The Child Care Availability and Affordability Act and the Child Care Workforce Act are two pieces of legislation that together form a bold bipartisan proposal to make childcare more affordable and accessible.
The legislative pieces would strengthen existing tax credits to lower childcare costs and increase the supply of childcare providers.
U.S. Sen. Tim Kaine of Virginia, a member of the Senate Health, Education, Labor and Pensions (HELP) Committee, and Katie Britt of Alabama, introduced the legislation today.
“I’ve heard from Virginians in every corner of the Commonwealth about how difficult it is to find affordable childcare, and how low wages are driving dedicated childcare workers out of a field they love,” said Kaine. “This crisis is holding our families, workers and economy back, and I’m proud to be introducing a bold bipartisan proposal to tackle it head on.”
Britt said that access to and the affordability of childcare is a challenge too familiar to families in Alabama and across the United States.
“This growing crisis has resulted in more and more parents, especially mothers, being forced to leave the workforce. I’m proud to join Sen. Kaine in leading this bipartisan legislation to put parents back in the driver’s seat by empowering and equipping hardworking Americans to determine the best path for their family. Our common ground solutions will help strengthen America’s labor force participation, fueling local Main Street small businesses and growing the economy,” Britt said.
The worsening childcare crisis is holding families, childcare workers, businesses and our entire economy back. Across the country, too many families cannot find — or afford — the high-quality childcare they need so parents can go to work and children can thrive. In the last three decades, the cost of childcare has increased by 220 percent, forcing families — and mothers, in particular — to make impossible choices. More than half of all families live in childcare deserts.
Meanwhile, childcare workers are struggling to make ends meet on the poverty-level wages they are paid and childcare providers are struggling to simply stay afloat. The crisis, which was exacerbated by the COVID-19 pandemic, is costing American economy dearly, to the tune of $122 billion in economic losses each year.
The Child Care Availability and Affordability Act would make childcare more affordable by:
- Increasing the size of the Child and Dependent Care Tax Credit (CDCTC) and making it refundable, allowing lower income working families with out-of-pocket childcare expenses to benefit from the credit for the first time. The proposal substantially expands the maximum CDCTC to $2,500 for families with one child and $4,000 for families with two or more children.
- Strengthening the Dependent Care Assistance Program (DCAP) to allow families to deduct 50 percent more in expenses (up to $7,500).
- Allowing eligible families to benefit from both the DCAP and the CDCTC when their childcare expenses exceed the DCAP threshold. This will have big benefits for middle income families who currently do not access the CDCTC but have particularly high childcare costs.
- Radically bolstering the underutilized Employer-Provided Child Care Tax Credit — commonly referred to as 45F — to encourage businesses to provide childcare to their employees. The Kaine-Britt plan would increase the maximum credit from $150,000 to $500,000, and the percentage of expenses covered from 25 percent to 50 percent. The legislation also includes a larger incentive for small businesses—a maximum credit of $600,000—and allows for joint applications for groups of small businesses who want to pool resources.
Because many childcare providers are forced out of the industry by low wages—which makes it even harder for families to find affordable child care—the Child Care Workforce Act would make it easier to access child care, by establishing a competitive grant program for states, localities, Tribes, and Tribal organizations that are interested in adopting or expanding pay supplement programs for child care workers to increase supply and reduce turnover.
Within that program:
- Grantees would provide supplements, paid out at least quarterly, directly to both home-based and center-based licensed childcare providers licensed by the state.
- An evaluation would be required of impacts on turnover, quality of childcare, availability of affordable childcare, and alleviating the financial burden on childcare providers. Model programs exist in Virginia, Nebraska, Oklahoma, Maine and the District of Columbia, with evaluations demonstrating large effects on the supply of workers, educator turnover, and worker well-being and satisfaction.
The proposal contains two bills because one proposes changes to existing tax credits, which best fits within the Senate Finance Committee’s jurisdiction, and the other authorizes a new pilot program, which fits the jurisdiction of the Senate HELP Committee.
“Inadequate compensation is the most pressing issue in early childhood education — impacting educators, children, families, businesses, and the economy,” said Michelle Kang, CEO of the National Association for the Education of Young Children (NAEYC). “NAEYC is pleased to endorse the Child Care Workforce Act, which provides bipartisan support for a federal role in increasing wages for educators working in childcare centers and family childcare homes. We urge Congress to continue working together towards long-term solutions that increase compensation and supply, and to prioritize sustainable and substantial direct investments in early childhood education and educators.”
First Five Years Fund Executive Director Sarah Rittling said the legislation is “an innovative package that strives to help address the unique challenges facing working parents, employers and childcare providers. By updating our tax code and taking additional measures to increase childcare supply, this plan will provide meaningful support to hundreds of thousands of working families across the country. We are so grateful for the bipartisan leadership of Senators Kaine and Britt for reaching across the aisle to find common sense solutions for working families, and we look forward to working with them to get this package over the finish line.”
Michele Stockwell is President of BPC Action.
“Choosing where and with whom to leave your child while you are at work is among the most personal choices a parent can make and one that has resulted in parents opting to leave the workforce because of lack of access to quality care,” Stockwell said.