Child care subsidies

There is strong evidence that child care subsidies increase maternal employment for families with low incomes (US DHHS-Enchautegui 2016, Ahn 2012, Blau 2007, NCCP-Schaefer 2006, Tekin 2005, Berger 1992). Such subsidies have also been shown to increase enrollment in center-based care among children from families with low incomes, which is often higher quality than non-family home-based care (Pilarz 2018, Weber 2014, Ertas 2012, Ryan 2011, OPRE-Michalopoulos 2010a, Brooks 2002, MDRC-Gennetian 2001).

Child care subsidies increase employment for single mothers (Blau 2007, Tekin 2005) especially those with low incomes (US DHHS-Enchautegui 2016, Ahn 2012, NCCP-Schaefer 2006, Berger 1992) and those without a high school education (NCCP-Schaefer 2006). Single mothers who receive subsidies appear to work more hours and have more standard work schedules (NCCP-Schaefer 2006). Mothers who receive subsidies appear to stay in jobs longer (US Census-Gurrentz 2021, Choi 2020, OPRE-Goerge 2009, NCCP-Schaefer 2006) and earn more than mothers who do not receive subsidies (Choi 2020, NCCP-Schaefer 2006), which may be linked to improved intellectual development in children (Choi 2020). However, a Wisconsin-based study only found increased earnings and employment spells for participants enrolled for 12 months or more (Ha 2015). Recipients may also pay less for child care than mothers not receiving subsidies (Brooks 2002).

Subsidy receipt may increase the likelihood that a single mother enrolls in school or job training (Herbst 2011), especially mothers of younger children and those with less education (Schochet 2019). It may help maintain employment for those experiencing intimate partner violence (Showalter 2019), and may decrease child care-related work disruptions (Forry 2011).

Subsidy receipt increases the use of higher quality care, mostly center-based (Pilarz 2018, Johnson 2013, Ryan 2011, MDRC-Gennetian 2001), across urban and rural settings (De Marco 2015). Child care subsidies can allow employed parents to access child care centers (OPRE-Michalopoulos 2010a) and center-based preschool programs (Ertas 2012) that they may not have been able to afford without subsidies. They also can increase the use of non-parental care for children with special needs, particularly center-based care (Sullivan 2018). More generous subsidies may increase the use of center-based care more than less generous subsidies (Weber 2014).

Based on a study in the Chicago Public Schools, children who receive subsidies in early childhood may be less likely to be truant in 7th and 8th grade, and those who attend licensed center- or home-based care may have higher 3rd grade math and reading scores (Zanoni 2019). Norway-based research indicates that subsidies that move children from informal, non-parental care to more formal care settings can have positive long-term effects on children's future educational attainment and labor market participation (Havnes 2011).

Subsidy receipt may not impact the stability of child care arrangements (Krafft 2017), but increased state spending on subsidy can decrease the likelihood of using multiple arrangements (Pilarz 2018). Child care subsidy eligibility requirements and renewal timelines vary across states and may cause frequent re-entry and exit by recipients, resulting in child care instability which may be associated with poor developmental outcomes for children (Davis 2017b, Krafft 2017, Tran 2011). Child care instability may also cause disruptions in employment (Davis 2017b), and increase material hardship for families (Kim 2021). There is some evidence that lowering the copayments for recipients increases spell length (OPRE-Michalopoulos 2010a), which is associated with longer employment spells (US DHHS-Enchautegui 2016).

A 2019 report projects that expanding the child care subsidy to all eligible families below 150% of the poverty line would reduce child poverty by 3% (400,000 children). This change would increase the number of families receiving subsidies by 73%, and cost approximately $9 billion (Urban-Giannarelli 2019).

Child care subsidies have the potential to reduce the racial and ethnic wealth gap that exists in the U.S. today by increasing employment and earnings for families with low incomes (Ahn 2012). However, child care subsidy uptake remains low. In 2020, only an estimated 10% of children potentially eligible based on federal income eligibility limits received a subsidy; that number increases to 14% based on state income eligibility limits. Use of subsidies varies by race and ethnicity, with black children having the highest rate of access and Asian and Hispanic children having the lowest rates. However, 83% of potentially eligible black children are not receiving subsidies (CLASP-Hardy 2024). Black children receiving subsidies and still experiencing child care instability may have a higher risk of poor outcomes compared with similar children of other racial or ethnic groups (Tran 2011). Overall, child care subsidies may not be enough to address the barriers that minority families face, and in some cases, policy and practice may even pose barriers to child care and subsidy access. More research is needed to understand the impact of subsidy policy and program implementation and its effects on communities of color (Urban-Adams 2021).

There is some evidence that child care subsidies have the potential to decrease disparities in maternal employment between families with low and high incomes (US DHHS-Enchautegui 2016, Berger 1992, US Census-Gurrentz 2021, Ahn 2012, Blau 2007), particularly for single mothers and mothers without high school degrees (NCCP-Schaefer 2006). Child care subsidies also have the potential to decrease disparities in children’s access to high quality, center-based care (Pilarz 2018, Ryan 2011, Brooks 2002, Weber 2014).

Child care subsidies are also a suggested strategy to increase earnings for mothers with low incomes (NCCP-Schaefer 2006, Choi 2020) and have the potential to decrease child poverty (Urban-Giannarelli 2019). Child care subsidies may increase educational attainment for mothers, particularly those who receive subsidies when their children are younger and those who have lower levels of education (Schochet 2019). A study of married, dual-earner families shows that child care subsidies may decrease earning disparities between male and female spouses (US Census-Gurrentz 2021).

Child care subsidies are more likely to reach black children than white children (US GAO-Child care 2016, Morrissey 2021, CLASP-Ullrich 2019). However, overall access rates among eligible children are low nationwide (CLASP-Ullrich 2019) and Hispanic children have especially low access to subsidies (US GAO-Child care 2016, CLASP-Ullrich 2019). Experts propose addressing inequities in access to subsidies, through actions such as simplifying applications for families and expanding subsidies to more child care options (Urban-Adams 2021).

The U.S. child care system is fragmented and not uniformly developed; federal funding for child care and early education programs has been inconsistent in purpose and scope, with widely fluctuating budgets and availability over time (Cohen 1996a). Many politicians disagree on whether childcare is a public or private responsibility and use child care funding as a short-term solution for social problems (Cohen 1996a). Starting in the 1830s, day nurseries began providing child care for working mothers (Kamerman 2007), though initial child care programs and policies used systemic barriers to limit access to high quality child care programs and prevent participation based on economic, Native, and racial backgrounds (Catalyst CA 2021). Enrollment in child care programs increased the most during times of war, and generally decreased after wars ended (Kamerman 2007). For example, the 1941 Lanham Act created and supported community child care facilities to encourage women's employment during WWII, but after the war ended funding was discontinued and most of those child care centers shut down (Michel 2011).

In the late 1950s, the Inter-City Committee for Day Care of Children (ICC), a national activist organization dedicated to child care, tried to convince government agencies like the U.S. Children’s Bureau and the U.S. Women’s Bureau to provide federal support for child care. Despite the ICC’s efforts and the Kennedy administration’s acknowledgement that maternal employment was becoming an irreversible trend, the administration could not gain sufficient political support to introduce a universal child care policy. Instead, federal support for child care was tied to training programs and work policies intended to reduce the number of mothers who were receiving welfare benefits (Michel 2011). In the 1980s, federal funding for child care increased for families with middle and high incomes while decreasing for families with low incomes (Michel 2011). The Child Care and Development Block Grant (CCDBG), authorized in 1990, was designed to support child care for families with low incomes who did not enroll in the welfare system, and was later combined with other small programs into the Child Care and Development Fund, dedicated to child care subsidies for both families with low incomes and families receiving welfare benefits (CRS-Lynch 2014). Expansion of child care subsidies has been introduced by Democrats several times over the past few years, but didn't receive enough bi-partisan support to become law (CNN-Hickey 2022).

• Who are the children that qualify for subsidies but do not receive them? What are barriers to access to subsidies for eligible families?
• How can you improve outreach to eligible families and decrease the complexity of program application?
• How can you secure additional funding to expand eligibility to reach more families with low to middle incomes?
• How can a state build an equitable subsidy system and support quality child care, such as increasing state payment rates for child care providers and expanding subsidies to various child care settings?

The federal Child Care and Development Fund (CCDF) provides funding to states, territories, and tribes to help families with low incomes, families receiving temporary public assistance, and those transitioning from public assistance to obtain child care so parents can work or attend education and training programs (US DHHS OCC-CCDF). During the reauthorization of the Child Care Development Block Grant in 2014, which funds CCDF, new and updated requirements were included to better support families with low incomes who are paying for child care. This included extending eligibility from 6 to 12 months, allowing temporary changes in employment status without loss of support, increasing consumer education, and increasing funds for quality improvement efforts (US DHHS OCC-CCDF final rule).

To qualify for child care subsidies, families’ earnings must be below income eligibility limits, and children must be under 13 years of age or have special needs (Urban-Dwyer 2021). The federal income threshold is set at or below 85% of state median income, but states can set lower thresholds (US DHHS OCC-CCDF). The median income for CCDBG eligibility across all states and Washington, D.C. was 180% FPL (CLASP-Ullrich 2019), or $47,700 for a family of four in 2021 (US DHHS-Poverty). States with more stringent Temporary Assistance for Needy Families (TANF) work requirements often have lower income eligibility limits and less generous child care subsidies than states with less stringent work requirements (Ha 2013). In 2021, New Mexico increased state subsidy rates paid to providers by setting the rates based on a cost estimation model rather than the market price (CAP-Workman 2021).

‡ Resources with a focus on equity.

CLASP-Matthews 2017 - Matthews H, Schulman K, Vogtman J, Johnson-Staub C, Blank H. Implementing the child care and development block grant reauthorization: A guide for states. Washington, D.C.: The Center for Law and Social Policy (CLASP) and National Women’s Law Center; 2017.

NCSL-EC legislation database - National Conference of State Legislatures (NCSL). Early childhood (EC) legislation database: Early childhood bill tracking.

Urban-Adams 2021^‡ - Adams G, Pratt E. Assessing child care subsidies through an equity lens. Washington, D.C.: Urban Institute; 2021.

* Journal subscription may be required for access.

Ahn 2012* - Ahn H. Child care subsidy, child care costs, and employment of low-income single mothers. Children and Youth Services Review. 2012;34(2):379-387.

Berger 1992 - Berger MC, Black DA. Child care subsidies, quality of care, and the labor supply of low-income, single mothers. The Review of Economics and Statistics. 1992;74(4):635-642.

Blau 2007* - Blau D, Tekin E. The determinants and consequences of child care subsidies for single mothers in the USA. Journal of Population Economics. 2007;20:719-741.

Brooks 2002* - Brooks F. Impacts of child care subsidies on family and child well-being. Early Childhood Research Quarterly. 2002;17(4):498-511.

CAP-Workman 2021 - Workman S. Promoting equitable access to quality child care. Washington, D.C.: Center for American Progress (CAP); 2021.

Catalyst CA 2021 - Catalyst California. Tracing the roots of systemic racism in the U.S. early childhood system. 2021.

Choi 2020* - Choi JK, Moon SK. The effects of child care subsidies on children’s health and developmental outcomes. Journal of Family Studies. 2020;26(3):405-421.

CLASP-Hardy 2024 - Hardy, A., Schmit, S., & Wilensky, R. (2024). Child care assistance landscape: Inequities in federal and state eligibility and access. The Center for Law and Social Policy (CLASP).

CLASP-Ullrich 2019 - Ullrich R, Schmit S, Cosse R. Inequitable access to child care subsidies. Washington, D.C.: Center for Law and Social Policy (CLASP); 2019.

CNN-Hickey 2022 - Hickey C. Not the year for women and parents: Child care provisions were cut from the Inflation Reduction Act. It’s not the first time. CNN Politics. August 12, 2022.

Cohen 1996a* - Cohen AJ. A brief history of federal financing for child care in the United States. The Future of Children. 1996;6(2):26-40.

CRS-Lynch 2014 - Lynch KE. The child care and development block grant: Background and funding. Congressional Research Service (CRS) RL30785; 2014.

Davis 2017b* - Davis EE, Krafft C, Forry ND. Understanding churn: Predictors of reentry among families who leave the child care subsidy program in Maryland. Children and Youth Services Review. 2017;77:34-45.

De Marco 2015* - De Marco A, Vernon-Feagans L. Child care subsidy use and child care quality in low-wealth, rural communities. Journal of Family and Economic Issues. 2015;36:383-395.

Ertas 2012 - Ertas N, Shields S. Child care subsidies and care arrangements of low-income parents. Children and Youth Services Review. 2012;34(1):179-85.

Forry 2011 - Forry ND, Hofferth SL. Maintaining work: The influence of child care subsidies on child care-related work disruptions. Journal of Family Issues. 2011;32(3):346-368.

Ha 2013* - Ha Y, Ybarra M. Are strong work-first welfare policies aligned with generous child care provisions? What states are doing and the implications for social work. Families in Society. 2013;94(1):5-13.

Ha 2015* - Ha Y, Miller DP. Child care subsidies and employment outcomes of low-income families. Children and Youth Services Review. 2015;59:139-148.

Havnes 2011* - Havnes T, Mogstad M. No child left behind: Subsidized child care and children’s long-run outcomes. American Economic Journal. 2011;3(2):97-129.

Herbst 2011* - Herbst CM, Tekin E. Do child care subsidies influence single mothers’ decision to invest in human capital? Economics of Education Review. 2011;30(5):901-912.

Johnson 2013* - Johnson AD, Martin A, Brooks-Gunn J. Child-care subsidies and school readiness in kindergarten. Child Development. 2013;84(5):1806-1822.

Kamerman 2007 - Kamerman SB, Gatenio-Gabel S. Early childhood education and care in the United States: An overview of the current policy picture. International Journal of Child Care and Education Policy. 2007;1(1):23-34.

Kim 2021* - Kim J, Henly JR. Dynamics of child care subsidy use and material hardship. Children and Youth Services Review. 2021;124:105979.

Krafft 2017* - Krafft C, Davis EE, Tout K. Child care subsidies and the stability and quality of child care arrangements. Early Childhood Research Quarterly. 2017;39:14-34.

MDRC-Gennetian 2001 - Gennetian LA, Crosby DA, Huston AC. Does child care assistance matter? The effects of welfare and employment programs on child care for very young children. New York: Manpower Demonstration Research Corporation (MDRC). 2001: The Next Generation Working Paper Series No. 2.

Michel 2011 - Michel S. The history of child care in the U.S. Social Welfare History Project. 2011.

Morrissey 2021 - Morrissey T, Heflin C, Fannin WC. The U.S. child care subsidy program is underused but well-positioned to promote racial equity. Research Brief #54. Syracuse, NY: Syracuse University, Maxwell School of Citizenship and Public Affairs, Lerner Center for Public Health Promotion; Center for Aging and Policy Studies; 2021.

NCCP-Schaefer 2006 - Schaefer SA, Kreader JL, Collins AM, Lawrence S. Parent employment and the use of child care subsidies. New York: National Center for Children in Poverty (NCCP); 2006.

OPRE-Goerge 2009 - Goerge RM, Harris A, Bilaver LM, et al. Employment outcomes for low-income families receiving child care subsidies in Illinois, Maryland, and Texas. Washington, D.C.: Office of Planning, Research and Evaluation (OPRE), Administration for Children and Families (ACF), U.S. Department of Health and Human Services (U.S. DHHS); 2009.

OPRE-Michalopoulos 2010a - Michalopoulos C. Effects of reducing child care subsidy copayments in Washington State. Washington, D.C.: Office of Planning, Research and Evaluation (OPRE), Administration for Children and Families (ACF), U.S. Department of Health and Human Services (U.S. DHHS); 2010.

Pilarz 2018* - Pilarz AR. Child care subsidy programs and child care choices: Effects on the number and type of arrangements. Children and Youth Services Review. 2018;95:160-173.

Ryan 2011* - Ryan RM, Johnson A, Rigby E, Brooks-Gunn J. The impact of child care subsidy use on child care quality. Early Childhood Research Quarterly. 2011;26(3):320-331.

Schochet 2019* - Schochet ON, Johnson AD. The impact of child care subsidies on mothers’ education outcomes. Journal of Family and Economic Issues. 2019;40:367-389.

Showalter 2019* - Showalter K, Maguire-Jack K, Yang MY, Purtell KM. Work outcomes for mothers experiencing intimate partner violence: The buffering effect of child care subsidy. Journal of Family Violence. 2019;34:299-308.

Sullivan 2018 - Sullivan AL, Farnsworth EM, Susman-Stillman A. Childcare type and quality among subsidy recipients with and without special needs. Infants Young Child. 2018;31(2):109-127.

Tekin 2005* - Tekin E. Child care subsidy receipt, employment, and child care choices of single mothers. Economics Letters. 2005;89(1):1-6.

Tran 2011* - Tran H, Winsler A. Teacher and center stability and school readiness among low-income, ethnically diverse children in subsidized, center-based child care. Children and Youth Services Review. 2011;33:2241-2252.

Urban-Adams 2021 - Adams G, Pratt E. Assessing child care subsidies through an equity lens. Washington, D.C.: Urban Institute; 2021.

Urban-Dwyer 2021 - Dwyer K, Minton S, Kwon D, Weisner K. Key cross-state variations in CCDF policies as of October 1, 2019. Washington, D.C.: Urban Institute; 2021.

Urban-Giannarelli 2019 - Giannarelli L, Adams G, Minton S, Dwyer K. What if we expanded child care subsidies? A national and state perspective. Washington, D.C.: Urban Institute; 2019.

US Census-Gurrentz 2021 - Gurrentz B. Child care subsidies and the labor force outcomes for working married mothers. U.S. Census Bureau, Social, Economic, and Housing Statistics Division. 2021: Working Paper SEHSD-WP2021-14.

US DHHS OCC-CCDF - U.S. Department of Health and Human Services (U.S. DHHS), Office of Child Care (OCC): An Office of the Administration for Children & Families. Child Care and Development Fund (CCDF) re-authorization frequently asked questions.

US DHHS OCC-CCDF final rule - U.S. Department of Health and Human Services (U.S. DHHS), Office of Child Care (OCC): An Office of the Administration for Children & Families. Child care and development fund (CCDF) final rule frequently asked questions. 2016.

US DHHS-Enchautegui 2016* - Enchautegui BME, Chien N, Burgess K, Ghertner R. Effects of the CCDF subsidy program on the employment outcomes of low income mothers. Washington, D.C.: Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services (U.S. DHHS); 2016.

US DHHS-Poverty - Office of the Assistant Secretary for Planning and Evaluation (ASPE). 2020 HHS poverty guidelines: One version of the [US] federal poverty measure. U.S. Department of Health and Human Services (U.S. DHHS).

US GAO-Child care 2016 - U.S. Government Accountability Office (U.S. GAO). Child care: Access to subsidies and strategies to manage demand vary across states. Washington, D.C.: U.S. Government Accountability Office; 2016:GAO-17-60.

Weber 2014* - Weber RB, Grobe D, Davis EE. Does policy matter: The effect of increasing child care subsidy policy generosity on program outcomes. Children and Youth Services Review. 2014;44:135-144.

WI DCF-Shares - Wisconsin Department of Children & Families (WI DCF). “Wisconsin Shares” child care subsidy program.

Zanoni 2019 - Zanoni W, Johnson AD. Child care subsidy use and children’s outcomes in middle school. AERA Open. 2019;5(4).