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Friday, April 3, 2020
Child Care is an Essential Business:
Indiana should recognize this – now, and in the future – by investing in a values-based early care and education (ECE) system
By Pamela Guerrero
Many states have issued orders to close nonessential businesses in order to control the spread of COVID-19. In Indiana, the recent stay-at-home executive order recognizes early care and education (ECE) facilities as essential businesses. ECE workers, even in the midst of this pandemic, continue to be paid the same low average wage of $11.25 an hour without taking into consideration the elevated risk that ECE teachers are facing. In most cases, early care and education programs do not have the means to afford benefits for their workers, such as paid sick leave, which is vital at this moment to ensure children's and workers' safety. This is the reality: the early care and education (ECE) system is the backbone of our economy, yet our state investments do not currently reflect that reality.
New research from the Economic Policy Institute (EPI) and the University of California Berkeley's Center for the Study of Child Care Employment (CSCCE) estimates that a "values-based" early care and education (ECE) system – a system that prioritizes quality and fair wages for workers – would yield significant benefits for Indiana's children, teachers, and parents. A comprehensive, publicly financed system that compensates educators fairly would serve between 257,000 and 339,000 children annually and employ between 106,000 and 143,000 ECE teachers with fair wages and benefits.
The “Financing Early Educator Quality: A Values-Based Budget for Every State” report explains that many proposals for ECE reform have focused primarily on improving access and affordability for families. However, these proposals have ignored the elephant in the room: that ECE is substantially “funded” through low teacher pay and inadequate supports for ECE teachers, who are primarily women of color, which further widens the wage gap. A values-based early child care and education system will help create a skilled and stable ECE workforce and support children's well-being, while removing barriers to work and increasing earnings among parents.
The report also finds that Indiana ECE teachers with a bachelor’s degree are paid 35.0% less than their colleagues in the K-8 system. Additionally, the poverty rate for early educators in Indiana is 22.8% – more than twice as high as the rate for Indiana workers in general (10.7%) and 8.4 times as high as the rate for other teachers (2.7%). This insufficient financial and professional support for ECE teachers fuels turnover and ultimately compromises the stable care that is critical for young children.
Despite low early educator pay, child care still costs too much for families. Parents nationwide currently spend about $42 billion on early care and education, while the federal government spends a low $34 billion in comparison. A recent analysis found that the average annual cost of infant care in Indiana is $12,612 or $1,051 per month. This makes Indiana the 18th most expensive in the country. Infant care for one child takes up 22.0% of a median family’s income in Indiana, and a minimum wage worker in Indiana earning $7.25 an hour would need to work full time for 43 weeks to pay for child care for one infant. It is even more arduous for a family when having to pay for child care for more than one child. A new system that draws more heavily on public financing would not only have the capacity to provide high-quality early care for more children, but would also lessen the burden that parents face under the current system.
“Indiana would benefit tremendously by making a serious investment in early care and education,” said Elise Gould, Senior Economist at Economic Policy Institute. “By paying early child care educators in line with their K-12 peers, we hope to create opportunities that offer a pathway to the middle class—rather than poverty—for those who do the crucial job of teaching our young children.”
The annual cost of a fully phased-in, high quality, and comprehensive ECE system for Indiana ranges from $6.7 billion to $9.2 billion, or $26,000 to $28,000 per child. For context, this amounts to 1.8% to 2.5% of Indiana's GDP. It is also important to understand that we are not starting from scratch. Indiana receives about $402.1 million annually in federal funds for the Child Care and Development Fund (CCDF) program. However, state and federal investments fall far short of serving all eligible children who qualify for current subsidy programs. As a result, many low and moderate-income families are heavily burdened by the cost of child care. Parents in Indiana collectively pay an additional $878.9 million annually for ECE.
The high cost of ECE forces parents to leave the labor force and forgo roughly $30 to $35 billion in income, which is a loss of taxable revenue of about $4.2 billion each year. This missed opportunity not only burdens parents, but also limits the state's ability to invest in needed services that a growing workforce demands. State and federal governments have to increase investment in the ECE system. As the economy rebuilds following the COVID-19 crisis, child care will be an essential piece needed to begin growth by getting parents back to work.
"It's clear that Indiana needs to make large investments in early childhood education – now, and for our future," said Erin Macey, Senior Policy Analyst at the Indiana Institute for Working Families. "These workers are essential in the COVID-19 crisis and should be paid fairly. Plus, we will need them to rebuild our economy. A substantial investment would benefit all of us - it would reduce poverty, promote child development, and enable parents to return work. A well-funded system of early childhood education is an investment that would strengthen communities and build toward a brighter future."
Unfortunately, our federal and state governments continues to prioritize other industries over a nationwide early child care and education system. The current $2 trillion rescue package includes billions of dollars for large corporations' bailouts, yet many child care programs are at risk of permanently shutting their facilities. As an extension, many families will no longer have access to vital child care services. To better paint the picture, Boeing airlines alone has requested a $60 billion bailout; in comparison, less than $50 billion is needed to sustain the entire child care system of the country. The CARES economic stimulus package offered a scarce $3.5 billion to child care through the Child Care and Development Block Grant, and additional loans and grants for smaller nonpublic child care businesses. The funding is not enough to sustain this vital service and to ensure that these services remain available once we have weathered the public health and financial crisis. Many of the front line workers that must remain working during this pandemic continue to pay sums of money that do not enable them to maintain their children's care. The high cost places an enormous financial strain on front line workers in the face of this stressful economic instability.
As the recent Executive Order 20-12 calls on ECE teachers to report to work and child care centers to open up their doors and increase care to accommodate front line workers school-age children, it is appropriate to reconsider the role of the state in building a resilient, values-based ECE system. This would allow a considerable reduction of parent's child care costs and also a fair wage for the ECE workforce. Indiana cannot solve the child care crisis without a significant investment. Luckily, policymakers and other stakeholders in Indiana have an opportunity to disrupt this problematic status quo and ensure that Indiana's system has the funding it needs to work effectively for children, families, and teachers.