The number of Americans who reduced their work hours due to child-care problems jumped sharply in October, the first month following the Sept. 30 expiration of pandemic-era federal funding for child-care-provider-based stabilization grants. The labor-force statistics were gathered through the monthly Current Population Survey (CPS) and released Friday by the Bureau of Labor Statistics.
About 92,000 Americans who usually work full-time—or roughly 35 hours a week or more—reported they were at work only part-time for at least one week in October due to issues with their child-care arrangements. In September, 55,000 workers reported that they had scaled back their work hours because of child-care problems.
A lack of adequate child care also caused 27,000 Americans to miss at least one full week of work last month, according to the latest data. That’s down from the 55,000 who missed work for at least a week in September, and below the average of 32,000 seen in the two years leading up to the Covid-19 pandemic.
The pullback in working hours in October due to child-care issues came after some $24 billion in federal child-care stabilization grants allocated as part of the pandemic-era American Rescue Plan Act (ARPA) expired, along with extra money for the Child Care and Development Block Grant.
Child-care advocates warned that the end of these federal funds, commonly referred to as the child care cliff, could lead to higher care expenses and daycare program closures, and affect the number of parents in the labor force, work hours, and career momentum.
While Friday’s data release provides an early suggestion of how changes in the child-care industry might be affecting parents’ monthly labor-force participation, the data are limited and can be volatile month to month. The Bureau’s data tracked the number of employed Americans who weren’t at work or worked only part-time due to child-care problems for the entire week of Oct. 8-14.
The full effects of the loss of child-care stimulus funds likely will take months, if not years, to be felt. Based on an analysis from the Century Foundation, up to 70,000 child-care programs across the U.S. could close permanently, resulting in the loss of 200,000 early-education jobs and 3.2 million child-care slots. Rising scarcity could drive up costs, which some parents might be able to pay. Others, however, might need to reduce their work hours or leave their jobs to care for children.
Americans families have seen their child-care expenses increase over the past three years, according to recent research from Bank of America that analyzed customers’ credit- and debit-card spending per household.
The average family spent more than $700 a month on child-care costs in September, 32% more than in 2019, the research found. Middle- and upper-income families with annual pay of between $100,000 and $250,000 saw the biggest jump in their child-care costs.
The demise of the emergency federal funds could drive those costs even higher. “This funding cliff takes away critical resources that allow programs to create what parents want and what children need,” Allyx Schiavone, executive director of Connecticut-based Friends Center for Children, said Thursday.
Most child-care providers used the stabilization grants to offset increased operating costs and provide raises for their staff, according to industry-group surveys.
So far, the lapse in funding hasn’t affected staffing levels in a major way. Employment within child-care services was relatively flat in October. Employers added 2,800 jobs last month, but overall employment remains slightly below prepandemic levels.
Many daycare and child-care centers operate on thin profit margins. The tuition paid by parents rarely covers the full cost of care, Schiavone said. At her center, all families’ tuition costs are subsidized in some way. Even with that, Schiavone said the program offers about 10% of families emergency financial aid every year.
Availability also remains an issue nationwide. Seven child-care centers in western North Carolina serving 300 children closed at the end of October, according to the state’s Department of Health and Human Services. At her Connecticut center, Schiavone said she has a waiting list of 160 families. “That is without advertising; that is just word-of-mouth,” she says.
The situation has caught the attention of the Biden administration, which called on Congress to provide $16 billion in emergency child-care funds in its $56 billion emergency supplemental funding request aimed at domestic issues, released at the end of October. Legislation addressing Biden’s emergency domestic funding hasn’t yet come up for a vote.
Write to Megan Leonhardt at megan.leonhardt@barrons.com
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