Welfare Reform Depends on Good Child Care; Isn't the Whole Point to Rescue the Next Generation? (Children)

By Wolfe, Barbara; Vandell, Deborah Lowe | The American Prospect, July 15, 2002 | Go to article overview

Welfare Reform Depends on Good Child Care; Isn't the Whole Point to Rescue the Next Generation? (Children)


Wolfe, Barbara, Vandell, Deborah Lowe, The American Prospect


WHEN THE 1996 WELFARE-REFORM BILL WAS passed, one of its many controversial provisions was the imposition of work requirements on single mothers applying for welfare assistance, even if they had very young children. In part, these requirements simply reflected the overall thrust of the legislation, which aimed to make work the fulcrum of the U.S. welfare system. But the inclusion of a single-mothers provision also signaled an acknowledgment of the sea change in American society and family structure that had occurred over recent decades, as large numbers of women with children have entered the labor force.

In spelling out a mother's obligation to work, most states' have accepted as a corollary the government's obligation to provide work supports. The most important of these has been child care. The change in this area has been rapid and substantial, for families both in and outside the welfare system: In the United States today, more than 60 percent of children under four years old, and around half of children two years old or younger, are in regularly scheduled child care outside their homes.

The existence of more good, state-subsidized child care is a salutary, and indeed essential, development. But as the budget surpluses of the last few years evaporate, there will inevitably be strong pressure from ideological right-wingers and fiscal conservatives in statehouses across the country to arrest spending growth in this area or even to cut back on existing programs. This would be a grave mistake. It would be potentially devastating to low-income working families, who would be forced either to pay for high-priced child care they cannot afford or to forgo jobs and income in order to stay home with their children, (or to leave their children untended). Moreover, high-quality child care has been well demonstrated to improve the life prospects for disadvantaged young children. Denying Children such care not only hurts them and their families in the short run but does a disservice to the larger society in the long run, as children who might otherwise have grown up to be economic contributors are less likely to reach their full capacities and become drains on the common weal.

THE VALUE OF CHILD CARE

In the year 2000, U.S. states spent $8 billion on child care. In seven midwestern states, spending on child care constituted nearly 40 percent of state welfare budgets, about double what was spent in 1995. More than $6 billion of the child-care spending came from the federal government, including $5.1 billion from the Child Care and Development Fund and $1 billion in direct spending under Temporary Assistance for Needy Families (TANF). These substantial increases in public expenditure have taken place in a rather ad hoc and piecemeal fashion, as both federal and state governments have scrambled to adjust to the newly restructured world of social assistance without coherent child-care policies to guide them.

Spending 40 percent of a state welfare budget on child care may sound like a lot, but the conventional approach to measuring government costs--typically calculated as the sum of all federal, state, and local money directed toward subsidizing this service--is inadequate. This is because child-care subsidies, unlike many other social services, are directly related to employment. By enabling many more people to go to work, or to work more productively, child-care subsidies generate additional tax income for the government--income that actually offsets expenditures for child care.

A report by three North Carolina organizations, for example, found that in 1993, a family in that state earning around $15,000 per year and receiving a monthly child-care subsidy of $212 and an Earned Income Tax Credit of $92 generated $351 per month in federal, state, and local tax revenue. That's a "profit" to the state of $47 per month. Such evidence suggests that increasing the amount available for child-care subsidies is likely to result in a net gain for taxpayers. …

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