What to Know About A $450 Billion Plan to Bail Out Child Care, Working Families

Hearings begin this week on what could be the largest-ever federal investment in childcare programs. The House Education and Labor Committee is meeting amidst a squabble between opposing wings of the Democratic Party. One side thinks that the current $450 billion price tag is simply all the country can afford. The other says it should be big enough to truly solve the childcare crisis.

Per the Washington Post, whatever comes out of these hearings and negotiations will likely be folded into the Democrats’ budget reconciliation bill, the now-$3.5 trillion companion to the more limited bipartisan infrastructure package of just under $1 trillion.

Here’s what parents need to know about the debate, from the scope of the crisis, which predates (but was accelerated by) the COVID-19 pandemic.

What constitutes the childcare crisis in America?

Put simply, there is a dramatic lack of affordable childcare in the United States. The low wages in the field—many childcare providers earn less than $12 an hour, a sub-poverty rate of pay—mean that many caregivers leave the field for better-paying opportunities, even though costs of operating are extremely high. And the constant churn of personnel means that childcare centers often operate understaffed, adding additional pressure to their work lives.

The COVID-19 pandemic made everything worse. Childcare centers, like schools, had to close, making access to nearby child care centers, already a struggle, even more of one. There is now a widespread need for expensive updates to ventilation systems in older facilities and to build new facilities that can handle the influx of children as schools reopen and parents return to the workplace (wisely or not).

The end result of this crisis is that many parents can’t enter the workforce because they can’t find childcare while others elect to stay at home since paying for childcare would eat up the majority of what they’d earn at a job anyways, a problem that’s exacerbated by the low wages American companies are allowed to pay. This has a major effect on the economy’s ability to grow.

This obviously is tragic on a family level, as parents either sacrifice their professional aspirations or spend tons of money on childcare in their kids’ early years. But it also keeps lots of people out of the workforce which also means that the money they would be paid in wages never enters the economy, limiting its growth.

How do the Democrats want to solve them?

The $450 billion they’re proposing would go towards a number of different initiatives.

• Higher wages for caregivers to make it possible for them to stay in the industry and attract more people to childcare work
• Training programs for incoming childcare workers
• Upgrades to existing childcare facilities
• Free pre-kindergarten for all three- and four-year-olds
• Subsidies that cap the cost of daycare for families on a sliding scale

The sticking points between more progressive and more conservative Democrats are on the timing of the aid—the current plan calls for phasing in this funding over six years—and its generosity.

Progressives want to provide something closer to universal childcare coverage with no spending caps, an effort to ensure that families in cities—where incomes are higher but so is the cost of living—aren’t denied the financial support they need.

“If you use a standard of 150 percent of state median income to determine benefits, you are actually going to penalize the states and localities that have passed a $15 minimum wage and are housing poor,” Rep. Pramila Jayapal, chair of the House Progressive Caucus, said in an interview.

Conservative Democrats reject those plans as too expensive, as they are much more focused on capping the final price tag of the overall package.

Will this childcare spending make it into the final bill?

It seems obvious that funding for some combination of childcare initiatives makes it into the final bill. Two free years of pre-kindergarten is a policy that’s been highly touted by the administration, and it’s often paired with the two free years of community college it also wants to provide Americans. Some amount of funding for childcare workers and facilities also seems likely to pass.

The gap within the Democratic Party lies is on the subsidies that will go to low-income families. Each side has a vested interest in coming to an agreement, but very different visions of how expansive and expensive that final agreement should be.