Understanding Child Care in New York State
80% of households in New York State (NYS) cannot afford child care. This lack of access to affordable, quality child care significantly constrains parents’ and guardians’ collective ability to participate in the economy, save for the future and enjoy a decent standard of living.
The most significant problem facing the child care industry is a dwindling supply of child care professionals. Due to the poverty wages paid to many child care workers in NYS, child care providers are unable to staff programs and meet the demand for child care. Since the pandemic, this constriction of the child care labor market has reached crisis levels.
What are the key problems, debates and potential solutions for New York’s ongoing child care crisis? Who are NYS’s child care professionals, and what issues are they facing as an industry? How are providers and legislators working to resolve these problems?
Context
Child care has taken center stage as a statewide policy issue in the past two NYS budget cycles. Given the work to be done in this arena, New Yorkers can expect to hear much more about child care in upcoming legislative sessions.
At the height of the pandemic, NYS legislators and advocates recognized child care providers as the 'workforce behind the workforce': an industry that enabled other essential workers to work because they had a safe, affordable place for their children to stay during the work day.
During and after the pandemic, child care professionals received scholarly attention as integral members of the multibillion-dollar growth of the United States "Care Economy," which includes workers who nurture young children, show compassion to the elderly and assist people with disabilities.
As former US Secretary of Labor Marty Walsh noted, the Care Economy encompasses all “caregiving work,” which often has a “highly customized and individually specific output” and “entails more personal connection than other types of work.”
Consequently, the Care Economy needs more discussion and investment. According to Walsh,
[Public] investments in child care and home- and community-based care for people experiencing disability or frailty can reduce tensions between paid work and family work, making it easier for people (especially women) to both earn the paychecks they need and provide the unpaid care their families, friends and communities deserve. A better care infrastructure would give everyone more freedom and flexibility to design their own care ‘packages.’
Poverty Wages
Child care workers remain notoriously underpaid and undervalued. In NYS, the median annual salary in 2023 was approximately $55,000, while the median salary for child care workers was roughly $33,000. Based on median salary, child care workers earn approximately 40% less than New York workers in general.
The NYS minimum wage outside New York City is $15 per hour. Many child care workers in New York State earn at or near the $15 minimum wage—the median wage among child care workers is $15.86.
In a 2022 study of child care workers and providers in Erie County, Cornell ILR Buffalo Co-Lab researchers found that some child care workers (especially family and group family service providers) worked 1,200 hours of unpaid labor (e.g., buying supplies, cleaning their homes and coordinating with parents before and after hours). When added to the respondents' work hours, the calculation showed that the respondents earned less than $15 per hour: Sub-minimum.
Child Care in Crisis
Working parents and child care providers depend on one another to earn a living. Parents can go to work only because they secure child care for their young children during the work day. The child care workforce facilitates the employment of the broader NYS workforce.
In the absence of quality, affordable child care, new parents might choose (or be compelled to choose) to forego employment and do the work of child care themselves. In fact, NYS has begun to lose adults in the statewide workforce due to child care issues. Recent survey data show that many New York State households choose parenting over employment because child care would cost too much.
According to Cornell University’s 2023 Empire State Poll, 42% of 635 respondents reported that at least one adult in their household decided not to find employment outside the house to stay home and care for kids. Within this subset of respondents, 53% cited the prohibitive cost of child care as the primary reason they opted out of employment outside the household.
In other words, the cost of living in New York State is outpacing the wages workers are earning, and child care costs for new parents in New York exacerbate this affordability gap. As a result, the NYS labor market loses potential workers and the economic activity they create. The state is losing at least one worker in 4 out of 10 households with new parents.
Policy Shortfalls
The child care enterprise approach gained momentum in the summer of 2023 when Governor Hochul and Micron Technology announced a plan to create child care services for the 50,000 new employees projected for their semiconductor manufacturing campus under construction in Clay, New York. In August, Micron purchased a parcel of land to build an on-site daycare for their employees.
On December 20, 2023, NYS Governor Kathy Hochul announced a $100 million program purportedly to address the shortage of child care supply in New York State. This commitment included $50 million in capital grants to developers seeking to build child care home and center-based programs, and $50 million in tax credits to business owners (in and out of the child care industry) to expand employee access to child care services.
However, just three days later, Governor Hochul vetoed the Decoupling Bill despite passing both houses of the NYS legislature with bipartisan support. What is decoupling? Right now, if a New Yorker qualifies for child care assistance, they can only use the subsidy at the exact time they are working. This regulation restricts access to assistance for New York’s parents and caregivers who work non-traditional hours.
The Decoupling Bill would have helped parents, providers, and children by removing a major obstacle to accessing state resources. Governor Hochul’s veto signaled to child care providers, advocates and parents that expanding access to quality, affordable child care may not be a priority in 2024.
A Proposed Solution
One practical strategy to improve the status of child care work would be to create and administer a NYS child care worker compensation fund to help stabilize and expand the child care workforce in New York. If included in future NYS budgets, the Child Care Compensation Fund (CCCF) would enhance wages for child care workers and provide financial incentives to providers who offer work benefits to child care workers.
To improve wages among child care workers, the CCCF would institute a state-provider partnership to ensure that child care workers receive pay equivalent to that of other early childhood educators in the state. The CCCF would subsidize all child care workers in New York State who apply; workers who earn below $23.06 per hour would have their wages enhanced, earning $23.06 per hour—the entry wage for NYS elementary and middle school teachers.
Additionally, providers who offer their employees discounted health care insurance and professional development opportunities could apply to the CCCF and receive tax incentives to support their businesses. Due to their participation in the CCCF, they would also receive special consideration for workforce development grants offered by NYS.
The CCCF would cost upwards of $2 billion—a significant amount of money; however, market data show that New York State stands to make a 90% profit from this investment. According to Buffalo Co-Lab researchers, a $1 billion investment in child care would produce $1.9 billion in economic activity and 20,304 new jobs.
It stands to reason that a $2 billion NYS CCCF could result in $3.8 billion of economic activity, which is 90 percent profit on the investment. The NYS CCCF would also create 40,608 new jobs. By these measures, the New York State Child Care Compensation Fund could end the crisis in child care and make the industry one of New York’s economic engines for the near future.