The rise in child care costs in metro Atlanta has outpaced even the region’s solid wage gains, forcing many parents to cut other spending and pressuring some to cut back on work, according to a study.
Since May, families paying for child care have spent less on other things, said economist Anna Zhou, author of the report from the Bank of America Institute, a research arm of the huge lending institution.
Moreover, families with child care costs have dipped into savings more than others, she said.
Unlike many other services, changes in child care can have a direct impact on a household’s lifestyle, as well as its finances, Zhou said. “Rising child care costs could be dragging some women out of the workforce.”
On Thursday, the Biden administration announced a $16 billion “stabilization” package aimed at keeping child care centers afloat by subsidizing operations. Georgia would get about $657 million, according to the White House.
While it’s difficult to prove that people who have recently left the workforce departed because of child care costs, there’s evidence of it, she said. During the first nine months of this year, the average number of paychecks per household has dropped about 4%, a sign of fewer people working.
Zhou spoke to The Atlanta Journal-Constitution after release of a report she authored for the institute that warned that child care costs are “starting to bite.”
For many parents — especially women — child care is the linchpin that keeps them working. When child care is unavailable or too expensive, many work fewer hours or drop out of the workforce altogether.
Huge numbers of women left the labor force in the first year of the pandemic when many child care centers were shuttered or downsized, but by this year, women were back at work in record numbers.
“We saw a rebound and growth in the share of women who were in the labor force to a level even higher than before,” she said. “But starting in June, we started to see a reversal.”
Georgia has 4,421 licensed child care programs serving about 320,000 children, according to the state Department of Early Care and Learning (DECAL). Many thousands of other children are in family or “underground” centers that are not licensed.
For many years, the child care sector has coped with staffing shortages, staff turnover and low profit margins. The median pay for a child care worker is $13.71 an hour, according to the Bureau of Labor Statistics.
But when the pandemic threatened to shut it down completely, federal programs were created to keep it alive.
Georgia received $403.6 million from the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA), money that DECAL disbursed to thousands of centers. Much of the money went to pay staff.
Funding from American Rescue Plan Act continues, and DECAL is using it to fund a pilot program helping 30 centers.
But the CRRSA funding ended September 30 when Congress declined to extend the program.
Advocates warned of a “child care cliff” as centers struggled to keep paying the higher wages they had used to hold onto valuable workers who could have left to make more money in fast food or retail jobs.
Without the funding, they might lose workers, giving them fewer slots for children. But if they raised tuitions to cover wages, some lower-income parents might decide it didn’t make financial sense to keep working, so they’d stay home with their children.
The passage of the “stabilization” package announced by the Biden administration last week may be a heavy lift in the current political environment, but help for the industry is crucial, even if the money is just a stopgap, said Neera Tanden, director of the White House Domestic Policy Council, during a teleconference with reporters.
“We are deeply worried that we will see thousands and thousands of people lose their child care,” she said. “It’s about stabilization. Nobody’s talking about bells and whistles.”
Friendship House in Dalton hasn’t fallen off the cliff yet, but it’s shakily weaving along the edge, said Mary Thelma Norris, director of the center, which has a staff of 21 caring for 73 children.
The center has asked its local United Way to dramatically boost its contribution for the coming year, she said. “We are asking for a 100% increase but not feeling good about our prospects.”
Without that increase, Friendship House will have to raise tuition and consider closing at least one classroom, she said.
With child care so critical to working families, Norris argued for using some of the state of Georgia’s sizeable surplus to help providers and parents.
“Georgia has the ability to support our own,” she said. “Let’s see if our elected officials have our families’ best interest in mind.”
A spokesman for Gov. Brian Kemp said the surpluses in both the current and previous fiscal years have been used to soften the blow from higher prices.
Those actions have meant “billions of dollars back to hardworking Georgians through special tax refunds, property tax relief and the suspension of the gas tax,” Garrison Douglas said. “This partnership approach has also resulted in additional support specifically for Georgia child care providers through the passage of a 10% rate increase.”
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