Factsheet: What the research says about early care and education in the United States

Key takeaways

The U.S. child care system is widely inaccessible and unaffordable, despite its importance to the healthy functioning of the overall economy. Care workers are also paid very low wages despite the high cost of care for families, leading to staff turnover and instability in the industry.
Several states are considering or implementing policies and programs to enhance access to child care, ensure child care spots are available to all who want them, and entice care workers to stay in their jobs. Research suggests that policies that address all three of these challenges together are the most effective and successful.
Given current federal-level policy uncertainty, states are bearing most of the responsibility to enact and fund these care policies. Yet many states face budget shortfalls and therefore may not be inclined to pass new policies that will cost them more. Federal investment is therefore essential to ensure high-quality child care is affordable and accessible to all U.S. families.

Overview

Research has long shown the importance and value of high-quality early childhood care and education. Child care offers working parents the ability to fully participate in the labor force and bolster their economic well-being. Child care also has positive impacts on their children’s short-term and future outcomes, further strengthening the overall economy.

Yet high-quality child care in the United States is often inaccessible and unaffordable. And, despite its central role in ensuring that parents can work (and thus the economy can function at full capacity) and its high price tag for most families, workers in the child care industry are often paid very low wages. The care workforce also is largely made up of women of color, who face racial and gender wage inequality across the U.S. economy. These issues were exacerbated by the COVID-19 pandemic in 2020–2023, and the child care industry has struggled to recover from its significant challenges in the post-pandemic era.

Several U.S. states are considering policy actions on early childhood care and education to improve access to and availability of high-quality care programs for all families and to stabilize the supply of child care, including by better supporting child care workers. Research suggests that addressing both supply- and demand-side challenges of the care industry is the most effective way to improve the system. And understanding the efficacy of certain policy interventions is essential to designing and implementing policies that are targeted, efficient, and can achieve their stated goals.

To that end, the Washington Center for Equitable Growth recently released two reports that shed light on the economic state of early childhood care and on education programs and policies in the United States. The first report provides a birds-eye view of child care policies and programs across the country, looking at state trends and opportunities and their impacts on families and care providers. The second report gathers the research on both demand- and supply-side policies and programs that are shown to improve the access, affordability, and quality of early care and education.

This factsheet summarizes and consolidates the main findings of these two recent Equitable Growth reports.

Demand-side interventions to support access to early care and education

Demand-side policies and programs target families’ ability to access and afford child care. These policies often include child care subsidies and tax credits to offset families’ care expenses.
- Examples of tax credits include the Child and Dependent Care Tax Credit, which allows families to claim a percentage of their child care expenses as a tax credit, and the Employer-Provided Child Care Credit, which allows businesses to claim a percentage of qualified care expenses related to providing or locating child care for their employees.
- The federal government offers the Child Care Development Fund, which provides money to states to administer child care assistance programs. States often administer funds in the form of voucher subsidies to low-income parents to help offset child care costs.Other demand-side approaches that states are currently testing include increasing the income-eligibility threshold for child care assistance, increasing the dollar value of subsidies, expanding eligibility for assistance to new groups of families, and creating or expanding dependent care tax credits.
- Other demand-side approaches that states are currently testing include increasing the income-eligibility threshold for child care assistance, increasing the dollar value of subsidies, expanding eligibility for assistance to new groups of families, and creating or expanding dependent care tax credits.

While most child care subsidies are targeted to low-income families, data suggest that they reach only a fraction of eligible households. Indeed, while almost 6.5 million children under the age of 5 qualify for subsidy funds across the United States, only about 921,000 receive them—in part due to state discretion, and in part due to federal funding for the Child Care Development Fund being below existing needs and not keeping pace with inflation.

While current federal and state funding does not meet family needs, research still finds that targeting resources to families can improve access to child care, expand participation in child care, and boost parental employment. A large body of research also shows positive effects on parental employment and educational attainment, specifically for mothers.

Supply-side interventions to increase the number of child care spots available

Supply-side policies and programs aim to grow and stabilize the number of high-quality child care slots available, usually by targeting child care providers and workers. Examples that states are currently implementing or considering include:
- Offering grants and other funding to child care providers to support operations and workforce costs
- Updating zoning restrictions to make it easier for providers to establish and operate new child care centers
- Helping providers meet the true costs of high-quality care by updating reimbursement rates and making payments to providers more predictable
State governments also can directly supply child care slots, such as through federally funded Head Start programs or state and local preschool expansion programs.
Broadening access to early care and education by increasing supply—for example, through the expansion of public kindergarten and pre-K expansion—has a positive effect on parents’ labor supply, particularly mothers.
Supply-side policies tend to operate at a small scale, meaning they do little to improve availability of care overall. They are also run at the state level, meaning there is a patchwork of options across the United States that can be confusing and difficult for parents to navigate.

Interventions to regulate the quality, safety, and health standards of child care

Primarily set at the state level, standards that regulate health and safety typically include immunization, food safety requirements, class size and child-to-teacher ratios, and staffing qualifications. Because they are set by states, there is wide variation across states and care settings.
Evidence suggests that more stringent regulations reduce the number of child care establishments, child care slots, and size of the child care workforce, but can boost the quality of child care services, especially in higher-income areas. Evidence is mixed on whether regulations impact child care use or household expenses.
Evidence also is mixed regarding the Quality Rating and Improvement Systems—a standardized system that aggregates multiple measures of quality and simplifies them into a rating system that is publicly available—and its impact on measurable child outcomes. Research is clear, however, on the importance of healthy relationships and attachments between children and caregivers for improved child development and their future outcomes.
While there is limited evidence on the impact of child-to-teacher ratio regulations, evidence from other early childhood contexts demonstrates the importance of small class sizes for improved child outcomes over the short- and long-run.

Policies that bolster care workers’ well-being and retention rates

Child care providers face significant challenges in hiring and retention because the industry is characterized by both high labor intensity and low wages. Child care workers also suffered severe job losses during the COVD-19 pandemic from which it took years to recover. Many workers left the sector entirely, largely due to low wages.
Research shows that high rates of turnover among early care and education staff are related to weaker language development and social skills among children. Research also indicates that care centers with high turnover experience more critical safety violations.
Evidence reveals that improvements in compensation and working conditions for caregivers leads to higher-quality care environments and better child outcomes. Other studies demonstrate that caregivers tend to respond to pay bonuses and financial incentives by staying in their jobs.
Sample policies that states have implemented or considered to invest in child care workers include:
- Making care workers eligible for child care assistance regardless of household income
- Boosting pay for caregivers
- Providing care workers with grants to repay student loans

Conclusion

Many states face budget shortfalls and uncertainty around federal funding for child care programs, which means that states may not be inclined or able to expand programs or pass policies that require additional funding. Yet ensuring access to affordable, high-quality early childhood care and education for all U.S. families requires public investment in both the demand and supply sides of the child care market. State policymakers need to equip families with resources to access and afford care, support a stable and qualified caregiving workforce, incentivize provision of care in underserved areas, and monitor the quality of care in settings operating with public dollars. While states can fill some of the gaps in accessibility and affordability of early care and education, federal investments remain necessary to ensure a high-quality care system that can support an equitable and robust economy.

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