The child care crisis in the U.S. has been exacerbated by the Covid-19 pandemic, resulting in billions of dollars in losses for businesses.

• Amid the Covid-19 pandemic, day cares closed, schools shifted to remote learning, and parents struggled to balance their work and childcare responsibilities.
• Since then, the sector has been affected by a shortage of workers and limited slots for children.
• The estimated annual cost of the U.S.'s infant-toddler child care crisis is $122 billion, according to projections from ReadyNation.

The pandemic exposed weaknesses and strengths in the US economy, with child care being a focal point as day cares closed, schools shifted online and parents struggled to balance work and childcare.

Despite the latest data from the Bureau of Labor Statistics indicating that employment in the child care sector has returned to pre-pandemic levels, a shortage of workers and limited slots for children in certain areas is still affecting the sector.

The cost of child care for families has increased between 15% and nearly 30% annually, according to a February report from Bank of America. Households with average incomes of between $100,000 and $250,000 experienced the largest increase in child care costs during the fourth quarter of 2023.

Advocates for policy argue that child care, including for infants and toddlers, is an economic issue that impacts all Americans, not just those with young children.

The expiration of billions in stabilization funds from the American Rescue Plan Act for the child care sector could result in increased costs for families or centers shutting down.

An advocacy group comprising over 2,000 business executives, ReadyNation, advocates for policies and programs at state and federal levels that promote a robust workforce and economy, including child care.

In 2023, a report by the group revealed that the U.S. loses an estimated $122 billion annually due to the infant-toddler child care crisis, which is a significant increase from the $57 billion lost in 2018. This increase occurred after the pandemic exposed and intensified the system's flaws for working families and the businesses that rely on them.

The crisis has been exacerbated by the combination of Covid-19 and inadequate policy action.

"The loss of taxpayers is $1,470 every year per working parent due to lower income taxes and sales taxes because of unemployment," stated Nancy Fishman, national director of ReadyNation.

Early child care providers are a crucial part of the nationwide solution.

"Ensuring that child care providers have access to benefits is crucial, as benefits are essential for both their health and their ability to find high-quality care for their own children. Additionally, programs that provide additional training and education for child care providers are also important."

Solutions in the Golden State

The economic toll in California, including lost earnings, productivity, and revenue, is estimated to be $17 billion, higher than any other state in the country, according to ReadyNation's projections.

Despite a 2020 baseline rebound in child care jobs in the state, other states have experienced greater job growth following the pandemic.

In 2019, a union called Child Care Providers United was formed in California, representing more than 40,000 home-based licensed and license-exempt, friends and family, child care providers. These providers are part of the state subsidy program in California and the union is a partnership of SEIU Locals 99 and 521, as well as UDW/AFSCME Local 3930.

In 2021, the group secured its first contract and was granted unique retirement benefits.

Child care providers in the state are reimbursed at a percentage of the cost of providing care, with average pay ranging from $7 to $10 an hour and many providers reporting no take-home pay, according to the union.

Advocates are pushing for full reimbursement of care costs through the state budget process to enhance provider dignity, maintain open providers, and attract new providers to the workforce.

Deborah Corley-Marzett operates an in-home center for subsidized care in Bakersfield, California. She stated that she would like to hire more staff to support her and the children, but it is challenging to find the right fit and offer competitive wages in this environment. In contrast, low-wage workers in the state's fast-food sector recently secured a historic $20 an hour minimum wage, putting pressure on other sectors to keep up.

"I am currently facing a staff shortage issue. I cannot afford to hire someone to assist me in the mornings at the moment. I am unable to do so financially," Corley-Marzett stated. "I do not have enough children presently. However, I am physically incapable of taking on any additional children."

While lawmakers contend that advancements have been made, there is still much to be accomplished. Senator Nancy Skinner, a Democrat representing the Bay Area and chair of the California Women's Caucus, emphasized the group's ongoing commitment to prioritizing early child care and education. Over the past two years, the group has advocated for a $2 billion increase in the state's spending, resulting in a total of $6.5 billion allocated towards early care and education.

The Caucus is currently concentrating on preserving consistent reimbursement rates for child care providers amidst the state's impending budget shortfall.

"Skinner stated on CNBC that although unemployment is low, several sectors of the economy are in need of workers. If a family is unable to go to work due to insufficient child care or inability to afford it, they cannot fulfill the job opportunities that are available."