New York State Labor Education

New York Child Care Providers Are Bleeding Workers as Federal Money Dries Up

Nearly half of the state’s child care providers have raised tuition and a third have lost staff, a new report found.

Julia Rock · October 1, 2024

"People can make more money selling coffee, so they are leaving the childcare sector to do that." | The New School

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More than 15,000 childcare providers across every county of New York were beneficiaries of the billions of federal dollars that President Joe Biden’s pandemic relief package injected into the industry. Childcare providers reported using the money to cover rent or pay worker wages, sustaining care for about 676,000 kids in the state.

“That helped us keep the doors open,” said Victor Vargas, a former teacher who operates a daycare out of his home in the South Bronx. His daycare, which has eight staff, benefitted from stabilization grants from the federal government as well as a workforce retention grant that the state set up using federal funds.

But the federal money ran out last September, leaving providers struggling with increasingly thin margins between their expenses and what parents can afford or state childcare subsidies will cover. Over the past year, 44 percent of New York childcare providers have raised tuition, and a third have lost staff, according to a new report from The Century Foundation, a liberal think tank, based on surveys and federal data.

New York has increased its own investment in the childcare sector in recent years, largely in the form of subsidies to parents and tax credits to providers, but lawmakers and advocates have called for more funding — especially to increase the wages of the industry’s poorly paid workforce.

This year, New York childcare workers are seeing a pay cut after the state budget delivered a lower wage boost to the industry than last year.

“The sector is completely flailing right now,” said state Senator Jabari Brisport, who chairs the chamber’s Committee on Children and Families and has proposed that the state fund universal childcare.

Twelve percent of New York childcare workers live below the federal poverty level, compared to 5 percent of all workers in the state. The industry’s median wage is just over $32,900, making for some of the lowest paid workers in the state.

“You expect us to be able to hire staff, keep them here, and have them want to be here — because they’re getting what exactly as a reward? It’s not money,” said Vargas, “because we can’t compete with anyone else. It’s hard for us to be able to stay in the market.”

The industry was already shedding workers when the federal funding cliff hit. According to The Century Foundation’s analysis of federal data, employment in New York’s childcare industry fell by 32 percent between 2019 and 2023. (That data excludes preschool teachers and teaching assistants.)

“In other sectors, like retail and food services, wages have gone up,” said Julie Kashen, the director for women’s economic justice at The Century Foundation and the report’s lead author. “Even if they train, and love working with children, people can make more money selling coffee, so they are leaving the childcare sector to do that. That means that eventually programs are going to shut down.”

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The Century Foundation had previously warned that the September 2023 funding cutoff could lead 70,000 programs to close across the country. Some congressional Democrats and the White House pushed for a new round of childcare funding to stave off the crisis, but it did not garner the votes to pass.

One year after the cutoff, the most apocalyptic scenarios haven’t yet come to pass, the think tank acknowledged in the report published Wednesday. But states are seeing a “downward spiral,” with providers raising prices in order to stay open and struggling to find or retain workers.

Governor Kathy Hochul, who dubs herself the state’s “first mom governor,” has called affordable childcare a key priority. In 2022, she committed the state to spend $7 billion on childcare over the four years of her term.

“As a mother forced to leave her job because of the lack of accessible childcare, I am proud of the work we have done with Majority Leader Stewart-Cousins and Speaker Heastie to make this historic investment and the opportunities it will provide for working parents,” Hochul said at the time.

That pledge was “significant and welcome,” said Dede Hill, the director of policy for the Schuyler Center for Analysis and Advocacy. Thanks to recent expansions of the program, more than half of children in New York are now eligible for the childcare subsidies — though only a small minority actually receive them.

“Unfortunately, there is a real danger that the state’s failure to invest in the workforce is going to threaten the success of all of these other historic investments on the side of childcare assistance,” said Hill. “You can expand eligibility for tens of thousands of families, as the state has done, but that means nothing to a family if they can’t find a spot for their child in a program because there are not enough workers.”

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Statewide, the number of slots that childcare providers are approved to offer is about the same as it was in 2021. Some parts of the state, especially poorer and rural areas, have lost capacity, while others have seen an increase. But many providers are operating below their capacity. In a March 2023 survey, 1,600 providers reported that they had nearly 30,000 licensed slots they couldn’t fill due to staffing shortages.

In 2023, Hochul and the state legislature agreed to spend $500 million in discretionary federal pandemic relief funds to provide bonuses of up to $3,000 to 110,000 child care workers across the state. This spring, Hochul and lawmakers allocated the unspent remaining portion of those funds for a smaller bonus.

According to the governor’s office, more than 80,000 childcare workers received a combined bonus of more than $5,000 over the past two years. “We’re committed to strengthening child care programs, growing the workforce and continuing to expand access affordable child care for New Yorkers,” the office said in a statement.

Advocates had called on the state to invest its own money in the workforce and set up a $2 billion “Child Care Compensation Fund” in this year’s state budget.

The proposal was modeled after a similar program in Washington, DC, that provided $12,000 supplements to childcare worker salaries. A Cornell University analysis found that it would cost nearly $800 million to bring childcare workers to a minimum wage of $23.55 an hour — the median entry-level wage for preschool and kindergarten teachers in New York.

Both the Senate and the Assembly budget proposals included a smaller version of the fund in the budget, but Hochul rejected it outright.

“She was completely unwilling to commit new state dollars to fund this proposal. She was solely focused on finding ways to recycle the federal money and leave it at that,” said Brisport.