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What should Indiana do to increase access to child care and make it more affordable?
Indiana faces twin crises in child care: a lack of access coupled with a lack of affordability.
While access and affordability are challenges across the education spectrum (as anyone with a student loan repayment about to start can tell you), they are particularly acute in child care because of the downstream effects a lack of affordable child care creates: the inability of parents and caregivers to seek or maintain employment or to enroll in education and training, which further hampers Indiana’s economic growth.
To address Indiana’s child care crises, the state should do two things: Spend more money and spend the money better.
Indiana’s approach to addressing child care is similar, in many ways, to the way it approaches other education policies. We rely on choice and markets and hope people have the incentives to make the right choices. Indiana provides scholarships in the form of On My Way Pre-K, Child Care Development Funds, and other support services to low-income families to use in a mixed system of providers that includes home- and school-based providers and child care ministries.
But this system exists in an environment with high fixed costs and small margins. Providers face an unenviable, sometimes impossible, choice between charging higher fees (and passing on the already-unaffordable costs to parents) or paying lower wages to staff (risking staff turnover, in an industry that was understaffed before the pandemic and is struggling to regain ground). We cannot rely on purely market-oriented solutions in the face of clear market failures. This is a clear space for expanded government involvement.
According to recent data from Early Learning Indiana, no counties in Indiana have what could be considered adequate access to high-quality early care and learning settings. Many providers report difficulty in hiring and retaining staff, in part because they cannot pay competitive wages. Workers respond to incentives, and when a worker can make more at a Target ($15 per hour as a cashier) than as a child care worker (approximately $12 per hour), this draws the contrast between what we say we value and what we actually value.
How can we give child care providers an advantage in attracting and retaining talent? With more generous scholarships for families and higher reimbursement rates for providers. These funds can then be used to keep out-of-pocket costs low for families and spur providers to pay higher wages and hire additional staff. Hiring more staff, and keeping them longer, will allow providers to expand capacity, creating additional seats in communities where access currently lags.
We might not get to a universal child care solution or even to a version of universal pre-K like Oklahoma, Vermont and Florida have, but we can build on our existing investments in a mixed-delivery model and make affordable child care a reality for Indiana. Spending more (on scholarships and on reimbursement) and spending better (to incentivize providers to expand access and pay higher wages) can get Hoosiers the child care they need to take our state to the next level.•
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Snideman is vice president of government relations for United Way of Central Indiana. Send comments to ibjedit@ibj.com.
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