America Is About to Lose Childcare Funding

By: Anneken Tappe · September 21, 2023 · Reading Time: 3 minutes

Expiration Ahead

Millions of families across the country anxiously await the end of pandemic-era childcare funding. The 2021 American Rescue Plan Act, which allotted $24 billion for childcare facilities to pay workers, cover expenses, and purchase supplies, is set to expire at the end of September.

With federal funding about to dry up, parents and providers worry that childcare costs are about to jump, and thousands of facilities could be forced to close.

Rising Costs & Closing Centers

In 2022, the Labor Department estimated median inflation-adjusted childcare costs for a single child to range from more than $5,000 in rural areas to around $17,000 in cities. At the top of the range, that amounts to almost 20% of the median family income per child.

Childcare can easily become the biggest budget line item for parents, with heavier burdens for single parents or families raising multiple children. Without the relief the Rescue Plan provided, costs could soar even further.

At the same time, the Century Foundation, a think tank, projects almost 70,000 childcare centers will likely be forced to close when the funding runs out, leaving approximately 3.2 million children without care.

Dwindling Daylight

If the sunset of the American Rescue Plan does lead to those outcomes, it could mean a dark day for more than just parents and providers. There is an economic cost associated with the poor childcare options.

Rising costs or closures could potentially force parents out of the workforce, affecting taxes and household spending. This shift would likely hit working mothers particularly hard, just as workforce participation for women is hitting new highs.

But there’s still a glimmer of hope. In Congress, there’s interest across the aisle in extending or solidifying child care subsidies.

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