ICYMI: Chairing Subcommittee on Economic Policy, Senator Warren Warns of Potentially Devastating Consequences of Child Care Funding Cliff
Warren: “Congress should provide $16 billion in funding to prevent the child care sector from collapsing and keep women’s labor force participation from plummeting.”
Washington, D.C. — Chairing a hearing of the Senate Banking, Housing, and Urban Affairs Committee’s Subcommittee on Economic Policy, U.S. Senator Elizabeth Warren (D-Mass.) asked witnesses about the potential consequences of the looming child care funding cliff for the American economy. Witnesses spoke to the importance of solving this funding crisis and investing in child care to ensure parents can join or stay in the workforce, businesses can hire the workers they need, and children can experience the long-term benefits of high quality early education and care.
Senator Warren highlighted her and Senator Tina Smith’s efforts to secure $50 billion in emergency stabilization funding to help child care providers stay solvent, to try to keep workers on payroll, and to handle the unexpected expenses that cropped up in trying to deal with the presence of COVID-19, and urged investments in child care to ensure over 3 million kids don’t lose their care as a result of the upcoming funding cliff.
Transcript: Child Care Since the Pandemic: Macroeconomic Impacts of Public Policy Measures
U.S. Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on Economic Policy
Wednesday, September 20, 2023
Opening Statement below and video HERE:
Senator Elizabeth Warren: This hearing will come to order.
Good afternoon, and welcome to today’s hearing on “Child Care Since the Pandemic: Macroeconomic Impacts of Public Policy Measures.”
I want to get right to the point: federal child care funding is on the verge of a massive funding cliff. This cliff has the potential to cause more than three million children across this country to lose their care, and the impacts will ripple throughout our whole economy.
But here’s the kicker: we here in Congress have the power to stop this.
That’s why we are having today’s hearing and that’s why I am so happy that we have our witnesses here today – Glenn Hopkins, who runs a child care center, Sarah Hardy, co-founder and COO of an infant formula company, and Kathryn Edwards, an economist and an expert on the labor market. They are here to help explain what the looming child care cliff will mean for businesses, for their workers, for parents and families, and for our whole economy.
Three years ago, in the early weeks of the pandemic, thousands of child care centers were forced to close their doors. Those closures exposed a truth that millions of American families already knew: the child care system in America is badly broken.
For decades, millions of working families have struggled to find care for their children and, if they are fortunate enough to find good care, millions struggle to pay for it so they can go to work or to school. Access to high quality child care is essential to our economy. If mamas and daddies can’t get care for their babies, they can’t go to work. And if millions of parents can’t go to work, businesses can’t find the workers they need to operate. And if businesses cut back because they can’t find workers, then national productivity and economic growth suffer.
These realities hit especially hard during the pandemic. When the entire child care industry was on the verge of total collapse, Senator Tina Smith and I rang the alarm bell. Democrats in Congress responded to this threat by providing $50 billion in federal funding to help stabilize the child care industry.
This funding couldn’t possibly solve every problem, but it worked – and it kept the industry afloat. Child care providers used those funds to help pay for rent, to keep children and workers safe, to raise wages to alleviate the massive funding shortages, and much more. And millions of children got the care they needed.
But now, the child care industry is back on the brink of disaster. Most of the child care relief funding expires at the end of September – that’s just ten days from now.
What will it mean for American families if we don’t invest more in child care? Analysts estimate that 70,000 child care programs will close.
That means nearly a quarter of a million child care workers could lose their jobs, and over 3 million children could lose their care. Millions of parents, especially moms, will be forced to leave the labor force – at a time when we are already facing an incredibly tight labor market.
The ripple effects will be far-reaching and devastating.
We cannot let this happen. We must act, and we must act quickly. We have champions in the Senate willing to get this done. Last month, I joined Senators Kaine, Smith, and 27 of our colleagues calling for $16 billion in emergency federal funding so child care providers can keep their doors open. Just last week, the White House announced support for efforts to secure additional funding for child care, and I’m willing to reach across the aisle to work with any Republican who wants to help get this done.
We’ve got one big opportunity before us this month. In August, the Administration sent its supplemental emergency spending request for Ukraine, disaster relief, and more. The Senate has now started debate on that package, and by the end of the month, we need to reach an agreement to fund the government and prevent a shutdown.
This is a must-pass bill. We need to keep the government going so that we can continue food safety inspections and vital medical research. We must protect our national security interests in Ukraine and around the world. We have to respond to the natural disasters that have devastated communities around the nation, including in Massachusetts. And we cannot leave American families behind. We need long term investments in child care, and we must at least keep the child care industry from tumbling off a devastating cliff.
Once again, I want to thank the members of this committee, and I thank our witnesses for helping to make clear the importance of this investment in America’s families.
Round 1 of Questions below and video HERE:
Senator Warren: So, I’m going to start with a round of questions, and then I’m going to go to the ranking member, Senator Kennedy.
So, the American economy depends on American workers. When more Americans are working, our economy can produce more. When production is up, families can spend more. When Americans are spending, companies can hire more. There’s no question that more workers means a better economy for families everywhere.
Getting Americans to work is especially important today. Right now, thanks to President Biden, the state of our economy is strong. We have more businesses looking for workers than workers looking for jobs. But to keep our economy humming along and to stave off inflation, it’s important we get more Americans into the workforce to fill those open jobs.
So, Dr. Edwards, let me just ask you. I want to get this on the record. You’re an economist who studies labor markets. Does access to affordable, high-quality child care affect labor force participation rates?
Dr. Kathryn Anne Edwards: Yes, both the availability of care and its price are related to labor force participation. There’s a very clear elasticity of the relationship between increase in price and the decrease in maternal employment.
Senator Warren: Ok, so these two things are very closely linked. In other words, child care is basic infrastructure for our economy, just like the roads and bridges we drive on every day to get to work. Let’s talk about what it looks like when basic infrastructure shuts down.
Ms. Hardy, you are the Co-Founder and Chief Operating Officer of Bobbie, a company that produces infant formula. You’re also, as you’ve described, a mother of two young children. Take me back to the early days of the pandemic. What happened to the child care that you and your employees relied on during those first few weeks?
Ms. Sarah Hardy, Co-Founder and COO, Bobbie: It’s hard to go back to that time.
Senator Warren: Yeah, no one wants to.
Ms. Sarah Hardy, Co-Founder and COO, Bobbie: But I’ll do it.
Senator Warren: Yes, but let's talk about it.
Ms. Sarah Hardy, Co-Founder and COO, Bobbie: At the top of the pandemic, Bobbie was just launching our business. We’ve been on the market for just shy of three years, just to put that into perspective. And it impacted everything. I remember myself staring at a document; I was about to sign an office lease for our new business and overnight, the whole world changed. All of our employees went home. We all logged onto zoom and, right there, front and center, for the entire team to see was working parents, trying to manage a kid with a little head running by in the background and trying to focus at work. It was absolutely impossible for them to manage that tension. I myself had a teacher move into my home. And I ran a kindergarten for a whole year. Everybody at Bobbie knows recess is at 11:00 A.M. and 1:00 P.M. in my house. But, truly, this is not something that we can fix on our own as business owners. I pride myself on how we support parents. And I had a moment of pause coming here today, because childcare is the one nut we cannot crack on our own. It is impossible for us to solve. So we need partnership—true partnership—between business owners and the government to solve this collectively on behalf of working parents.
Senator Warren: So, that’s a very powerful point and I’m not going to drop this point. I just want to make sure I get everything else on the record here. But, I very much hear you and we’re going to talk about this. But, I do want to go back to what I was saying about the first few months of the pandemic. You talk about how everything changed over night. Americans experienced record job losses on a scale not seen since the Great Depression. Over 20 million Americans were suddenly out of work, and they couldn’t pay their child care providers. Hundreds of thousands of child care providers were at risk of shutting their doors. Mr. Hopkins is nodding about this, because you remember these days.
So this is when, Senator Tina Smith and I led the charge to secure $50 billion—50 billion with a “b”—in emergency stabilization funding to help child care providers stay solvent, to try to keep workers on payroll, and to handle the unexpected expenses that cropped up in trying to deal with the presence of this virus.
So, Mr. Hopkins, I want to get your view here. You run a child care center in Virginia. How did the pandemic stabilization fund affect your operations?
Mr. J. Glenn Hopkins, President and CEO, Hopkins House: Senator Warren, let me start by letting you know that Hopkins House is an 84-year-old institution. We serve the range of Americans who need childcare from military to working to government folks. And, the 1.2 million dollars we received in federal funding represented 8% of our budget over the pandemic, but it was absolutely lifesaving for the institution. Had it not been for this funding, we might have been among the 67% of childcare providers in Virginia that had to close temporarily and permanently. These funds enabled us to save 60 jobs in the childcare industry. That served the military folks from Fort Belvoir and the Pentagon, where some of our folks’ children come from. It also allowed us to continue serving essential workers. We only closed for three weeks during the pandemic, and it was because of the funding from the federal government we were able to continue funding the folks in this country who needed that help.
Senator Warren: So this picks up on the theme that you had laid down, Ms. Hardy, and that is the importance of partnership between the federal government and in this case the providers of childcare. And, what I am hearing you say is that the emergency stabilization funding was critical to keeping child care afloat during the pandemic.
Dr. Edwards, I want to go back to labor markets on this. Who suffered steeper job losses during the pandemic – men or women?
Dr. Edwards: Men lost about 13% of jobs. Or, that is to say 13% of men lost jobs, and 17% of women.
Senator Warren: Ok, so more women as a percentage of workers in the workforce lost their jobs than men, although it was both.
Dr. Edwards: It was actually absolute and relative terms. More women in number and a larger share of women lost their jobs in the first two months of the pandemic.
Senator Warren: And three years later, have women workers overall recovered from the pandemic?
Dr. Edwards: Yes, aggregate labor force participation and employment of women have recovered from their pandemic losses.
Senator Warren: So, did preserving the child care sector help ensure that workers, parents – particularly women – could get back to work as the pandemic waned?
Dr. Edwards: Absolutely. In fact, the 3 million increase in labor force participation over the past year has been led by prime age women 25 to 54 and women with children under five are currently experiencing some of the highest labor force participation rates they’ve ever seen—far above their past peak.
Senator Warren: So access to quality child care and a strong economy go hand in hand. If child care centers had closed their doors in March 2020 and never reopened—a very real possibility at that point—our economy would have suffered serious long-term consequences. But because child care centers were able to stay open, parents were able to continue to work and rejoin the workforce when the economy opened back up. In fact, under President Biden, the U.S. economy has already added over 13 million jobs, and the unemployment rate has now hit a 50-year-record low.
The emergency funding that we fought for helped save jobs, it helped save child care providers, and it helped save American families. And, in a few minutes, I’d like to talk more about the details of this.
But now, I want to turn to my partner here, Ranking Member Kennedy, and recognize him.
Round 2 of Questions below and video HERE:
Senator Warren: We have already talked about how Congress stepped up and provided the childcare sector with a life raft, $50 billion in funding, during the pandemic. And all across the country, providers like Mr. Hopkins used stabilization funds for critical needs. As you have explained, to keep the centers open, to keep them from folding during the pandemic, to pay workers more for this critical work, to compete for these workers with others who could hire them, and to try to keep staff safe and the kids safe. But what I want to do is just for a minute focus on what happens if the funding goes away now because this has been funding we have had over a period of three years. And in 10 days, if Congress does not act, this funding stream dries up. So Mr. Hopkins, let me ask you, without the funding you have relied on the last couple of years, what is that likely to mean for your center? Over, you can stretch out a bit, but over the next year or so?
Mr. Hopkins: What is likely to happen should these funds disappear, really several things. Let me start with the impact on our staff. We have promised them cost of living increase, 2.5% I believe, and now inflation is double that at least. Now they’re barely keeping up with the ability to put food on their own plates. Number two, we would have to worry about whether we could afford the staff that we have, at least certainly to the degree that we have and maintain the ratios. If we reduce our staff, we will lose the ability to serve children. The new free health care insurance we are providing to our staff will evaporate. That would be an absolute tragedy. The reason I should also mention, part of the incentive staff will have to leave our institutions, in indeed they will. You are aware Amazon hq2 is now in Virginia, they started out paying folks $20 an hour. They are higher now. We are still getting close to $16-$17 an hour. What choice will our employees have but to go and work for Amazon or Walmart? You can be a manager at Walmart for a minimum of $50,000 a year. Why should we consider that if I were a child care provider, getting a four year degree for example, to make $20,000 a year? The impact on us will be tragic. It will be worse than simply dropping off the cliff. It would be absolutely devastating.
Senator Warren: I really appreciate you underscoring this. Dr. Edwards, what would be the impact of ending this funding on the overall childcare industry and the broader labor market?
Dr. Edwards: A reduction in childcare can only reduce labor supply. There is no outcome in which we somehow have less care and more or the same workers.
Senator Warren: And Ms. Hardy, what proportion of your workforce are parents of children under five?
Ms. Hardy: So we are 60% of the parents on the Bobbie team have at least one child under five. Many of them have two under five years old.
Senator Warren: Okay so what would it mean for your company if providers like Mr. Hopkins were forced either to close their doors altogether or cut back on their hours or reduce the number of classes they have? What will that do to your employees?
Ms. Hardy: Without workers, we literally cannot run our business. Childcare is powering the Bobbie business. There is one story actually I would like to tell from a current member on our team. She is a mom of two. Her eldest is in preschool and her husband is a teacher. Four years ago, they had to make the decision for him to leave his job because when they sat down at the kitchen table to figure out their finances, it made no sense for him to go back to work. Four years we had that teacher out of the workforce. Four years he has been the primary parent, he has bared the mental toll of having to do that. She brings that to work. That is hard for them. So childcare is not just about who is in the workplace but also about who is at home. It impacts everybody.
Senator Warren: That is a powerful point around this. As best I understand the data, the looming childcare funding cliff could cost over 3 million kids their care. That is about one in every eight children under the age of five. It would come right in the middle of a tight labor market when we need people in the workforce more than ever. Congress cannot let childcare take a dive off of this cliff because without these investments, we will see thousands of childcare providers either close or cut back on the number of employees. We will see employees leave, as you described, Mr. Hopkins. This is one of those things where you can either do the investment that is good for everyone, or you can cut the investment and see the negative effects all the way through the system so I very much appreciate your help on documenting this.
Round 3 of Questions and Closing Statement below and video HERE:
Senator Warren: I want to wrap this up by asking a few more questions to see if we can pin this in, and that is the importance of this pay, not just with the lives of the child care workers, but literally on how many we have and how many children are served.
Mr. Hopkins, you explained that stabilization funding from Congress meant that you were able to increase pay for your teachers – I think you said by about 25%. You’re still not paid well, but at least you were able to move it up a little. You still pay far less, I think you said, than similarly credentialed teachers in public schools. I would ask you to translate that into the number of kids that you serve. The consequences of the pay differential. What does that mean in terms of how many kids can actually get care in your center?
Mr. Hopkins: We can serve up to 319 children. Right now, we have 160.
Senator Warren: Wow, so you’re at about half of what you would be able to serve if you had a full complement of teachers?
Mr. Hopkins: Correct. Exactly. If parents came to our center today and wanted to fill up our school, we would not be able to serve them. We would have to turn them away and that would be tragic both for the economy and for those parents, but also our center. That is one indicator. Let me talk about the second one, which is quality also suffers. If I were to just simply today say in order to serve 300 kids let me go out and find anyone off the streets who loves kids and does not have a horrible background and hire them. That does not help because they do not have the skill set necessary to move forward the intellect of the children and cognitive development and all of that. That is critical. That makes a heck of a difference. The final piece related to this is if we are not able to fill our center, I am not sure we can afford to continue the high quality that were providing and the training we give our staff, the kind of resources we put into the classrooms. All of those things matter. The extent to which we are able to do that requires additional funding.
Senator Warren: So to get the teachers we need, we have to pay them something closer to what they are worth?
Mr. Hopkins: Liveable, dignified wage.
Senator Warren: We know parents cannot afford to pay more. They are already stretched beyond what they can do. This goes back to what Ms. Hardy said from the beginning, we need a good partner from the federal government to make this work. Just so I get all the pieces stitched together, as we come to this. We talked about workforce participation. That is the proportion of women in the workforce, proportion of men of working age that are in the workforce.
Dr. Edwards, you said that we have recovered in the sense that we now have as many women – or a proportion of women – post pandemic as we had pre-pandemic who are in the workforce. But let me ask the question differently. Could we have a higher participation of women in the workforce if Mr. Hopkins could find more teachers and expand his childcare offerings?
Dr. Edwards: There is nothing special about the high of labor force participation that was set for women around 24 years ago. It was not some bellwether moment for femininity in the U.S. It was just a high that was set when the demographics and labor market were different. It does not mean we have accomplished something. Rather, if you were to look at it from a different perspective it means we have been frozen in place for 25 years, only just now recovering what we once had 25 years ago in terms of labor force participation.
I would offer there is no optimal level of labor force participation in the aggregate. We know we can go higher because we know women are constrained and they are constrained from working because they cannot find affordable or accessible child care. When Senator Fetterman was asking about rural areas, I think one thing we have not brought up today, but is worth mentioning is that there is a cascading effect of pushing women and mothers in particular out of the labor force because labor markets – men and women do not hold the same jobs. Walk past a construction site and walk past a daycare and you will see different looking people. Mothers and fathers do not hold the same jobs by extension. The number 2 occupations in terms of both the number of mothers they employ and having the highest share of mothers in their employ are nurses and teachers. Two occupations we can ill afford to take workers out of the labor market right now.
Senator Warren: That’s a really powerful point. If we want those workers, we have to have the slots. In order to have the slots, need to have the federal government as a partner. I will let you give us the last cheerful view here, Mr. Hopkins, and that is, if we actually put up the money, and it is both the money to avoid the cliff, which is what we are talking about right now, but the long-term money to actually build in the kind of support that would permit us to build out the systems for universal childcare so that everyone who wanted access to high-quality child care could both find it and could afford that care. That would mean raising wages fr your workers. Can you just say a little bit about what this would mean for your workers and overall for your center and the child care industry?
Mr. Hopkins: If the child care industry had all the money we needed, we would be very, very happy. Number two, we’d be able to put enormous resources in the classroom that helps these kids not only grow up to be amazing contributors to this country, they would be folks who came from families that did not need to be stressed out about worrying about their incomes. They would be healthy because families can support the health care that is needed. In addition, it would tear away generational poverty because child care starts a child on a path of total success. That is what I think and hope and pray that this government wants for our children – high achievement, great success. We want them to be strong leaders. We want them to be contributors to the global economy and the global social world. We want them to go into space and discover amazing things. Additional funding for childcare gets that engine moving.
Senator Warren: Strong leaders, strong businesses, a strong economy. This is what we need. I so appreciate you putting it in those terms. We talk about child care. That is mostly what we have talked about. This is early childhood. This is education for even those tiny babies that are around colors and words and other children and a thousand new experiences. This is an investment worth making and I very much want to say how I appreciate your point, Dr. Edwards, that how about if we give child care a 20-year runway to show what it can do? That if we make those investments early on, the kind of nation we could create and the kind of opportunities we can create not just for people in a narrow slice, but what we can create for everyone.
Thank all three of you for being here today. I am very grateful for your taking the time to come here and tell this story nationally. With that, questions for the record are due one week from today on Wednesday, September 27, for our witnesses. Once those questions come, you will have 45 days to respond to any question.
Thank you, again. This hearing is adjourned.
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