New York child care providers are increasing tuition and losing workers after federal funding dries up

Oct 23, 2024 —

Julia RockNew York child care providers are increasing tuition and losing workers after federal funding dries up

This story originally appeared in New York Focus, a nonprofit news publication that covers power in New York. Sign up for their newsletter here.

More than 15,000 child care providers in every New York county benefited from the billions of federal dollars that President Joe Biden’s pandemic relief package injected into the industry. Child care providers reported using the money to cover rent or pay workers’ wages, maintaining care for about 676,000 children in the state.

“That helped us keep the doors open,” said Victor Vargas, a former teacher who runs a daycare out of his home in the South Bronx. His daycare center with eight employees benefited from stabilization grants from the federal government as well as a staff retention grant that the state set up with federal funds.

But last September, federal funding ran out, leaving providers grappling with narrowing margins between their spending and what parents can afford or what state child care subsidies cover. According to a new report from the Century Foundation, a liberal think tank based on surveys and federal data, 44 percent of New York City child care providers increased tuition last year and a third lost staff.

New York has increased its own investment in the child care sector in recent years, mostly in the form of subsidies for parents and tax credits for providers, but lawmakers and advocates have called for more funding — particularly to boost wages for the industry’s low-paid workers.

This year, New York child care workers will take a pay cut after the state budget gave the industry a smaller wage increase than last year.

“The sector is in complete disarray right now,” said state Sen. Jabari Brisport, who chairs the chamber’s Children and Families Committee and has suggested that the state fund universal child care.

Twelve percent of New York child care workers live below the federal poverty line, compared to 5 percent of all workers in the state. The industry’s average wage is just over $32,900, making it one of the lowest paid workers in the state.

“They expect us to be able to recruit people, keep them here and make them want to be here – because what exactly do they get as a reward? “It’s not about money,” Vargas said, “because we can’t compete with anyone. It’s hard for us to stay in the market.”

The industry was already laying off workers when the federal funding cliff hit. Employment in New York’s child care industry fell 32 percent between 2019 and 2023, according to the Century Foundation’s analysis of federal data. (This data excludes preschool teachers and teaching assistants.)

“In other sectors, such as retail and food service, wages have increased,” said Julie Kashen, director of women’s economic justice at The Century Foundation and lead author of the report. “Even if they are educated and enjoy working with children, people can make more money selling coffee, so they leave the childcare sector to do so. This means that programs will eventually be discontinued.”

The Century Foundation had previously warned that the funding cut could lead to the closure of 70,000 programs across the country in September 2023. Some Democrats in Congress and the White House pushed for a new round of child care funding to avert the crisis, but it failed to get the votes needed to pass.

A year after the lockdown, the most apocalyptic scenarios have not yet occurred, the think tank admitted in the report published on Wednesday. But states are experiencing a “downward spiral,” with providers raising prices to stay open and struggling to find or retain workers.

Gov. Kathy Hochul, who calls herself “the state’s first mom governor,” has made affordable child care a key priority. In 2022, she committed the state to spending $7 billion on child care over her four years in office.

“As a mother who has been forced to leave her job due to a lack of accessible child care, I am proud of the work we have done with Majority Leader Stewart-Cousins ​​and Speaker Heastie to make this historic investment and the Opportunities it offers working parents,” Hochul said at the time.

This promise is “significant and welcome,” said Dede Hill, policy director of the Schuyler Center for Analysis and Advocacy. Thanks to recent expansions of the program, more than half of New York’s children are now eligible for child care subsidies—though only a small minority actually receive them.

“Unfortunately, there is a real danger that the state’s failure to invest in the workforce will jeopardize the success of all of these other historic investments on the child care support side,” Hill said. “You can expand eligibility to tens of thousands of families, as the state has done, but that means nothing to a family if they can’t find a place for their child in a program because there isn’t enough workers.”

Statewide, the number of spaces child care providers are allowed to offer is about the same as it was in 2021. Some parts of the state, particularly poorer and rural areas, have lost capacity, while others have seen an increase. But many providers are working below their capacity. In a March 2023 survey, 1,600 providers said they had nearly 30,000 licensed slots that they were unable to fill due to staffing shortages.

In 2023, Hochul and the state Legislature agreed to spend $500 million in voluntary federal pandemic relief funds to provide bonuses of up to $3,000 to 110,000 child care workers across the state. This spring, Hochul and lawmakers allocated the unspent portion of those funds for a smaller bonus.

According to the governor’s office, more than 80,000 child care workers received bonuses totaling more than $5,000 in the last two years. “We are committed to strengthening child care programs, expanding the workforce, and continuing to expand access to affordable child care for New Yorkers,” the office said in a statement.

Advocates had called on the state to invest its own money in the workforce and create a $2 billion Child Care Compensation Fund in this year’s state budget.

The proposal was modeled on a similar program in Washington. Direct currentwhich included a $12,000 supplement to the salaries of child care workers. A Cornell University analysis found that it would cost nearly $800 million to raise childcare workers to a minimum wage of $23.55 an hour – the average starting wage for preschool and kindergarten teachers in New York.

Both the Senate and Assembly budget proposals included a smaller version of the fund in the budget, but Hochul strongly opposed this.

“She was completely unwilling to provide new state money to finance this proposal. She focused solely on finding ways to repurpose the federal money and left it at that,” Brisport said.