Maya Pendleton, MPP Staff Writer, Brief Policy Perspectives
As an idea, universal child care is not new. In fact, the United States briefly implemented universal child care as a part of the 1940 Defense Housing and Community Facilities and Services Act (or the Latham Act). Under this law, all families were eligible for child care for up to six days a week at a cost of $9 – $10 per day in today’s dollars.
The Latham Act responded to a specific need during World War II, but the Act’s intention – providing low-cost child care so that working parents could ensure that their children were safe during the work day – still resonates today. Modern parents and children could stand to benefit from a child care system that meets the needs of all families.
The Nation’s Child Care Affordability Crisis
Receiving high-quality early childhood education is crucial for children. Research from Harvard University’s Center for the Developing Child confirms that early learning programs can positively affect children’s social and emotional development. However, in 33 U.S. states, infant care costs more than in-state college tuition, with the nationwide average annual cost for full-time care ranging from $3,000 to $20,000. The U.S. Department of Health and Human Services maintains that child care should not exceed more than 7 percent of a family’s budget, but for many working parents this standard is unobtainable.
Expensive child care doesn’t just affect family finances. A 2013 Pew survey found that women are more likely to stay home and care for their children in response to childcare needs. Expanding child care may be particularly impactful for women who seek to remain in the workforce after having children and for Black and Latinx women who are more likely to be their household’s primary breadwinner.
What is Universal Childcare?
There are two programs that currently provide income-based assistance for child care in the U.S, but both of these programs fall short of addressing the nation’s child care needs. The nation’s largest federal child care program, the Child Care and Development Block Grant (CCDBG), provides child care to 15 percent of eligible families. Head Start offers subsidized early childhood education programs but only serves about “7 percent of eligible children under age three.”
The tax code also subsidizes support for working families and their children through the Child Tax Credit and the child and dependent care tax credit. Tax credits also fail to meet child care needs, as the annual costs of child care far outweigh maximum tax credit amounts. Additionally, tax credits provide a lump sum once a year, which is not aligned with families’ monthly obligations.
Advocates and Presidential candidates on both sides of the aisle have proposed amendments to these existing programs in order to mitigate child care costs. Recent proposals include doubling the child care tax credit and a one-time $1 billion investment to increase the supply of child care. Additionally, several 2020 presidential hopefuls co-sponsored a bill expanding access to child care for families with low to moderate incomes. None of these plans go as far as offering universal child care.
On February 19, Presidential candidate and current U.S. Senator, Elizabeth Warren, outlined the Universal Child Care and Early Learning Plan. The plan outlines a federal program that “would make child care available to all families at no-cost or an affordable cost; establish quality standards that support child development; provide comprehensive child development services for children who need support; and strengthen pay and benefits for the child care and early education workforce.” Under the Universal Child Care and Early Learning plan, the CCDBG would become a supplemental program providing extended care hours, tailored services for children with disabilities, and after-school care for 5 to 13-year-olds. The program would cost taxpayers approximately $70 billion per year and is expected to cut child care costs for families with young children by 17 percent. Some economists estimate that the plan would increase the number of children receiving child care from 6.8 million to 12 million.
The Costs of Providing Universal Child Care
Cost is one of the largest hurdles associated with implementing universal child care. How such a program would and should be paid for is still not entirely clear. Some research concludes universal child care almost pays for itself, with each dollar spent in early care and education returning about $8.60 to society. On the other hand, other policy research from Brookings argues that investment projections are empirically shaky. Senator Warren proposes paying for universal child care through a wealth tax which taxes households with a net worth above $50 million at a 2 percent rate, and net worth above $1 billion at 3 percent. However, it is unclear if this plan is feasible both politically and constitutionally.
One potential approach to paying for such a program, offered by the Brookings Institution, suggests offsetting costs through reduced government spending on the charitable donations tax deduction – which costs the government $55 billion a year – to free up funds for child care. However, this plan is limited in scope; it provides child care subsidies only to families living at or below 200 percent of the poverty level and therefore is not necessarily universal.
Extending child care to more families is appealing, but much more analysis is needed to most effectively pay for such a sweeping program.
Under-providing child care comes with significant costs to children, families, and communities. The Universal Child Care and Early Learning Act is one response to deficiencies in the current child care system and provides a potentially useful framework for thinking through what a universal child care program in the United States could look like. While such programs require rigorous social and economic analysis before implementation, legislation that expands families’ access to child care provides opportunities for all communities to increase their safety and well-being.