This is the fourth in a series of commentaries from CLASP experts that explore dimensions of poverty ahead of the U.S. Census Bureau’s annual release of poverty, income, and health insurance coverage statistics from the previous year. On September 10, we’ll get a snapshot of the economic hardship that children, youth and young adults, and families experienced in 2023. Ahead of the release, CLASP experts are offering key insights on the impending 2025 tax debate, Medicaid unwinding, and raising labor standards and enacting new regulations to protect workers. In honor of the 60th anniversary of the War on Poverty, we’ll examine what has and has not changed in the past six decades. The complete series is available here. 

By Alyssa Fortner and Stephanie Schmit 

The high cost of child care has a significant impact on families’ economic security and spending power, yet this impact is not captured well in data. In fact, for families with the lowest incomes, the costs consume 35 percent of their income on average. This means that these families must make difficult decisions around care and other necessities like food and housing. For example, a recent study found that families with low incomes are more likely to reduce work to care for their children whereas families with higher incomes are more likely to pay for care. This crisis has led to $122 billion in lost earnings, productivity, and revenue to the national economy every year, according to the Council for a Strong America As we near the release of the U.S. Census Bureau’s annual poverty statistics, it is important to uplift this significant impact that is very real to families’ pocketbooks and interrogate the missing piece from this important data source. 

Access to affordable child care and early education is essential to the economic well-being of families with young children, particularly those with low incomes. However, the programs that support access to care for families with low incomes, including child care subsidies, have historically been underfunded and undervalued, which has led to significant tradeoffs at the state level that have created inequitable policies and limited access. In fact, only 14 percent of potentially eligible families received Child Care and Development Block Grant (CCDBG) subsidies in the most recent year (2020) data that is available. Because of this, they often experience further economic instability related to care compared to families with higher incomes. This is because access to child care is critical for parents’ ability to work and support their families and needs, but it is also incredibly expensive.  

The Census Bureau’s poverty data, however, fails to capture data on the full impact of child care expenses on a family’s income, especially impacts on families with lower incomes who may have access to child care assistance. Even the Supplemental Poverty Measure (SPM), which measures poverty by considering both cash and noncash benefits while subtracting necessary expenses, it does not reflect the true impact child care expenses have on have on families with different care arrangements and financial circumstances. For example, it does not distinguish between a family that has low costs for child care because they receive a child care subsidy for quality child care and the family that has low child care costs because they are paying a minimal amount for low-quality, unstable care that they can afford. But the National Academies of Science recognizes this significant cost and complexity and recommends the SPM be updated to include the full picture of the impact of child care expenses. Their report cites that for families who pay for child care, it is the third largest expense after housing and transportation. Despite its incredible cost burden, child care is essential for family economic security, and we must be working to alleviate that burden.  

Until Congress makes intentional, transformative investments in building an equitable, high-quality child care and early education system, we will continue to lose billions of dollars in the national economy and fail to improve economic and job security for families. However, we will not see this reality in the data that is being released which undermines the ability of families, advocates, and others to make a strong case for why these investments are necessary. Additionally, even if investments are secured, the lack of data and/or data that doesn’t lead to an accurate assessment of expenses means that we can’t ensure that the amount of funding meets the actual needs of families across the states. This is also true in states’ abilities to know if their proposed investments and policies fit their families.  

To mitigate this, it is crucial for more intentional, equitable data to be collected about the state of child care and early education in this country, including the accessibility and affordability of these programs for families. While we know care consumes large portions of families with low-income budgets, we don’t see it reflected in this measurement of impact on families’ resources and income. And one strong place to start is to begin is in the Income, Poverty, and Health Insurance Statistics and American Community Survey Estimates.