Child Care Faces $24 Billion Fiscal Cliff as Pandemic Aid Ends
Providers face a tough choice: Roll back pay increases or raise prices for families.
Some of the classrooms at Discover Magical Moments Daycare in Rochester, Minnesota, sit empty because of staff shortages.
Photographer: Simone Lueck/Bloomberg
A crucial source of emergency funding for US child-care providers is starting to run out, threatening to hit an already overstretched industry at one of its biggest pain points: trying to hold on to low-paid staff in a tight job market.
Much of the $24 billion handed out as part of the pandemic-era American Rescue Plan (ARP) has been used by child-care providers to give wage increases or bonuses to teachers to discourage them from leaving for higher-paying jobs. With the supply of federal dollars coming to an end, providers say they’ll likely have to roll back those raises or increase tuition, something that’s already caused some parents to pull their kids out of care.