Failing to Care: The Failure of the Child Care Market

Failing to Care: The Failure of the Child Care Market Danielle Ewen Director, Child Care and Early Education Center for Law and Social Policy (CLASP) June 26, 2006 Contact: 202-906-8014 or dewen@clasp.org

Overview Child Care System is a failed market. • Quality child care is both a public and a private good. • Quality child care cannot be delivered at a price families can afford; most families are already paying significant portions of their income for care. • In order for markets to work well, consumers need good information about differences in quality; this information is difficult, if not impossible, for parents to find.

Families Need Child Care to Work: Child Care as a Private and Public Good Source: CRS analysis of Current Population Survey (CPS) data.

Quality Child Care Helps Children Learn: Child Care as a Public Good Source: Peisner-Feinberg, E. S., Burchinal, M. R., Clifford, R. M., Culkin, M.L., Howes, C., Kagan, S. L., Yazejian, N., Byler, P., Rustici, J., & Zelazo, J. The children of the cost, quality, and outcomes study go to school: Executive summary. 1999.

Demand for Care: Children are in Out-of-Home Care Questions about: how parents choose, quality, need for multiple settings, work hours. Source: U.S. Department of Education, National Center for Education Statistics, Early Childhood Program, National Household Education Survey 2001.

Type of Demand Varies by Income Source: Urban Institute, 2002 National Survey of America’s Families.

…Even as Children Get Older Source: Urban Institute, 2002 National Survey of America’s Families.

Yet Most Families Receiving a Subsidy Choose Child Care Centers Percentage of CCDBG-Funded Children Served in Types of Care in U.S., FY 2004 Source: U.S. Department of Health and Human Services, Child Care Bureau. http://www.acf.hhs.gov/programs/ccb/research/04acf800/list.htm

Supply of Care: Families Can’t Find Quality Care “You’ve probably seen the newspaper headlines talking about the shortage of quality child care — in other words, child care that meets or exceeds some basic standards for quality. This shortage doesn’t necessarily mean that you’ll have trouble finding child care spaces in your community (although, frankly, that can be an issue, too), but you can pretty much count on having trouble finding quality child care spaces in your community, at least according to what the experts are saying.” -- Choosing Child Care for Dummies

Supply of Care: Families Can’t Find Quality Care The top obstacles parents say they face in finding child care programs for their children • Affordability (59%) • Availability (48%) • High quality • Learning environment (48%) • Teachers (47%) (National Poll of Parents of 2 to 6 Year Olds, 2003)

Price of Care: Families Spend Large Amounts of their Income on Child Care Source: U.S. Census Bureau, Who’s Minding the Kids? Child Care Arrangements: Winter 2002. 2005.

Cost of Care: Families Do Not Pay the True Cost of Quality • The level of funding required to meet the “True Cost of Care” allows for: • competitive salaries and benefits for staff; • ongoing certification and training to ensure retention of quality staff; • family support services and age-appropriate curriculum development; • facility costs at market rates; • high quality indoor and outdoor equipment including replacement, maintenance and safety upgrades; • sufficient ongoing funding for program supplies; and • programs small enough to meet the needs of children to be in small group sizes with high adult to child ratios • A preliminary calculation of this “true cost of care” in Washington state indicates an average cost per month at about $1,525 per child.

Families Cannot Afford the True Cost of Quality Child Care In 2006, the HHS federal poverty guideline for a family of four is $20,000.

Quality of Care: Most Care is Mediocre Quality Excellent Quality Good Quality Average Quality Ratings (ECERS Scores) in four different studies

Quality Standards Vary from State to State • In 33 states, providers caring for 9 month-olds cannot care for more than four children in a maximum group size of 8. • For three-year olds, 9 states each require ratios of 6:1, 8:1 and 10:1, and group size not regulated in 15 states. • # of states requiring ECE pre-service qualifications, by type of provider • Teacher – 15 states • Small FCC provider – 11 states • Large FCC provider – 14 states • Number of states requiring CDA/Credential as minimum amount of pre-service training, by type of provider • Teacher – 7 states • Small FCC provider – 2 states • Large FCC provider – 6 states

Quality: How Do Parents Find High Quality Settings? • Licensing standards are minimal, and parents have misconceptions about government oversight • Often no external indices to help differentiate between child care providers • Differing needs based on age of child, work schedules and other family or child characteristics may drive consideration for child care

Policy Solutions: Quality • Improve Access to Information for Parents • Expand access to resource and referral agencies • Identify and explain components of quality • Improve Supports for Quality • Improve licensing regulations and agencies to monitor and provide training and technical assistance to providers • Quality Rating Systems • Support for Accreditation

Policy Solutions:Financing • Assistance to Parents • Expand access to subsidized care for low-income families • Raise average subsidy amount so that families can choose higher quality providers • Increase tax credits for higher-income families (including refundability) • Assistance to Providers • Make supports available to help providers purchase equipment, meet accreditation and other quality benchmarks • Provide training and access to higher education for providers through scholarships • Subsidize wages and benefits for better-educated and trained providers • Encourage participation of public and private partners, including government, foundations, business • Includes both access to care and quality improvements

Appendix

Primary Child Care Arrangements of Children Under Age 3, with Working Parents Source: The Urban Institute, Caring for Children of Color: The Child Care Patterns of White, Black and Hispanic Children Under 5, 2006.

Primary Child Care Arrangements of Children Ages 3-4, with Working Parents Source: The Urban Institute, Caring for Children of Color: The Child Care Patterns of White, Black and Hispanic Children Under 5, 2006.

Primary Child Care Arrangements of Children Under Age 3, with Working Parents Children of Immigrants refers to children with at least one foreign-born parent. Source: Urban Institute, 2002 National Survey of America’s Families.

Primary Child Care Arrangements of Children Ages 3-5, with Working Parents Children of Immigrants refers to children with at least one foreign-born parent. Source: Urban Institute, 2002 National Survey of America’s Families.

Failing to Care: The Failure of the Child Care Market