The childcare crisis in the United States is a growing concern that demands immediate attention. With more than 14.4 million children, or 67.8 percent, having all available parents in the workforce, the lack of accessible and affordable childcare pushes families to make difficult decisions, such as reducing work hours, declining promotions, or leaving the workforce entirely. This challenge is compounded by the fact that over half of the children under age 5 live in childcare deserts, areas with insufficient licensed childcare slots. The COVID-19 pandemic only worsened the situation, causing widespread closures and financial strain on the childcare sector.

To address this crisis and bolster local economies, local governments can play a pivotal role by supporting community initiatives. Here are four ways they can make a difference:

1. Invest in subsidized childcare programs

The high cost of childcare is a significant barrier for many families. In fact, 67% of parents spend 20% or more of their income on childcare, and the costs have risen by 51% since 2022. In 44 states, the average cost of childcare for two children exceeds the average rent.

To combat this, local governments should invest in subsidized childcare programs. By providing financial assistance to eligible families, they can ease the burden and allow more parents to remain in the workforce. These programs can help prevent families from having to make the tough decision between work and caring for their children, ultimately supporting economic stability. A great example of state government support is Wisconsin’s Partner Up Program, in which businesses contribute 25 percent or more toward the cost of childcare care for their employees.

Although childcare financial assistance may initially appear to strain a local government’s already tight budget, it can actually lead to long-term economic growth. By investing in childcare opportunities, governments can:

• Economic growth: A potential $140,000 first year-economic benefit is contributed to the local economy by each additional working mother enabled by reliable childcare.
• Increased tax revenue: Local taxes are boosted when more parents are enabled to enter the workforce,
• Long-term social benefits: A $4-9 return per dollar invested is yielded by quality early childhood education. Studies demonstrate substantial economic benefits of investing in quality early childhood programs for the community, including improved educational attainment, increased earnings, and reduced crime rates.

2. Build a connected and coordinated system to access services

One of the biggest challenges in accessing childcare subsidies is the complex and confusing application process. Only 15% of the nearly 8.7 million eligible families receive childcare subsidies, largely due to the excessive paperwork and lengthy payment cycles that can strain both families and childcare providers.

Implementing technology-driven solutions, like Upwards, can streamline the application process, reduce administrative costs, and ensure faster payments to providers. This approach not only makes it easier for families to access the care they need but also supports the financial stability of childcare providers, helping to maintain a robust supply of services.

In fact, the Uplift Subsidy Program in California achieved remarkable results in a short period:

• 90% of program slots filled within 6 months (vs. 2-year estimate by government body)
• 5-day turnaround for applications (vs. 30 days in traditional systems)
• 70% average enrollment growth for participating providers
• 72-hour payment cycle for providers (vs. 60 days traditionally)

A working mom in Kern County, CA applied on a Thursday and her daughter started full-time care the following Monday. This allowed Ariel to focus on her studies and career while saving $800 per month on childcare expenses.

3. Support the development of family child care centers

With as many as 70,000 childcare centers projected to close as pandemic-era federal funding ends, the childcare sector is at a breaking point. The potential loss of 232,000 jobs in this sector could have devastating effects on the economy, in addition to the number of children and families left without access to care.

The good news is that there are ways to mitigate the care center crisis. While some initiatives may focus on new brick and mortar childcare centers, the reality is that in-home family childcare centers (FCCs) are up to 18X faster to set up, allowing governments to meet the needs of their residents in months, not years.

These FCCs also tend to be closer to home for many residents, increasing parity in commutes across income levels. For example, if a parent takes public transportation to and from work, they may be required to leave at least one hour early to accommodate care center drop-off — 1 hour (home to childcare center) and 1 hour to work (center to work). That means the parent is dropping off their child at least two hours earlier than normal, a logistical and financial burden.

4. Enhance workforce training and compensation

The childcare workforce has been one of the slowest to recover from the pandemic, with the number of childcare workers in Ohio alone dropping by 35.89% from 2017 to 2022. Other states are having similar problems. Amid a tight labor market, the childcare sector is having one of the hardest times attracting workers – down 39,400 workers in 2023. Childcare workers also receive less competitive wages than other occupations. In fact, childcare workers receive some of the lowest median wages of all occupations, at $11.65 per hour.

Local governments can attract and retain skilled childcare workers by investing in workforce training and offering competitive compensation. States like California have implemented mentoring programs that pair new workers with experienced mentors, while San Francisco voters approved a tax increase projected to raise $60 million for early childhood educator pay. In Washington, DC, an advocacy campaign led to higher income taxes for the wealthiest residents, raising $55 million to fund stipends for early educators. Similarly, Maine extended wage supplements for early care educators, linking bonuses to experience and education to encourage retention and professional development.

By improving the quality of care and making childcare jobs more appealing, communities can ensure a stable supply of services and support economic growth.

Implementing community childcare programs with Upwards

The childcare crisis is a complex issue that requires a multi-faceted approach. By investing in subsidized stipend programs, building a coordinated system, supporting the development of childcare centers, and enhancing workforce training and compensation, local governments can be the heroes their communities need.

These initiatives not only meet the immediate needs of families but also drive economic growth, create jobs, and boost tax revenue. Upwards offers a comprehensive, technology-driven platform that can help local governments implement these strategies effectively:

1. Upwards streamlines the application and payment processes, making it easier to manage and distribute subsidies.
2. Our platform serves as a central hub, connecting families, providers, and government agencies seamlessly.
3. Upwards provides tools and resources to help childcare centers manage their operations more efficiently, providing more available slots and higher quality care for families in the community.

Ready to learn more about local childcare support? Contact Upwards today to discover how our innovative solution can be tailored to your government’s unique needs and those you serve.