Increasing the Supply of Child Care: Policy Recommendations

January 27, 2023

The Current Child Care Landscape

Child Care Deserts

Of North Carolina’s 100 counties, almost half (44%) of families with children live in child care deserts according to a recent report by the North Carolina Early Childhood Foundation (NCECF). Onslow County, in particular, is part of the Southwest Propensity Zone (PZ), where more than 50% of children live in a child care desert.

Although exacerbated by the COVID-19 pandemic, the scarcity of affordable, accessible child care is not new. The tenuous industry has been on the brink of collapse for years—and the impact has only become more tangible for children, families, and early childhood educators.

Working Parents & Sacrifices

In addition, the consequences of insufficient child care pose a dire economic impact affecting nearly everyone across the nation. North Carolina’s economy is inextricably linked to the child care industry—and limited access to child care options across the state contributes greatly to a family’s economic well-being and future.

NCECF estimates that 400,000 working parents across the state struggle to find child care—and this greatly impacts the choices they make on a daily basis, including pursuing education, participating in the workforce, or even paying for food or housing. 45% of parents with young children were dropping out of college or training, according to survey results.

Child Care Closures

The United States has never had an adequate supply of high-quality child care centers but the pandemic has only exacerbated this issue, leaving many families—especially those living in a child care desert—with no options for care. Between December 2019 and March 2021, a total of 8,899 child care centers closed and 6,957 licensed family child care programs closed, representing a 9% loss in licensed centers and a 10% loss in family care centers.

The COVID-19 pandemic placed a financial strain on many providers, leading to program closures, and new difficulties linked to inflation are now impacting many providers. Additionally, years of undervalued work and staggeringly low wages have forced many early childhood educators to leave the sector entirely.

In Onslow County, the number of infants and toddlers with working parents is approximately 5,000; however, the percentage of infants/toddlers care needs begin met is just 17%.

Policy Recommendations

In order to successfully reinvent the child care ecosystem and create a stronger future for children and families, the Center for American Progress has defined several key policy recommendations:

Increase grant opportunities for new and existing providers. Although the American Rescue Plan Act (ARPA) funding provided new opportunities for many child care providers and ensured they were able to keep their doors open and pay their educators a fair wage, this funding is set to expire in December 2023. According to CAP, accessing federal grant funding to establish centers or family child care programs is crucial—however, the process is often convoluted, complicated, and inaccessible to new providers. To effectively put a stop to child care deserts, new providers must be able to seamlessly open their doors with federal funding and support.

Collaborate with intermediaries.

CAP also recommends that states enable local resource and referral agencies, such as Child Care Aware of America, to serve as an intermediary between the government and the providers. Through close collaboration and partnership with an intermediary, more providers will have access to helpful information and understand the process in better detail.

Increase and stabilize provider reimbursements.

One consistent barrier to building the nation’s supply of child care is the slim return that providers receive for child care tuition covered by state subsidies. State and federal policymakers must increase the subsidy reimbursement to ensure providers receive compensation for the true cost of care. Without proper reimbursement for the cost of care, centers are resistant to offer services to subsidy-eligible families—which only causes more challenges for families in need of child care.

Specify policy language about supply building.

To effectively increase the supply of child care, CAP recommends that states detail how they plan to use CCDBG funds in support of supply-building activities. How will providers measure growth, workforce development, and enrollment? States must also pay attention to marginalized populations and communities with a high amount of child care deserts—and focus on increasing the child care supply in these areas so families can get the support they need.

Support the child care workforce.

The early childhood education workforce has always faced substantial recruitment and retention challenges. Poverty-level wages remain one of the primary reasons that workers are leaving the industry. In North Carolina, the median hourly wage for child care workers is just $11.83. A July 2021 study from the National Association for the Education of Young Children (NAEYC) found that 78% of respondents identified wages as the main recruitment challenge and 81% said that low wages were a key reason that educators leave the field.

Increasing compensation and professional development for child care providers and educators would help expand the availability of quality options for families and emphasize early childhood education as a viable career opportunity. With adequate funding, more programs would have the tools to recruit and retain qualified educators.

Expand affordability

Although the current CCDBG grants provide states with federal support to offer subsidies to low-income families, offsetting the exorbitant cost of child care, these subsidies are not entirely effective. Not only do they only reach a fraction of eligible children, they also fail to adequately cover the true cost of child care—leaving parents with copayments and providers with a lack of income.

New and sustainable federal policies are required in order to ensure that comprehensive child care services are available for families—at no more than 7 percent of their annual income.

The Future of Early Childhood Education

To build a stronger North Carolina and Onslow County, parents need access to affordable, high-quality child care—which requires a collaborative, comprehensive effort from policymakers, employers, and more. The child care ecosystem requires long-term federal, state, and local investment to ensure that centers remain open, access to the funding they need, and parents can return to work.

Although there have recently been improvements and initiatives from the Biden-Harris administration, it isn’t enough to fully solve the systemic issues the industry faces. The Coronavirus Aid, Relief, and Economic Security Act (CARES) passed in March 2021, providing $3.5 million in funding to be used as part of the Child Care and Development Block Grant (CCDBG) program; North Carolina received $805 million to help care providers offer a healthy and safe environment, keep their workers on payroll, and provide mental health support for both educators and children.

The Build Back Better Act (BBBA), a $1.75 trillion spending proposal and the most significant investment in child care to date, is stalled in Congress—but if passed, the BBBA’s impact on child care could have a momentous effect. The framework includes $400 billion for early childhood initiatives, including universal free preschool for all three- and four-year-olds and an expanded version of the Child Tax Credit.

Although both of these bills were born in crisis, they address chronic weaknesses in the public marketplace for child care and have the potential to provide examples of how to strengthen a system that is in dire need of government intervention and support.