At Ebenezer Child Development Center in Austin, Texas, one of the infant rooms has been closed for a year. The cribs and highchairs are still there, just no kids. A separate room that was previously a prekindergarten classroom is now a gym.
That is not for lack of demand. The wait lists are long. But the preschool’s director, Jordan Maclay, says a big problem is that she can’t find enough teachers who can work at the wages she is able to offer.
Maclay is hoping that voters next week will approve an amendment that would raise property taxes by 2.5 cents per $100 valuation throughout Travis County, which includes most of Austin. The state already helps some low-income families pay for daycare. The county money would add to that, with the goal of raising pay and creating new positions for daycare staffers.
“It’s always been a little difficult to hire people,” said Maclay, who pays workers between $15 and $17.50 an hour. After Covid, when the job market tightened, it became “next to impossible.”
Similar initiatives to raise property or sales taxes to fund child care are on the ballot in Sonoma County, Calif., and St. Paul, Minn.
Florida this year started offering tax breaks to businesses that provide child care for employees.
Vermont created a new payroll tax, to increase staffing and capacity at daycares. And in Louisiana, taxes on sports betting, cannabis-derived products and casinos raise money for early-childhood education.
Three bipartisan bills in the Senate propose bigger tax credits, to both help families with child-care costs and motivate businesses to provide care, though no vote has been scheduled for any of them.
Vice President Kamala Harris said on the campaign trail that her plan is for working families to spend no more than 7% of their income on child care.
Former President Donald Trump hasn’t offered a plan on child care but has said that it isn’t an expensive problem to fix given the amounts he expects to raise from “taxing foreign nations.” His running mate, JD Vance, has promoted the idea of grandparents helping with care.
Child care is crucial to the U.S. economy. If parents can’t find quality care, or can’t afford it, that inhibits their ability to work.
“There’s a growing understanding, especially through Covid, that this is economic infrastructure,” said Aly Richards, chief executive of the Burlington, Vt.-based nonprofit Let’s Grow Kids.
Daycares are labor intensive. They can’t, for example, hire remote workers. They are also closely regulated, which means they can’t skimp on the number of teachers. Other fixed costs are also high and hard to bring down: the rent or mortgage, insurance, food.
All this results in an economic mismatch. The median wage for a child-care worker is less than $15 an hour, according to the Labor Department. But the median cost for parents to send just one child can easily top $10,000 or $15,000 a year.
“The child-care market is a textbook example of a market failure,” said Cynthia Osborne, professor of early childhood education and policy at Vanderbilt University. “Child care is unaffordable for families and not profitable for businesses, and child-care educators are the ones really struggling in the middle.”
Daycares don’t get the same public resources the K-12 system receives, and profit margins are razor thin. Droves of child-care workers were laid off during pandemic lockdowns, and when the economy reopened, many got better-paying jobs at retailers, warehouses and restaurants.
Advocacy group Child Care Aware of America estimates that about 13,000 regulated in-home daycares have closed since 2019, a 12% drop. The number of daycare centers has increased over that same period, though only by 1%.
A paucity of child care is a drag on the labor market. About 13% of young children in the U.S. had a family member who had to quit, change or refuse a job because of child-care problems, according to the Annie E. Casey Foundation, which examined Commerce and Labor Department data.
Cece Collins tried taking a job as an office manager last year but couldn’t make the math work. Her paycheck barely covered her daughter’s $2,500 monthly daycare bill. Collins also struggled to make it to work on time because of the daycare’s hours and her long commute. She lasted less than two months.
“It doesn’t make a whole lot of sense for me to take a job where I’m going to turn around and pay almost my entire paycheck to put her in daycare,” said Collins, 30. “And I really do want to work.”
Collins said she would vote in favor of the amendment, even though it would increase her property taxes. She is keeping her daughter at home with her for now.
Texas has lots of workers, lots of employers and lots of children. Austin in particular has been growing rapidly, with Tesla setting up its headquarters there and many young families moving in.
The state’s economy was the second-fastest growing in the U.S. last year, behind North Dakota. Its fertility rate is one of the highest. Last year, nearly 388,000 babies were born there. (Texas bans most abortions after about six weeks.)
Texas voters last year approved a law that lets counties and cities exempt daycares from property taxes.
“We need to have a strong workforce, and we need everybody to have the option to be in that workforce,” said Andy Brown, a Democrat, who supports the proposition to subsidize child care. As Travis County judge, he oversees the county’s budget and other operations.
Local Republicans argue that a better approach would be to reduce regulations on child-care operators.
“This is just a small small scratch, but it’s one that we still oppose ideologically,” said Andy Hogue, communications director at the Travis County GOP.
The county estimates the amendment will cost the average family $126 a year and raise an annual $76 million.
That would be used to create 1,900 subsidized daycare spots for infants and toddlers, and 3,900 after-school and summer slots for school-age children. A family of four who makes roughly $75,000 a year or less could apply for a space. Another goal of the program is to increase pay for child-care workers.
The demand for subsidized child care far exceeds the supply in the Austin area. The wait list for infants to school-age kids is about 5,000 strong, according to the Texas Workforce Commission.
Tami Blackmon, who runs a daycare from her home in Austin, has space for 12 kids but there are currently only five. She knows lots of families who would like to sign up, but they can’t afford to pay her full price and they are still wait-listed for subsidized care.
Blackmon supports the child-care amendment on the ballot. She has one employee and pays $18.75 an hour.
“It’s killing me to pay that,” she said, “and that’s not enough to survive in Austin.”