Federal subsidies for child-care just ended, and child care options could dwindle for many employees

October 3, 2023

The American Rescue Plan (ARP), passed in early 2021 when we were still reeling from the Omicron surge of the COVID-19 pandemic, provided $24 billion in subsidies for child care. The Department of Health and Human Services estimates that this program has provided aid to more than three quarters of all child care providers through the states. Regardless of whether or not there is a federal shutdown due to the Congressional budget impasse, the ARP funds are no longer available in any state at the end of September, and this is likely to lead to an increasing crisis in child care access for many families. Many of these families also face elder care challenges.

Childcare has always been a challenge, especially for low wage workers, and the Century Foundation estimates that the loss of ARP funds will lead to closing of more than half of child care centers in 6 states/territories (AR, MT, UT, VA, WV, DC) and the shuttering of a third of licensed programs in 14 more states. They estimate that 232,000 child care workers will be laid off.

Over a third (37%) of companies responding to our Best Practices in Healthcare Survey reported that they currently offer backup child care - although many parents whose child care program closes will need more than backup! Only 6% of respondents currently offer onsite childcare (and 2% are considering for 2024).

Implications for employers:

-        Loss of childcare options could worsen the structural labor shortage employers already face due to lower birth rates and decreased immigration.

-        The burden of lost childcare will likely fall hardest on lower wage workers, who are least likely to have the resources to find new child care arrangements outside of the family. This could mean that some caregivers will exit the workforce.

-        Employers should be aware of the upcoming challenges that their employees might face in addressing child care needs.

-        Some employers could create an advantage in their talent recruitment and retention by helping employees address their child care needs.

Illustration by Dall-E

Tomorrow: 1 RSV vaccination approved for pregnant women

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