NJ child care industry seeks help for post-pandemic recovery

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When COVID-19 hit two years ago, Newark native Autumn Daniels and her husband found themselves searching for someone to look after their kids, ages 6 and 3. Both parents work 40 hours a week, Autumn in Paramus and her husband at a warehouse in Linden. The costs they face are exorbitant, upwards of $400 a month for her youngest son with special needs.

While there are programs offered by the state and federal governments, Daniels said her family does not qualify. “We have to be below the poverty line,” she said. “We have an allocated budget that I came up with. If anything happens it throws me off.” Food stamps, which her family qualified for during the pandemic after they lost their jobs, are being cut off.

The cost of center-based infant care in New Jersey is about $15,600 per year, according to a September report by the nonprofit Council for a Strong America, a Washington-based, left-leaning group that advocates for education and child care programs.

While federal and state subsidies, like grants from New Jersey or tax credits from the Biden administration, have helped in the past year, those funds amounted to a band-aid, said Cindy Shields, the child care director for the YMCA of Metuchen, Edison, Woodbridge & South Amboy.

“They’re getting us through,” she said, but “overtime costs are through the roof. We’re having to do a lot of training – so many of the staff that we do have are now. And turnover is so high – they’re coming in and leaving to work at Amazon or Wayfair or FedEx.”

Those jobs, she said, pay upwards of $18 to $20 an hour, while a teacher at a child care center holding a bachelor’s degree might make just above minimum wage. “There needs to be repair. We need to look at how to develop the workforce and create incentives for people who want to choose early childhood education as a career.”

The costs are borne mainly by working women, and by women of color, according to several advocates. For example, the New Jersey Economic Development Authority found that of parents in the 25 to 54 age group, classified as prime age, 6.8% of working mothers dropped out of the workforce between February and December 2020 compared to 3.8% of fathers.

“Returning women to work is key to New Jersey’s economic recovery,” the Council for a Strong America said in its report. “Lack of child care was an important driver of women exiting the workforce, as both schools and child care providers closed, and many mothers left work to care for their children.”

There were 4,098 child care centers across the state in 2019, then 3,035 in 2020 and 4,038 centers in 2021, or a net decrease of 60 centers, according to numbers from the Department of Human Services.

The squeeze is felt most acutely by mothers with children under the age of 3, who left the workforce in the largest numbers during the pandemic, according to Cecilia Zalkind, president and CEO of the nonprofit Advocates for Children of New Jersey.

Leveling the field

Simply getting child care is hard enough, said Shields, with a waiting list of 30 to 40 families. “We generally didn’t have waiting lists. Maybe a handful or less” before COVID-19, she said.

And even in the YMCA program, resources are being stretched thin. By Shields’ latest estimate, there are 140 staff accommodating 650 children spread across 17 different programs, with infants through age 13. Most staff are in their 20s, and many are in college.

Staffing shortages meant that many child care programs needed to “combine age groups and combine classes of children,” and Shields said that “if New Jersey tried to do that I would definitely speak against that. It’s not good for the children.” One staff member generally cares for four infants or a dozen school-age children.

But many potential workers simply do not see the benefits of entering the child care and early childhood education field. “That industry is decimated and if we can’t get our kids back into child care by lifting up that workforce … it is a big part of the hiring crisis,” said Michele Siekerka, president and CEO of the New Jersey Business & Industry Association.

Child care advocates contend that money from the Murphy administration and funds from the American Rescue Plan have helped to keep businesses afloat. “It is a positive idea – the idea of giving families cash for their needs,” Zalkind said.

Last fall, the Murphy administration said it was setting aside $700 million in federal pandemic relief funds to subsidize costs both for parents and day care centers. The funds are in various stages of the distribution process and must be spent by September 2023, according to the DHS, which oversees the finances.

Child care providers across the state received public subsidies to cover the costs of roughly 45,000 children. There are also hiring bonuses for workers, and grants that have been awarded to thousands of centers ranging from $20,000 to $80,000 for pay increases and facilities upgrades.

In addition, the child and dependent care tax credit program, enacted in 2018, which provides a tax credit for certain eligible child and adult-care expenses, was expanded but only for costs incurred in 2021. In 2020, before the expansion went into effect, there were 50,000 tax credits claimed that totaled roughly $8 million, according to the state Treasury Department, which noted that these credits were claimed before the expansion. And a $500 income tax rebate program for families that earn up to $150,000 a year resulted in 670,000 rebates totaling roughly $300 million in 2020, according to the state Treasury.

Under the current state budget, an additional 90,000 New Jerseyans qualified for the expanded earned income state tax credit, which provides refundable tax credits for certain low-earning workers in the state. Treasury officials estimated that there were 607,000 claimants in 2020 totaling $550 million, but noted that the numbers predate last year’s expansion.

Between 2011 and 2018, the percentage of New Jerseyans that took advantage of the EITC ranged from 76.9% to 79.1%, according to the Internal Revenue Ser-vice. And the nonpartisan state Office of Legislative Services estimated spending another $76.2 million through the end of this year thanks to the child care tax credit expansion.

“I think the state has a fairly balanced plan for that money that will help programs, will help parents, will help staff,” Zalkind said.

Advocates are pressing for a state-run $100 million child tax credit program, which according to New Jersey Policy Perspective, a progressive think tank that published a February study on the proposal, would not strictly be limited to child care expenses as is the case with the current subsidies.

“That little bit of extra money makes it more likely they’re able to secure employment because that small amount of money can help patch things like a broken car or missed car payment or bus fare, or periodic child care so they can make regular hours,” said Peter Chen, an analyst with NJPP.

One proposal calls for a tax credit for families with children under the age of 6 that would benefit 449,000 children from 186,000 households. It would cap the tax credit at $582 per child and cost the state $100 million.

A second proposal would expand the tax credit to families with members under the age of 18, and dependents between the ages of 18 and 24. The credit would be pared down to $187, but an anticipated 792,000 people would benefit across 424,000 New Jersey families. It would carry a $106 million price tag.

Either proposal would need legislative approval and a sign-off from Gov. Phil Murphy, but his office and the Senate Democrats – who control the state Legislature’s upper house, did not comment on the proposal.

“Our child care system remains in a fragile state,” said Assembly Women and Children Committee Chair Gabriela Mosquera, D-4th District. “As many parents in New Jersey know, this is not a new problem. For years, we have seen warning signs that the child care industry was in distress. Staffing shortages and subsidy levels have been consistent challenges for child care providers, but these problems were exacerbated by the pandemic.”

Zalkind said she is skeptical of how much the added benefits could turn the tide for many families’ finances, given the limited spending capacity of New Jersey’s government compared to the might of the United States. “For the family that’s paying $12,000 for child care for a child under the age of 3, sure I think this will help” at least a little bit, she said.

For Raquel Kooper, a single mother of three children living in Mine Hill, the federal child tax credits enacted under the ARP were a godsend. As part of the COVID relief package signed by President Joe Biden, the federal government expanded the child tax credit from $2,000 to $3,000 per child, or up to $3,600 for kids under the age of 6. On top of that, many families received automatic advance payments on the tax credit of between $250 and $300 a month between July and December last year.

NJPP’s proposal is modeled after the federal child tax credit.

“When we were receiving the child tax credit monthly installments was great,” Kooper said. “People like me – when you’re living check to check, it is extremely hard. You have no cushion.”

And the benefit of those now-vanished payments was that “you can rely on” them “coming at a certain time of the month,” and plan your budget accordingly.

Zalkind called those funds “a huge benefit for families.” “They used it to pay bills. They used it for urgent needs,” she said.

Biden and congressional Democrats wanted to roll a longer form of the expanded child tax credit into the president’s Build Back Better plan, a multi-trillion-dollar infrastructure and social safety net proposal that stalled in the U.S. Senate.

“The new Child Tax Credit enacted in the American Rescue Plan is only for 2021,” the White House said on its website. “That is why President Biden strongly believes that we should extend the new Child Tax Credit for years and years to come.”