Billions in Emergency Child Care Funding Just Expired Due to Government Inaction

Congress temporarily averted a government shutdown with just hours to spare over the weekend after House Republicans finally agreed to pass a stopgap bill without the draconian spending cuts they had previously demanded.

But despite Senate Majority Leader Chuck Schumer’s (D-N.Y.) invitation to the American public to ” breathe a sigh of relief” following the measure’s passage, one sector in particular had little reason to do so.

On Saturday, billions of dollars in emergency childcare funding approved during the coronavirus pandemic expired due to government inaction, a nightmare scenario that providers, lawmakers, and analysts had been warning about for months.

In mid-September, members of Congress introduced the Child Care Stabilization Act in a last-ditch effort to prevent catastrophe, but Republicans have not supported the bill.

As a result, according to a recent analysis by The Century Foundation, more than 3 million kids could soon lose their childcare spots, more than 70,000 childcare programs across the country could be forced to close their doors, and 232,000 childcare workers — who are chronically underpaid — will likely lose their jobs.

“While there is some temporary relief that the government avoided a shutdown last week, they still failed millions of children and families by not acting on the childcare cliff and failing to pass the Child Care Stabilization Act,” Nicole Jorwic, chief of advocacy and campaigns at Caring Across Generations, said in a statement late Monday.

“The continuing gamesmanship in Congress is putting livelihoods at risk, and in a little more than a month from now, Congress will fail millions more if they continue down this path of threatening families’ well-being and holding the economy hostage for political gain,” said Jorwic. “Families all over this country are struggling as a direct result of the inaction from Congress. Our economy will not be able to fully recover and thrive if people who are already squeezed by the lack of investments in family-first policies have even more taken away. It is critical Congress stop manufacturing crises and instead, take care of their constituents.”

The Covid-19 crisis hammered the childcare sector, which has been slower than other areas of the economy to recover after seeing significant job losses and other pandemic-related disruptions.

Tens of billions of dollars in childcare grants approved in 2021 as part of the American Rescue Plan provided some relief, helping to keep hundreds of thousands of childcare providers running and preventing millions of children from losing their spots.

Now that the funding has expired, many childcare centers are expected to raise tuition to compensate, potentially pushing low-income families out. Childcare costs vary across the U.S., but “prices are untenable for families even in lower-priced areas,” warned a recent Labor Department analysis.

“Using the most recent data available from 2018 and adjusted for inflation to 2022 dollars, childcare prices range from $4,810 ($5,357 in 2022 dollars) for school-age home-based care in small counties to $15,417 ($17,171 in 2022 dollars) for infant center-based care in very large counties,” the Labor Department found. “These prices represent between 8% and 19.3% of median family income per child.”

The Century Foundation estimated that the impacts of the emergency funding lapse could cost U.S. families $9 billion a year in lost earnings, as many could have to leave the workforce or curb their hours to care for their children.

“Parents simply cannot afford to pay the true cost of providing care, and providers can’t afford to earn any less,” Daniel Hains, a managing director at the National Association for the Education of Young Children, told The New York Times.

The end of the childcare grants will compound the damage done by the collapse of the pandemic-era safety net, which lifted tens of millions out of poverty in 2021. The reversal has been sharp: Last year, U.S. child poverty more than doubled, largely due to the expiration of the boosted child tax credit that congressional Republicans and Sen. Joe Manchin (D-W.Va.) opposed.

In an op-ed for Fortune last week, All Our Kin CEO Jessica Sager warned that “the loss of childcare resources will be devastating for families. For most, it can be their single largest cost. And without it, they cannot participate fully in the workforce.”

“In Arkansas, Montana, Utah, Virginia, West Virginia, and Washington, D.C., the impact could be particularly drastic, with some estimates saying at least half of the licensed childcare programs could close,” Sager wrote. “Another 14 states could see their options for licensed childcare programs reduced by a third.”