Pandemic and child care crisis worsen the economic situation

Bryan Kang, an occupational therapist, and his wife, a teacher began looking for child care in Los Angeles after Kang's baby was born in July.

Pandemic and child care crisis worsen the economic situation

 Eight day care centers were called by the couple: Some had no spots for months, others didn't take their calls, and some weren't answering at all.

Kang was left with few options and had to search for a remote job.

Kang stated, "I told my manager that by the end of this month, I must transition out." "They were all mothers and they were supportive and understanding. Now, there is only one body that can see patients.

Kang stated that he was fortunate to have found a job teaching online classes. However, the unexpected career pivot required him to take an 11% salary cut.

He could not find a place for his 3-month-old son in day care, and the $2,500 per month cost of infant care makes it financially impossible for him to work remotely.

For years, the child care industry has operated in a dysfunctional market. This is because of low wages for workers and high prices for consumers. The critical service managed to continue its existence.

Experts have long known that the pandemic has confirmed what they had been warning about: Insufficient child care can limit the jobs people are willing to accept, make it more difficult to get promoted and, ultimately, reduce the economy's ability to grow.

"Early education is not a problem for children or women. It is now seen as an economic problem. It's about workforce participation," stated Mario Cardona (political chief at Child Care Aware of America). It's about employers that don't need to worry about whether their employees will be available.

Child Care Aware of America believes that 9% of licensed child-care programs have closed permanently since the pandemic. This is based on its count of almost 16,000 shut down centers in 37 states, between December 2019 to March 2021.

Each teacher resignation, coronavirus infection, and day care closing reveals an industry at the edge, with far-reaching consequences for an entire economy.

Many people, mostly women, have had to quit their jobs due to the national crisis. This has reshaped the child care crisis, making it not only a problem for parents with young children but anyone who relies on them. This has led to a shortage of labor, which has made it harder for customers to get goods and services.

Betsey Stevenson from the University of Michigan said that the decisions we make today about child care will influence the U.S. macroeconomy over the next decades. They will determine who returns to work, the types of jobs parents choose, and what career paths they can follow.

In hopes of fixing the child-care market, President Joe Biden has promised a record amount of federal spending. He assured parents that they wouldn't have to spend more than 7% of their income on child care at a Baltimore town hall. Federal money would be used to fund care centers for costs beyond the 7% cap. The average American family would spend $6,046 annually on child care if they earned $86,372.

Biden's plan includes universal prekindergarten which could help families reduce their child care costs. Biden's $1.9 billion coronavirus relief package approved an increase in monthly child tax credits payments. This would be extended for another one year. The president also suggested increasing the tax credit to cover the cost of child-care, which would help families have better access.

As the cost estimates are still being negotiated before Biden departs Thursday to attend the G-20 conference in Rome, the Congressional Budget Office has not yet scored them. Donald Schneider, who was the House Ways and Means Committee's chief economist, now works for Cornerstone Macro. He estimates that child care and prekindergarten support will cost $465 billion over ten years. The price tag for the extended child tax credit in one year would be approximately $120 billion. If the credit were to be renewed for another nine years, it would cost an additional $940billion.

While it remains to be seen which side prevails in the brutal negotiations of Congress for Biden's broad Family Services Agenda, the pandemic is being a catalyst for the future success of the child-care industry.

Amy McCoy, a daycare worker at Forever Young Daycare in Mountlake Terrace, is on the verge of exhaustion.

Half of the year she spent trying to find a new assistant to her in-home childcare. But until then, she works 50 hours per week as a former teacher to public schools. She also spends more time cleaning, cooking, and running her business.

McCoy asked, "At what point does my day care become more important than my family?"

McCoy's assistant, who had been there for five years and earned $19 an hour, left April to take a job as nanny at $35 per hour. McCoy posted the job opening for an entry-level assistant to Indeed and Facebook. The hourly rate is $16 -- almost 20% more than the state's minimum wage. So far, she's received very few responses. All of them turned her down for pay reasons. This makes it impossible to hire without raising tuition.

McCoy stated, "Nobody wants work for less than I can afford right now." "I believe that these employees are $20 an hour, but I hate the fact that I will most likely have to raise tuition."

In a September report, the U.S. Treasury Department stated that child care workers make an average of $24,230. Over 15% of workers in the sector live below the poverty level in 41 states, and half require public assistance. This sector is highly turnover-prone, with between 26% and 40% of workers leaving each year. There is not much to be done in child care centers, which tend to make a profit of 1% or less.

Briana McFadden, a local child care center owner, closed her Cocoon Child Care Center last month because of stress from the pandemic. McFadden believes she would have kept the business open if the government had provided subsidies to stabilize it.

McFadden stated that she has never raised tuition in her 12 years of business. She was also the only day care provider in the northern Seattle suburbs who would accept low-income families with a subsidy from the state. Cocoon had seven employees to care for 37 children in pre-pandemic days. McFadden now plans to open convenience stores.

McFadden stated, her voice trembling with emotion, "It wasn't worth continuing." "Daycare is hard work."

Tatum Russell's existence was dependent on McFadden’s day care as it was the restaurant that employs McFadden to make hand-baked seafood.

The single mother could not get help from her family during a COVID-19-related closure of day care in August. Russell had to miss four work days.

Russell stated, "It's been an absolute nightmare, and it's still not over."

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