The Child Care Crash
At the start of the COVID-19 pandemic in early 2020, Christina Robles had to close her home child care program just outside Salt Lake City, Utah, and let go of half of her staff. With parents continuing to keep children at home, she reopened a month later with just eight enrolled instead of her usual capacity of sixteen, which meant she lost half her income, too. It stayed that way for more than a year.
Her saving grace was government help. She got a state grant in 2020 that “plugged the hole” in her income, she says. Then in early 2021, Democrats in Congress passed the American Rescue Plan Act (ARPA), which included $39 billion in funding for child care, the largest amount of federal funding the sector has ever received. More than 90 percent of the 220,000 child care programs that received stabilization grants through the program said it helped them to stay open; an estimated 75,000 child care programs would have closed were it not for the money.
Robles took her chunk of the money and invested it in improving her program. She was able to raise employee pay from $10 per hour to $15 or more and cover staff training. For the first time ever, she could offer her employees health and dental insurance; one employee who could never previously afford dental coverage was able to get $20,000 worth of work done. Robles started having a cleaner come in once a month for a deep cleaning of her home. She bought new toys and playground equipment. She opened a second and then a third location, and she hired an extra employee above the required ratios at each location to cover in cases of employees’ personal emergencies. The improvements mean that she’s now rated as a “high quality” child care provider by Utah’s quality system at all of her locations. She had zero turnover the entire time she was receiving government funding.
Before the pandemic, Robles always felt like she was written off, viewed as just a babysitter. After receiving so much funding, she says, “It felt like we were being seen, heard, and valued.”
The funding that kept her stable and helped her offer a high-quality program, however, is now completely gone. States stopped receiving ARPA child care stabilization money in September 2023, and by now it has all been allocated. Congressional Democrats tried to pass ongoing funding in their Build Back Better legislative package, but it foundered in the face of united Republican opposition and a lack of support from former Democratic Senator Joe Manchin. No extra federal funding has since flowed to the sector. Robles got her last payment in September 2024.
The ramifications have been enormous. After experiencing her first staff departures since she let people go at the pandemic’s outset, Robles is now down to six employees. Most of her staff is now made up of family members—her husband, son, and daughter-in-law all left their jobs to work at a discount in her program. She doesn’t want to reduce her remaining employees’ wages, but it’s tough to ask parents to pay more. She’s been forced to raise prices twice already and is contemplating having to do it again. “I walk a really, really fine line between passing that cost [on to the parents], who are already underserved, underprivileged, economically disadvantaged, and not being able to pay my staff what they’re valued and what they’re worth,” she says. She has a waitlist “two years deep” of families wanting to enroll in her program, but she doesn’t have the money to hire staff and increase her capacity.
Robles also stopped giving herself a paycheck for a while to make things work. This carried a steep cost: In October 2024, the first month after her federal funding ended, she had to file for personal bankruptcy. She maintains she had no choice. “This is not my fault,” she says. “This is people not valuing what I bring to the table and not valuing the amount of sacrifice I have to take personally to ensure the safety, the well-being, and the education of the most vulnerable portion of the population, our children, who should be at the forefront of every policy we put forth.”
The appreciation she felt during the pandemic has been yanked out from under her. “All they did was throw a Band-Aid over it until the pandemic was over,” she notes. Now the message, she says, is, “Times have changed; go back to the corner. Know your place, sit down, be quiet.”
Child care providers have long suffered from a lack of funding that leaves them operating on the thinnest of profit margins, if they’re able to stay out of the red at all. But then the pandemic hit. “You had kids running around in Zoom backgrounds, you had schools closed,” says Melissa Boteach, until recently the vice president for income security and child care and early learning at the National Women’s Law Center. “It laid bare and exacerbated the child care crisis to such a degree that it was impossible to ignore.”
The emergency, which threatened the entire economy if parents couldn’t do their jobs, made substantial federal funding “politically possible,” says Boteach. Congress found the will to stabilize child care programs across the country.
But now with ARPA funding over, “There’s less money to pay providers, there is less money to provide subsidies, there is less money to support expanding supply,” Boteach explains, “all of which has trickle-down effects for parents and families of young children.” Child care providers have had to increase prices; they were up 22 percent between January 2020 and September 2024 and rose 6 percent alone in the year after ARPA money stopped flowing.
Many providers haven’t been able to make it at all. In a January 2025 survey of more than 10,000 early childhood educators by the National Association for the Education of Young Children, more than half were aware of at least one program closing in their community over the past year, with nearly one in ten reporting four or more programs closing.
“Families are continuing to have a hard time finding programs, and if they can find them, then affording programs,” says Julie Kashen, director of women’s economic justice at The Century Foundation. At the end of last year, child care problems forced more parents to miss work, work part time, or go without a job at all than during the peak of the pandemic.
Caroline Fulpher is among the providers who have had to shut their doors. She’s worked in the child care sector for more than thirty years and opened her home-based program in Georgia, which had been serving six children, in 2021. She’s specialized in serving children with special needs, a kind of care that can be particularly challenging for parents to find. The ARPA funding she received helped her buy supplies while also covering costs when parents found themselves unable to pay, both of which meant drawing less from her own household budget, as she has otherwise needed to do. But once ARPA funds stopped, Fulpher struggled. She had to let her own health insurance and life insurance lapse, and she wasn’t able to cover for families who struggled to afford her care. “It’s a hard pickle [lawmakers] have put us in,” she says.
Fulpher held on as long as she could, but eventually her health began to falter, her hands and knees giving her problems. She decided to close in 2023 shortly after she stopped receiving the funding. “We don’t want to say no to the families, because we don’t want to see any child left home alone,” she says. But her own family intervened, telling her that she had to stop starving her own budget to cover the costs of her program. More than a year later she’s still not whole. “I’m still trying to catch up from what I’ve taken from my household,” she says.
Providers in some states have fared a bit better. At least eleven states and Washington, D.C., have used state funding to try to plug the hole left by ARPA dollars, and providers in those states were much less likely to report having needed to raise prices. But in states that couldn’t or wouldn’t pony up their own money, the consequences have been dramatic. In North Carolina, as an example, the number of licensed child care programs fell by 5.6 percent between March 2020 and November 2024.
Emma Biggs’s North Carolina staff has shrunk from twenty-four teachers before the pandemic to fifteen, and the number of open classrooms has similarly dropped from eight to six. Before the COVID-19 crisis, “We were already hanging by a thread,” she says. But now the situation is “a lot worse than it ever has been before.” The emergency funding helped her cover extra costs like thermometers to keep children and staff safe, and waiving co-pays for parents who get subsidies or scholarships for people who couldn’t afford it at all. Then she lost the funding just as the cost of necessities like utilities and food started to climb. She faced either reducing teachers’ pay or raising tuition; she increased tuition by $50 more per week in July 2024.
Even so, she’s struggling to hold onto staff who can make similar money working at Amazon or Target. Many are leaving to be nannies, she says, making even more than she can pay without facing the educational requirements of licensed child care programs. One person who left is now making $7 an hour more.
Staffing is an acute challenge across the industry. Wages for U.S. workers have risen over the past few years, particularly for low-wage workers, but absent federal funding, child care providers can’t afford to pay more without increasing prices for parents. “Competing for staff is harder for child care now because other sectors can just pay more,” says Kashen of The Century Foundation. On top of that, other significant costs are rising. Sky-high rents are hitting home-based providers especially hard, although centers are facing rent hikes as well. The cost of insurance has jumped. In the January survey, about a third of early childhood educators reported paying more for rent, while nearly half were paying more for insurance.
Some lawmakers might believe that things have now returned to normal, so the child care sector doesn’t need emergency funding anymore, but Biggs argues things have gotten more expensive and more difficult since then. “They did great giving us what we needed during the pandemic, and then when the pandemic’s over with, it’s like, ‘We want you to go back to where you were,’ ” she says. “Nothing in society has gone back to where it was prior to the pandemic. No industry has gone back to where it was prior to the pandemic.”
So this vital sector hobbles along in desperate need of government funding. “The fundamental truth hasn’t changed: Parents cannot afford care—or find it for that matter—and providers are making poverty wages,” Boteach says. “The only solution to that, long-term, is sustained and robust public dollars. It’s not rocket science.”
Robles’s challenges have only gotten worse in recent months. About three-quarters of the children she serves are subsidized by federal funding, either through child care block grants or funding for Native Americans. When President Donald Trump’s administration abruptly froze trillions in federal spending in January, it “wrecked my entire world,” Robles says. The portal for the Native American tribal funding she receives was frozen, and she was asked to keep providing her services even though there was no way to pay her. She continued, knowing that she could only keep it going for a month before she’d have to ask those families to either pay out of pocket or leave; she told staff she soon might not have a job for them. When the freeze was lifted a day later, she still had to wait a month until she got the money she depends on.
Then there are the massive layoffs of federal employees. The Department of Health and Human Services, which oversees child care programs, has already lost about 3,600 probationary employees. “They’re dismantling the very infrastructure that’s needed to actually have a child care system,” Boteach says. The loss of personnel is slowing grant awards and reducing technical assistance for providers. Republicans are also coalescing around big cuts to Medicaid, which could starve state budgets so much that they have to make cuts in things like child care to make up for it.
The chaos has made it hard for Robles to plan long-term. She’s making contingency plans to go into a different industry. “But at what cost?” she asks, knowing the families she serves still need care.
Robles isn’t going quietly back into the shadows. She’s now organizing with the grassroots nonprofit Community Change. Receiving the government funding “empowered me to know my place,” she says. “I feel like I’ve had a fire lit under my ass. I feel like nobody is coming to save me; it’s time that I stand and save myself.” She’s educating herself about government funding processes and how she can get involved in fighting for change.
“You will not shut me up,” she says. “This society can’t function without what we do, and it’s time that everybody realizes that.”