Capping the Co-pay: A State-by-State Analysis, Child Care Proposal Will Keep More Money in Families’ Pockets

It is no secret that the cost of child care is unbearable for most families. In many states, the monthly cost of child care often exceeds the average mortgage payment and the annual cost is higher than in-state college tuition. Historically, this cost has fallen to parents and providers as the child care system has been significantly underfunded. The lack of funding exacerbates the structural racism embedded in the system and disproportionately affects families of color, women, and single parents.

To make matters worse, the COVID-19 pandemic ravaged the child care system, significantly impacting parents and providers. The pandemic has made it even more difficult for families to afford the high cost of care. Moreover, the lack of affordable child care falls most directly on women, whose labor participation has fallen drastically throughout the pandemic. The risk of mothers’ departure from the labor force or reduced work hours as the result of caregiving needs could cost up to $64.5 billion per year in lost wages and economic activity. Investing in an equitable system that supports families, children, and essential workers who are caring for them, is crucial to the economic recovery of our country.

Biden’s proposed federal investment of $450 billion for the child care industry is estimated to serve 8.27 million young children in the tenth year of implementation. With this investment, it is essential to make care affordable and control the out-of-pocket costs for families. The Child Care for Working Families Act (CCWFA), which was reintroduced in congress this year, provides a sliding scale structure for co-payments. Under this plan, families’ co-payments, or their share of the cost, is based on their income and co-payments vary based on state median income (SMI). Co-payments vary based on income, ranging from no out-of-pocket costs for families earning under 75 percent of the SMI to co-payments capped at 7 percent of income for families earning under 150 percent of the SMI. By incorporating a sliding scale in a future investment in child care, parents in the lower income brackets—who are disproportionately people of color—would be alleviated of the burden of the high cost of care, and have more money to meet other needs. By investing in the child care system, we will both recover from the economic challenges of the pandemic and create systemic change for a brighter, equitable, and more prosperous future.

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