September 28, 2023
Something big is coming at the end of this week that will impact more than 3 million kids in this country, their working parents and the economy. And this may even impact you whether you have kids or not.
At midnight on Saturday the American Rescue Plan will expire. You may be thinking – what does a pandemic era stimulus bill have to do with kids? Well, there was a provision in that bill that gave a total of $39 billion in new federal funding for child care. When the industry was struggling to stay afloat about $24 billion of that fund was given to about 220,000 child care and early education centers nationwide to offset the extremely high cost of child care in this country. And it basically propped up the industry. The funding was also supplementing salaries for workers at the day care centers, and about $15 billion of it turned into grants for low-income families to pay for child care so those parents had the chance to go back to work.
But with that funding going away, and child care costs rising faster than inflation for the last five straight months — some experts believe – it’s very possible that as many as 70,000 child care centers or one in three—in this country could close. And the ones that are able to stay open will likely increase their prices. In this already tough economy — that means — many parents are going to be left with a difficult choice. Quit their jobs to take care of the kids or do what they can to stretch the family budget even farther to pay those higher prices.
Now – even if you don’t have kids here’s why this could impact you. This whole mess could drive up inflation for all of us. I’ve been reporting that the jobs market is finally starting to cool off and when the jobs market cools off enough, the federal reserve is projecting that wages will start to fall in line with inflation and the costs of goods and services will then start to come down. But, if more parents are forced to leave the workforce to take care of their kids that opens up a bunch of jobs which will then heat the jobs market up again. That drives up inflation. You know what else drives up inflation? Increased child care costs. And simple supply and demand theory says when there are fewer child care centers available and more kids that need to be watched, the price for the service goes up. And don’t forget when those child care centers close all those workers will be let go – and that could amount to about 230,000 jobs lost which would drive up the unemployment rate.
The Democrats in the House have been pushing for months to add $16 billion in emergency child care funding this year to the budget to try and steer us away from this iceberg we’re headed for…but that proposal is going nowhere in the House as Republicans say it’s that added spending that’s driving up inflation.
More on the child care provisions in the American Rescue plan here.
More on the child care funding by the numbers here.
