Child care is an absolute necessity for working parents; yet safe, high-quality care remains out of reach financially for many lower-wage workers and state subsidies have dropped off dramatically. For parents, the high cost of child care can result in a reliance on relatives, neighbors and friends who may not be able to make a long-term commitment; work disruptions that could jeopardize their jobs; and tough choices between job and family. For employers, the lack of child care can lead to absenteeism, job turnover and a threat to their bottom line. For children, it means an ever-changing string of caregivers, the inability to build the secure relationships needed to thrive, and lost opportunities during those very early weeks, months and years of life when scientists have shown that the very architecture of the brain is set in ways that affect lifelong learning. For the state, the lack of high-quality child care options for children and families can ultimately reduce third-grade literacy, increase the need for remedial education and other services, and slow economic growth.
While child care providers are some of the lowest-paid workers in the state, the cost of care is prohibitive for many lower-wage parents. In Michigan, child care workers had median wages of only $8.73/hour in 2013. Nationwide, wages for child care providers are so low that almost half receive some form of public assistance.
With wages stagnating in Michigan, 2 of every 3 young children now have all parents in the workforce, so for many families child care is essential, not optional. A family of four living at the state median wage must dedicate more than 20% of its income to place two children in a child care center. At poverty-level wages, over 80% of a family’s income would be consumed by child care, making work impossible, or forcing families to look for unregulated care that may not be reliable or even safe. The average cost of placing an infant in a child care center in Michigan ($9,882 annually) exceeds the state median rental cost ($9,168 a year), and rivals tuition and fees in a public college ($11,909 a year).
Despite the persistence of low-wage jobs, the number of families receiving state child care assistance has fallen by 75% in the last decade, and low eligibility levels and child care provider payments are major contributors. With income eligibility limits set at 38% of the state’s median income (121% of poverty), very few low-wage workers in Michigan are eligible for child care assistance—even though they do not earn enough to purchase safe, good-quality care for their children while they work.
Michigan’s income eligibility ceiling for child care assistance is one of the lowest in the country. Nationwide, child care eligibility caps range from approximately 120% of poverty to 300% of poverty. Because poverty limits were developed in the 1960s, they do not reflect the real costs faced by low-income families today, and 200% of poverty is now considered a more accurate reflection of what it takes for families to make ends meet.
Child Care Expansion in Flint: The governor recommends $8 million in the upcoming budget year to provide a half day of child care to children ages birth to 3 in Flint—regardless of income. The purpose is to help identify developmental delays in children exposed to lead and aggressively counter the effects. The House and Senate Appropriations Committees agreed to this funding.
Child Care Eligibility Limit: The governor did not increase the child care assistance eligibility limit for children statewide. The House Appropriations Subcommittee recommended an increase from 121% to 125% of poverty, but did not provide funding. While a step in the right direction, this falls far short of what is needed even if funded. Michigan currently has approximately $60 million from the federal Child Care Development Fund that it is carrying forward because of lagging caseloads—money it will ultimately have to use or lose. Michigan needs to expand child care eligibility statewide and be as aggressive as possible in heading off problems facing infants and toddlers in Flint. The state can afford to do both with available federal funds.
Child Care Payments: There are no increases in payments to child care providers in the governor’s budget or those approved by the House and Senate Appropriations Subcommittees. Rates were increased in the last two years for providers that rank higher on the state’s rating system for child care, but almost 7 of every 10 licensed providers were not qualified for the raise. Of the highest-quality providers, (4 and 5 stars on the state’s 5-star rating system) less than one-third serve children receiving a state subsidy.