Spring, 1998, Vol. 4, No. 2

Making Work "Work":

The Importance of Child Care

By Kristeen G. McLain, a second-year student at the Irving B. Harris Graduate School of Public Policy, and works in City Hall in the Budget Office.

Few bills have received as much scrutiny as The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. Since that time, the press, researchers, advocates and politicians have been racing one another to assess its success. Many cities, counties and states across the country have set up task forces, advisory groups and workshops to address the myriad of challenges their communities face as a result of Temporary Assistance for Needy Families (TANF) program, a component of PRWORA. The good news is that for the first time, varied members of the private, nonprofit and public sectors are coming together to sort out responsibilities that have landed in local and municipal "laps." The bad news is that most parties involved have discovered that even in these times of economic prosperity, there are still significant barriers to transitioning welfare recipients into the workforce in a meaningful and sustained manner.

Child Care: The Three A's

The policy-issue of child care is typically discussed in terms of the "three A's: Availability, Affordability, and Accessibility." Ideally, child care meets all three areas. However, often people are forced to compromise, and one area is diminished in the obtainment of another. For instance, a mother may have to travel a long distance to find affordable care. Thus, accessibility is sacrificed for affordability.

The availability of child care is obviously key to the success of welfare reform. A lack of affordable, accessible and stable child care significantly decreases the likelihood that single mothers will find and sustain employment.1 Research indicates that off-hour care and infant care are currently in short supply. A recent General Accounting Office report indicates that in Chicago, the supply of infant care meets only 16% of current demand. That number will decrease to 12% of demand in 2002 when 50% of the TANF recipients will be required to move into the workforce full-time.2

Furthermore, many low-wage jobs have atypical hours that will require child care during non-traditional hours. Nearly three-quarters of women leaving welfare report work schedules that include nights, weekends or rotating shifts, while only one-fifth of licensed child care programs in Chicago are open before 6:00 a.m. or after 6:30 p.m.3 Awareness of assistance that is available is also an issue among low-income families. Fewer than 20% of current and former welfare recipients are aware of child care subsidies or tax credits for low-income working parents.4 Seventy percent of all child care in the United States is unlicensed. This rate is even higher among providers serving low-income families.

Policy Options

Three main policy solutions typically implemented by governments in order to solve public problems are broadly defined as legislation, creation of private-public partnerships and the provision of cash assistance. In regard to legislation, Illinois has made some exciting changes in how it provides subsidies to low-income families for child care. The new sliding-fee scale will help all working parents earning less than half of the state median income. This new fee structure essentially de-links subsidy eligibility from TANF status. While the plan instituted by the Illinois Department of Human Service (IDHS) is certainly a step in the right direction, simply creating vouchers and expanding their availability does not increase the number of child care slots nor does it address quality issues. Many parents who are eligible for subsidies struggle to find good quality affordable care. This is because most providers are unwilling or unable to provide care for children whose subsidies are much lower then the actual cost of care. The Day Care Action Council of Illinois (DCAC) recommends a funding structure that would raise the basic rate ceiling for licensed care to the 75th percentile of the market rate.5 This would allow parents with subsidies a greater chance of access to quality of care.

President Clinton recently unveiled his child care expansion plan. Clinton's FY 1999 budget will include approximately $21.7 billion over five years for child care, representing the largest investment in child care in the nation's history. The program combines a series of child care subsidies, tax credits and block grants to states. The President's initiative is meant to serve as a comprehensive approach to the challenges in addressing the "three A's." The President proposes to pay for at least one-third of his plan by using the proceeds from the proposed tobacco suit settlements. However, these suits are yet to be settled in most cases, and early signs show that while Republicans did not immediately reject the President's proposal, they favor increased tax exemptions over additional funds. In either case, funds are far from secured for this initiative.

Clinton's plan does not directly increase the number of subsidized, full-day infant and toddler slots which are so desperately needed in urban areas like Chicago. Furthermore, while the creation and expansion of subsidy programs are a type of assistance-solution, they do not address the root causes of the problem: lack of affordable, accessible care.

Regarding partnerships, expanding the number of slots available for child care cannot be done by government agencies alone. Legislators and politicians must work toward creating partnerships between public and private agencies. Some experts advocate linking child care financing and service delivery with the public education system.6 Another option is to expand Head Start programs with the help of private providers. Both of these options would reduce capital costs for day care centers, but can be liability-intensive. Many cities are also trying to encourage family-friendly policies by offering tax credits to those companies who provide on-site care.

The main strength of partnerships is also their weakness: they are self imposed relationships, which far too often means that those involved will act in their best interests. However, partnerships are an integral part of a "complete" policy solution, especially given the recent trend toward "smaller government."

One way states are dealing with the increased demands on family incomes due to child care is to simply increase TANF benefits given to each family. Administratively, it is the least labor-intensive (although arguably the most expensive) policy option. Nine states recently raised their minimum benefit levels in order to help their recipients meet basic life-needs. "The financial difficulty that a welfare recipient has in paying for life's most basic necessities-food, clothing and shelter-often acts as a barrier to TANF recipients' chances of landing and keeping a job," according to a recent issue of Illinois Welfare News.7 Illinois has increased the assistance grant only three times (one of which was a $1 increase) during the entire decade of the 1980s and none in the 1990s. The monthly grant has lost 70% of its buying power in the last 25 years.8 With raised TANF levels, families are able to better meet the financial burdens required in paying for housing, child care and other basic needs.

Others might contend that increasing TANF benefit rates would put us right back where we started, with benefits being preferred over work. This overlooks the fact that most states are currently incrementally decreasing benefits as employment begins (e.g, Illinois' Work Pays program) so that work does not preclude the receipt of benefits. Furthermore, one could argue that increased income levels would allow TANF recipients to shape the natural "market" of child care by actively participating in it as consumers.

In sum, it is critical for governments to provide basic supports to those transitioning from welfare to work. Simply put, it is more expensive to work than not, and without transitional support in terms of child care, assisted housing, medical care and food stamps, those coming off welfare will encounter difficulty in staying employed. The more pressing public policy challenge at hand is to examine what supports are needed for all low-wage earners in this country. While the new TANF plan does indeed create new incentives that push welfare recipients toward work, it does not follow that work equals an escape from poverty. So while the much-heralded PROWRA may be getting people off welfare while the economy is strong, it does not address many of the underlying challenges of escaping poverty.

REFERENCES

1. City of Chicago-Cook County Welfare Reform Task Force. Understanding Welfare Reform and Guideposts for Moving Forward, August, 1997.
2. Davis, L. "Child care availability may hinder welfare moms entering job market." Intergovernmental Issues, Volume 18, Number 3. Illinois Commission on Intergovernmental Cooperation. Fall, 1997.
3. Day Care Action Council of Illinois. "Child Care in Illinois Unfinished Business" Thriving Children, Striving Families, 1998.
4. Institute for Women's Policy Research. "Child Care and Welfare Reform." Welfare Reform Network News, Issue No. 6. May 30, 1997.
5. Day Care Action Council of Illinois. "Child Care in Illinois Unfinished Business."
6. Zigler, Edward F. and M. Finn-Stevenson, "Funding Child Care and Public Education," The Future of Children.
7. Illinois Welfare News, "Evidence of need for increase in TANF grant mounts; Unmet basic needs frustrate job efforts-nine states raise grants levels." January, 1998.
8. Ibid.

Kristeen G. McLain is a second-year student at the Irving B. Harris Graduate School of Public Policy, and works in City Hall in the Budget Office.

Return to the Table of Contents

Back to Adovocate's Forum