive solutions at the federal level that offer safe, nurturing, and affordable child care options to every family,” the report concludes.

“Federal funding made a huge difference,” Julie Kashen, a Senior Fellow at The Century Foundation and a co-author of the report, told The New York Times. “There are going to be huge and dire consequences for child care employees, for families, for employers.”

Child care centers’ owners and directors say they will respond to the loss in federal funds with a combination of approaches that include raising tuition, cutting wages, cutting employee benefits, and serving fewer children. 

The National Association for the Education of Young Children routinely surveys child care owners and workers. In its most recent survey, conducted in October 2022, 43 percent of owners and directors said they would have to raise tuition when the federal funding ends. Another 27 percent said they would cut wages; 22 percent expect to lose staff; 18 percent said they would serve fewer children; and 16 percent said they would cut staff benefits. 

While some child care owners plan to raise tuition, others in certain geographic locations say that is not an option. One of those is Lorna Adkins, who runs Growing Places out of her home in Huntington, West Virginia.

“Raise tuition? Not in West Virginia, not in this economy, not here,” Adkins told The Times. Adkins has been receiving $3,200 a month from the federal funds. She told the newspaper she spent the money on wages, cleaning supplies, utilities, and to offset rising food prices. After expenses, she said her take-home pay before the federal grants kicked in was a miserly $2.50 an hour.

Now, with the grants ending, prices continuing to rise, and new regulations on providers, she said she will take early retirement.

“There are a lot of people in child care that are going to close down because of this,” she said. “It’s just a fact.” 

American Rescue Plan
child care