$ 15 minimum wage may make child care less accessible for some families

The push for a higher federal minimum wage could help those who are underpaid, especially child care workers.

However, increasing this minimum wage rate could also make child care unaffordable for many families.

This is the Catch-22 that policymakers now face as they seek to rebuild the economy from the Covid-19 pandemic, according to recent research from the Bipartisan Policy Center, a Washington-based think tank.

“The business model of child care is broken, and Covid has taught us that,” said Linda Smith, director of the early years initiative at the Bipartisan Policy Center.

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In addition, raising the minimum wage could create a “vicious cycle with no end in sight,” she said.

“If parents can no longer pay, it will basically exclude more parents from child care, and not increase their access to it,” Smith said.

The federal minimum wage is currently $ 7.25 an hour. However, lawmakers have proposed increasing that hourly rate to $ 10 per hour or up to $ 15 per hour.

In 2020, the median hourly wage for educators was $ 12.24 per hour, or $ 25,460 per year. That’s below the federal poverty line of $ 26,200 for a family of four, according to the Bipartisan Policy Center.

Raising the minimum wage to $ 10 an hour wouldn’t help most child care workers, research shows, due to the fact that 84% of those professionals already earn more than that rate. The remaining 16% earn less than $ 1 of the proposed rate of $ 10.

However, a minimum wage of $ 15 an hour would give more child care workers a boost, as 71% of professionals now earn between $ 10 and $ 14 an hour. Another 16% would see a 50% pay rise because they now earn less than $ 10 an hour. Meanwhile, 9.8% earn less than $ 1 of the proposed hourly rate of $ 15, and 3.9% earn more.

Many families are already struggling to cover childcare costs, according to a recent survey by the Bipartisan Policy Center and Morning Consult.

About 47% of parents said the maximum they can afford to pay is less than $ 200 for child care per week. Respondents most likely to be in this group included parents with incomes below $ 50,000, as well as workers in the service and trades.

Therefore, the question that needs to be asked in regards to an increase in the minimum wage is what impact such an increase would have on the costs of running child care programs and who would pay for it, Smith said.

“Stabilizing child care means investing money in some kind of subsidy or contract and that, in turn, can help solve labor market issues,” Smith said.

The Child Care and Dependents Tax Credit, which was extended for 2021 under the American Rescue Plan Act, is one way available to offset these costs. The credit allows taxpayers to offset some of the expenses they incur by working or looking for work and paying for someone to care for a loved one.

However, many parents – 48% – said they didn’t know they could claim more child care expenses when they file this year’s tax returns, according to the Bipartisan Policy Center and Morning poll. Consult.

Parents were evenly split – with 39% each – as to whether they would prefer only tax refunds to help them care for their children or a combination of government grants and tax refunds.

Ideally, businesses should also help make child care more accessible because they benefit from it as well, Smith said.