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Biden-Harris’ American Rescue Plan: How it aims to save child care and help parents return to work

Biden-Harris’ American Rescue Plan: How it aims to save child care and help parents return to work

The pandemic has been disastrous for child care providers and the parents who rely on them, but relief is in sight, thanks to a new release of $39 billion in funding from the Biden-Harris administration. The emergency aid is a part of President Biden’s American Rescue Plan and is intended to bail out the struggling child care industry and get more parents back to work.

The impact of COVID-19 

More than two million women have been forced out of the workforce since the pandemic began, and a July survey by the U.S. Chamber Foundation found more than 75% of families have children at home during work hours. For these parents, there simply is no possibility of returning to “normal” without access to quality, affordable child care. Unfortunately, COVID-19 has also left the child care industry in crisis.

In an August 2020 survey by the Bipartisan Policy Center, 70% of parents reported their child care provider was either closed or operating at reduced capacity. Another report shows 40% of child care centers are at risk of closing for good without emergency help. One in six child care jobs that were shuttered at the start of the pandemic have not yet come back, and two in five child care providers report taking on debt to keep their programs running or using personal credit cards to pay for the increased costs of opening during the pandemic.

What’s included in the American Rescue Plan?

The $39 billion in child care relief is aimed at addressing emergency needs and rebuilding the child care industry. The money will be distributed in two separate funds. $15 billion will go towards expanding the Child Care and Development Block Grant, which helps low-income families pay for child care. The other $24 billion will be distributed to providers to help with operational and hiring costs. 

The main priorities for the funding include:

1. Helping child care providers stay open or reopen. Child care providers can use funding to pay rent and mortgage payments, cover the costs of utilities and insurance and pay off debts accrued during the pandemic. Providers can also access funds to cover the costs of personal protective equipment and other supplies to comply with the Center for Disease Control and Prevention’s (CDC) Guidance for Operating Child Care Programs during COVID-19.

2. Protecting and improving child care workers’ jobs. Care providers will have money to hire more workers or to rehire those who were let go during the pandemic. Additionally, the Biden administration aims to increase the base pay and benefits offered to child care workers. Currently, child care workers in the US earn an average of $11.65 an hour, often without health insurance benefits or paid leave.

3. Providing affordable care to families in need. States, tribes and territories can use funding to provide direct child care subsidies to any family earning below 85% of their state’s median income. This will help a projected 800,000 families, including many essential workers, access child care.

The American Rescue Plan also includes an update to the Child and Dependent Care Tax Credit (CDCTC), which has already gone into effect. Under the plan, families with incomes below $125,000 will save up to half the cost of their eligible child care expenses when they file taxes for 2021. This allows families to receive up to $4,000 in tax credit for one child and $8,000 for two or more children. Previously, the CDCTC was capped at $600 for one child and $1,200 for two or more children.

What’s next?

The White House hopes the funding provided under the American Rescue Plan will help lay the groundwork for later efforts to create a more affordable and more equitable child care system in the U.S. 

“In America, child care should be readily available and affordable for all who need it,” Vice President Harris says in a statement. “Child care workers should be paid fairly and treated with dignity and respect. And small business owners who run child care centers must be fully supported.”

The pandemic has made it clearer than ever that child care is an essential need for most parents, and the work child care providers do is vital. While this relief plan will not address all of the problems in the U.S. child care system, it represents an important first step in expanding access to affordable care for thousands of families and offering much-needed support to the child care workers who make working parenthood possible.