Child care subsidies

Evidence Rating  
Scientifically Supported
Evidence rating: Scientifically Supported

Strategies with this rating are most likely to make a difference. These strategies have been tested in many robust studies with consistently positive results.

Health Factors  
Decision Makers

Child care subsidy programs provide financial assistance to working parents or, in some cases, parents attending school, to cover the costs of certified in-home or center-based child care. Child care subsidies are usually available to families with low incomes; eligibility criteria vary by state.

Expected Beneficial Outcomes (Rated)

  • Increased employment
  • Increased use of center-based care

Other Potential Beneficial Outcomes

  • Increased access to child care
  • Increased stability of care
  • Increased earnings
  • Increased educational attainment for single mothers

Evidence of Effectiveness

There is strong evidence that child care subsidies increase maternal employment for families with low incomes1, 2, 3, 4, 5, 6. 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 care7, 8, 9, 10, 11, 12, 13.

Child care subsidies increase employment for single mothers3, 5 especially those with low incomes1, 2, 4, 6 and those without a high school education4. Single mothers who receive subsidies appear to work more hours and have more standard work schedules4. Mothers who receive subsidies appear to stay in jobs longer4, 14, 15, 16 and earn more than mothers who do not receive subsidies4, 15, which may be linked to improved intellectual development in children15. However, a Wisconsin-based study only found increased earnings and employment spells for participants enrolled for 12 months or more17. Recipients may also pay less for child care than mothers not receiving subsidies12.

Subsidy receipt may increase the likelihood that a single mother enrolls in school or job training18, especially mothers of younger children and those with less education19. It may help maintain employment for those experiencing intimate partner violence20, and may decrease child care-related work disruptions21.

Subsidy receipt increases the use of higher quality care, mostly center-based7, 10, 13, 22, across urban and rural settings23. Child care subsidies can allow employed parents to access child care centers11 and center-based preschool programs9 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 care24. More generous subsidies may increase the use of center-based care more than less generous subsidies8.

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 scores25. 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 participation26.

Subsidy receipt may not impact the stability of child care arrangements27, but increased state spending on subsidy can decrease the likelihood of using multiple arrangements7. 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 children27, 28, 29. Child care instability may also cause disruptions in employment28, and increase material hardship for families30. There is some evidence that lowering the copayments for recipients increases spell length11, which is associated with longer employment spells1.

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 billion31.

Child care subsidies have the potential to reduce the racial and ethnic wealth gap that exists in the US today by increasing employment and earnings for families with low incomes2. However, child care subsidy uptake remains low. In 2016, only an estimated 8% of children potentially eligible based on federal income eligibility limits received a subsidy; that number increases to 12% 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, 79% of potentially eligible black children are not receiving subsidies32. 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 groups29. 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 color33.

Equity Analysis

Potential to decrease disparities: Supported by some evidence

There is some evidence that child care subsidies have the potential to decrease disparities in maternal employment between families with low and high incomes1, 2, 3, 6, 14, particularly for single mothers and mothers without high school degrees4. Child care subsidies also have the potential to decrease disparities in children’s access to high quality, center-based care7, 8, 10, 12.

Child care subsidies are also a suggested strategy to increase earnings for mothers with low incomes4, 15 and have the potential to decrease child poverty31. 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 education19. A study of married, dual-earner families shows that child care subsidies may decrease earning disparities between male and female spouses14.

Child care subsidies are more likely to reach black children than white children32, 40, 41. However, overall access rates among eligible children are low nationwide32 and Hispanic children have especially low access to subsidies32, 40. Experts propose addressing inequities in access to subsidies, through actions such as simplifying applications for families and expanding subsidies to more child care options33.

Historical Context

The US 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 time42. Many politicians disagree on whether childcare is a public or private responsibility and use child care funding as a short-term solution for social problems42. Starting in the 1830s, day nurseries began providing child care for working mothers43, 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 backgrounds44. Enrollment in child care programs increased the most during times of war, and generally decreased after wars ended43. 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 down45.

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 US Children’s Bureau and the US 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 benefits45. In the 1980s, federal funding for child care increased for families with middle and high incomes while decreasing for families with low incomes45. 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 benefits46. 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 law47.

Equity Considerations

  • 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?

Implementation Examples

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 programs34. 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 efforts35.

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 needs36. The federal income threshold is set at or below 85% of state median income, but states can set lower thresholds34. The median income for CCDBG eligibility across all states and Washington DC was 180% FPL32, or $47,700 for a family of four in 202137. 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 requirements38. 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 price39.

Implementation Resources

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, DC: The Center for Law and Social Policy (CLASP) and National Women’s Law Center; 2017.

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

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

Footnotes

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1 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, DC: Office of the Assistant Secretary for Planning and Evaluation, US Department of Health and Human Services (US DHHS); 2016.

2 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.

3 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.

4 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.

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

6 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.

7 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.

8 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.

9 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.

10 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.

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

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

13 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.

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

15 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.

16 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, DC: Office of Planning, Research and Evaluation (OPRE), Administration for Children and Families (ACF), US Department of Health and Human Services (US DHHS); 2009.

17 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.

18 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.

19 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.

20 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.

21 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.

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

23 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.

24 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.

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

26 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.

27 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.

28 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.

29 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.

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

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

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

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

34 US DHHS OCC-CCDF - US Department of Health and Human Services (US 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.

35 US DHHS OCC-CCDF final rule - US Department of Health and Human Services (US 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.

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

37 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. US Department of Health and Human Services (US DHHS).

38 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.

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

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

41 Morrissey 2021 - Morrissey T, Heflin C, Fannin WC. The US 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.

42 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.

43 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.

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

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

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

47 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.

Date Last Updated