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Let's Look at a Bailout for Child Care, Too

Analysis: Providing care and enrichment to the children of the working poor is a good investment, not a luxury.

Much more needs to be said about child care.

It can help lift American families through economic downturns, is a powerful tool for investing in human capital and pays off for both taxpayers and those receiving the help. Few public programs provide taxpayers with as much bang for the buck as child care subsidies, and sometimes, solutions to our most pressing problems are not complex.

Anne B. Shlay and Marsha Weinraub’s article in the September issue of Miller-McCune, “The Catch-22 of Welfare to Work,” accurately described the often nonsensical ways in which low-income parents are expected to access child care subsidies (needing to already have a job in place before they are allowed to obtain help for child care, for example, when in many cases it is the lack of child care that prevents them from looking for and keeping a job). But the interrelatedness of child care subsidy programs and employment is only the beginning. To create the fullest picture of these benefits, one has to explore the topic of child care from multiple perspectives: economics, social science, psychology, juvenile justice, public policy, early childhood development and pediatric medicine.

Because Shlay and Weinraub aptly described the short- and long-term employment benefits to child care subsidy programs, I won’t reiterate them here. Suffice it to say that researchers consistently find that employed parents who have stable, reliable child care (which usually costs more than less reliable care) are better employees with a better chance of stability and even growth in their jobs.

In situations where mothers have never worked before, the boost to self-esteem from employment is a benefit on top of the increased income that can help parenting. Having parents who work has positive long-term effects on children’s development. Although some studies find that children in certain age groups may not always respond well when their mothers work, the overwhelming body of work points to all children doing better when a parent’s employment reduces stress over money problems.

Parental stress has significant and lasting implications for child development, and few things cause as much stress as the inability to provide for one’s children. There are now much better ways to describe and measure just why being poor is so hard on children and causes so many long-term problems.

Two theories — family stress theory and investment theory — guide this work and are particularly powerful when combined.

Family stress theory describes the ways in which stress (such as insufficient income) will adversely affect how parents and children interact. The most common reaction of a mother who cannot provide for her children is to become depressed. Depression leads to withdrawal, and withdrawal can lead to emotional and physical neglect. Nationwide, neglect is the most common form of child maltreatment; it is not surprising that economic services are cited as the greatest need by families screened for child protection reports in most child welfare offices.

Investment theory relates to the family’s ability to provide a stimulating, learning-rich environment for a child. Books, quality toys, sports and community activities that are good for child development (Boy Scouting or Girl Scouting, camps, etc.) cost money, and strapped families cannot provide these opportunities.

Opportunity is what child care subsidy programs are all about. Few areas of study illustrate this better than early childhood and after-school care research. We’re learning repeatedly about the benefits of high-quality early learning environments for all children and for economically disadvantaged children in particular. Institutions like RAND, the Urban Institute and even the Federal Reserve Bank of Minneapolis have publicly affirmed the wisdom of investing in high-quality care to prepare young children for school (which, at a minimum, saves remedial education costs in our public schools) and to ensure that kids get to school and do their homework. Benefits to out-of-school time care are not limited to young children. School-age children and adolescents facing a shortage of engaging after-school opportunities end up staying home alone or become involved in drugs, crime or sex. Depending on the age of the youth involved, this results in child protection involvement, teen pregnancy or contact with the police. None of these situations is good for families, for how parents see themselves or for a child’s development or how his or her life turns out.

As if the intrinsic benefits to children were not enough, researchers like Judy Temple and Arthur Reynolds and the Washington State Institute for Public Policy have conducted cost-benefit analyses that consistently show significant savings to taxpayers over the lifetimes of children for every dollar spent to provide quality care to them now.

In spite of this wealth of knowledge — and hard evidence about the extent to which families struggle to pay for child care that helps them get to work, provide for their families and simultaneously meet the developmental needs of their children — we continue to underinvest in this program. Even before the post-9/11 economic slump, eligible families nationwide accessing child care subsidy programs was estimated to be as low as 10 to 20 percent. States have understandably given priority access to subsidy programs for families on their Temporary Assistance for Needy Families programs (as welfare is now known) but have had to create waiting lists for families who leave TANF programs (when family incomes reach an exit level) or who have never been on welfare but need help because of low wages.

Worse, by 2003, 32 states cut funding to their child care subsidy programs to balance state budgets, disproportionately affecting the families who were trying to work their way off of welfare or to avoid it altogether. Many who administer what remains of these programs worry that their programs might be targeted again, given dire state budget forecasts for 2009.

From a research perspective, once families become disconnected from programs like those that provide child care subsidies, they become very difficult to study. One look — using administrative program data — at the effects on Minnesota families who lost access to child care subsidies revealed that parents increased the number of jobs and hours they worked after losing eligibility. Less conclusive findings showed school attendance fell for elementary school children whose parents lost child care subsidies and indicated that some families went onto welfare. These limited findings support the notion that losing child care subsidies significantly stresses families and that in spite of the benefits and broad income eligibility of families, states seem to view their child care subsidy programs as non-essential luxuries in tight-budget times and an afterthought in better times.

So what can be done?

Part of the problem is that most people do not understand what child care subsidy programs are, how they work, what they can do for families or that they even exist. The research on some of the positive child development, family functioning and educational benefits has been outlined here. An important first step is to explain and reiterate to the American public that child care subsidies are not welfare. They are very different, and they preserve many of the ideals of choice and autonomy that Americans hold dear.

Parental Choice
First, parents can choose the care provider for their child. It is true that most states and counties will not allow child care dollars to be paid to a provider who has a criminal record, but by and large, families can use any type of provider they want, ranging from a licensed, accredited child care center to a family member. Although in the early years of child care subsidy programs parents may have been required to use particular child care facilities, this is no longer the case. Current subsidy rules allow for parental autonomy and rely on parental judgment about who can best care for a child. This helps respect the cultural and religious needs of some immigrant parents and can help ensure consistent parenting practices for others.

Because school readiness is currently receiving public policy attention all over the United States, there are a number of new initiatives aimed at helping parents better identify high-quality child care, such as Minnesota’s Parent Aware program and North Carolina’s Star Rating System.

To be clear, it isn’t that parents don’t know what is best for their children, but the sheer number of choices in the market, including the types of settings and qualities of those settings (smoking vs. nonsmoking homes, pets or no pets, preschool curriculum offered or not, etc.) can be overwhelming, particularly for brand-new parents whose own parents may not have used formal child care. These new resources are intended to help parents know more about how the attributes of child care settings may or may not be associated with the types of care known to enhance learning and development.

And, since child care is market-driven, demand can influence supply. If more parents know what to demand from the child care marketplace, the marketplace will provide it, and all families in the community will benefit. The obvious hurdle is how to pay for it.

Not a Handout
Second, working parents using child care subsidy programs pay a portion of their child care costs — it is not free — and parents are expected to pay some of their earnings directly to their child care provider. In most cases, the parent pays the provider a certain amount each month, based on the parent’s income, and the county or state agency pays the balance. In states where the parent receives the child care dollars directly, the parent is still responsible for his or her portion of the child care costs. In addition, the proportion of care costs a parent pays increases as his or her income increases, preserving another important American value — self-sufficiency — making the program unlike a welfare entitlement.

Can child care subsidies really help families make ends meet during times like the current economic downturn? When child care costs are estimated to constitute anywhere from 16 percent to 32 percent of family income, when child care costs as much as college tuition for a year (but in contrast is completely unsubsidized) and when child care costs are second only to shelter costs in a typical family budget, the answer is yes.

Could a child care assistance “bailout” in the form of an infusion of federal funding to programs make an immediate impact? Again, the answer is yes. While most state and county child care subsidy programs are battered by recent cuts, they are not broken, and the infrastructures (eligibility determination systems, child care resource and referral networks, payment processes and provider supports) are in place to help more families access the programs and facilitate the entry of more quality providers into communities.

And there are precedents. The United States has invested in broad access to child care in the past during trying times and can do so again. Besides the temporary federal increases to child care at the time of the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (welfare reform), the Lanham Act of 1940 was the last large federal investment in child care.

Lanham paid for high-quality child care for the children of women working in factories to support the World War II effort — funding that ended after American men returned from the front and women to their housework. But it proves that when the American people and the American government understand the connection between working mothers, care for children and the achievement of a broad shared goal, they will invest in it.

Today, the broad goals we seek are providing relief to financially strapped working families in a struggling economy who are raising tomorrow’s taxpayers — children who need better educational supports and preparation to participate in a global job market and stable, engaged employees. Instead of creating myriad new programs to help us get there, let’s reinvest in one that is underresourced but at the ready.

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