“Beginning September 30, 2023, states will face a steep drop-off in federal child care investment. Without Congressional action, this cliff will have dire consequences. More than three million children are projected to lose access to child care nationwide. Seventy thousand child care programs are likely to close. This will have ripple effects for parents forced out of work or to cut their work hours, for businesses who will lose valuable employees or experience the impact of their employees’ child care disruptions, and state economies that will lose tax revenue and jobs in the child care sector as a result.” 

The Century Foundation has conducted an economic analysis of the impact of the end of the American Rescue Plan Act (ARPA) child care subsidies, which examines the potential effects on children, families, and state economies across all fifty states and the District of Columbia. 

The lack of comprehensive investment in child care and early learning in the United States has led to unaffordable costs, child care deserts, and workplace challenges for families even before the COVID-19 pandemic. The pandemic further exposed vulnerabilities in the child care sector, resulting in closures and limited options for parents. The American Rescue Plan Act (ARPA) stabilization funds provided much-needed support by helping child care providers cover expenses, increase wages, and implement safety measures. However, once these funds expire in September, progress towards a well-resourced child care system will be reversed, leading to a devastating “child care cliff.” Projections indicate that more than 70,000 child care programs could close, affecting 3.2 million children and their families. Early educators, who are primarily women and often underpaid, will face job losses, exacerbating the existing staffing shortage. As a result, child care prices will rise, and the availability of options will decrease. The scarcity of resources after the ARPA funds end will intensify the affordability crisis and scarcity of child care options. 

The impact will be felt through higher tuition costs and fewer available openings due to staffing shortages. Several states, including Florida, Illinois, New York, and Texas, could see significant numbers of children and families affected. The loss of affordable, high-quality child care options not only hinders parents’ ability to work, which will drive men and women out of the work force. The economic consequences are significant, with parents projected to lose nearly $9 billion in earnings annually. This loss of income exacerbates existing financial hardships, particularly for Black and Latinx households.  These workforce disruptions also have adverse effects on child well-being, impacting cognitive development, physical health, and social and behavioral development.  

For example, math and reading performance are some of the best indicators of educational success. Research has shown that children of color typically enter kindergarten nine months behind in math and almost seven months behind in reading compared to their peers. Access to high-quality early learning can close that gap significantly. However, high quality early learning is expensive and inaccessible to many low- and middle-income families. A Rutgers study found that in just one year of high-quality early learning, the gap between children of color and white children in reading could be eliminated; and for math the gap could be cut almost in half. But the opportunity to put better and more accessible programs in place will become even further out of reach for communities of color.   

The expiration of federal child care funding will also have far-reaching consequences for families, equity, and local economies. More than $300 million in state income tax revenue is projected to be lost, and more than $10.3 billion in losses to employers due to increased turnover and reduced productivity resulting from child care disruptions. While states are implementing measures to support their child care sectors, federal funding is essential for long-term investments and to prevent further decline. Without federal intervention and continued investment, the child care sector will suffer, affecting providers, parents, and children. 

While states can have a significant impact, true progress necessitates federal support and partnership. With the largest investment in child care set to expire in September, immediate action is necessary. Congress must provide funding and sustainable solutions, such as the Child Care for Working Families Act, to make child care affordable and accessible for all parents.