Child Care Subsidies: Supporting Work and Child Development for Healthy Families

Students play with Play-Doh in class.

Nonparental child care is a key support for working parents and can contribute to long-term child health and development. Yet high-quality, affordable care that meets parents’ needs can be hard to find.

What’s the Issue?

In the United States, while parents are at work or in school, their children (many school-age, but the majority of those younger than age 6) spend time in child care. Lower-income family members—who often have irregular and hard-to-predict work schedules—find it especially challenging to obtain high-quality, affordable child care. These families can rely on the Child Care and Development Block Grant (CCDBG), a joint federal and state public child-care program that supports child care activities. CCDBG funding helps families with low incomes pay for care, primarily through vouchers or certificates that parents can use to defray some or all of the costs. Parental choice is a fundamental tenet of the CCDBG, as policymakers trust parents—rather than the state—to determine what child care best meets their family’s circumstances.

The program served 1.3 million children in 2018, which is only 15 percent of those who are eligible under federal law. The re-authorization in 2014 of the CCDBG brought changes that emphasized the quality of child care and facilitating greater access to assistance for families. With limited service hours available in formal child care, the market fails to serve many low-income families, who work outside of daytime, weekday hours—which forces families to disproportionately use home-based arrangements (especially informal caregivers). An unintended consequence of the re-authorization changes is the challenge of how states can support parental choice while ensuring safety and high quality across all settings. Other reasons for the shortfall in families that utilize CCDBG could be insufficient funding; state eligibility rules; policy priorities; lack of program awareness; and bureaucratic problems.

What’s Next

Research generally indicates strong labor market effects of the subsidies, with several studies showing a positive relationship between subsidy use and employment—especially full-time employment. A recent study also suggests that subsidy use is related to higher educational attainment among mothers with young children. Furthermore, a study found young children who had used subsidized, licensed centers and home-based arrangements demonstrated higher reading and math scores in third grade and fewer school absences in junior high school compared to children who had not used subsidized care.

The roles of income, income support policies, and quality early care are critical to developing and sustaining health and well-being of children and families. With a formal child-care market that is not well- aligned with the realities of today’s low-wage labor market, the CCDBG faces challenges in helping low-income families access high-quality, affordable, and convenient care.

The authors recommend that funding be made available to states to use “a multi-pronged strategy that focuses support on access and quality in both formal and informal settings—rather than singularly prioritizing centers...[expanding] equitable access to high-quality care for all low-income families.”

Accomplishing this goal will require a comprehensive approach focused on access and quality, outreach to child-care providers in home-based and formal settings, and a significant expansion of federal and state funding.

The brief summarizes a best-case scenario: States will make their systems more family friendly by fully implementing strategies to simplify subsidy application and retention; support access to high-quality care by ensuring providers receive sufficient rates; promote quality by targeting training, technical assistance, and incentives to the full range of providers. It is essential to support equitable supply and access for priority populations—such as parents working nontraditional hours; infants and toddlers; children living in rural areas; and children with special needs.

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