Association for Public Policy Analysis & Management

Quality child care is expensive for families with young children. Indeed, for many families it is one of the largest monthly out of pocket expenditures. For others, quality child care may not be an option pushing them to either rely on informal arrangements or remain less (or un-) attached to the labor force. In this paper, we take a closer look at the child care situation faced by low income families. Using 5 years of the Annual Social and Economic Supplement to the Current Population Survey, we consider which families are being “pushed” into poverty by child care expenses. Specifically, we use a Supplemental Poverty Measure (SPM) framework to consider which poor families would rise above their family’s poverty threshold if they did not have to pay for child care, all else being equal. The SPM subtracts out-of-pocket child-care expenses (as a part of total work expenses) from total resources when calculating the poverty rate. We can therefore use the SPM to examine the total effect of child-care expenses that push families into poverty, in addition to how potential subsidies that reduce such expenses ameliorate these effects. We focus on families with young children, defined as those with a child aged 0-5, for whom child-care needs are most pressing. We consider variation by age of the youngest child, the number of children in the home, parent’s marital status, race/ethnicity, and parental educational attainment. Preliminary results suggest that among families with a young child who pay for child care, nearly a third of those in poverty would not be in poverty if families did not incur such expenses. Among these families, those most often pushed into poverty include households with three or more children, those headed by a single parent, those with a black or Hispanic head of household, and those headed by someone with less than a high school degree. We will also explore how necessary child care expenses factor into the budgets of families with young children across various income thresholds (e.g. by quintile, or low-income/middle class status). Additionally, to better understand the need for quality child care, we will look at working families who do not pay for child care, providing a descriptive portrait of their resources and needs, and what would happen if they exhibited the same child care costs as their more advantaged peers. We will describe the characteristics of this population and propose some possibilities of what might happen if child-care costs were not a barrier. We also examine poor families where all adults are not working, and where this lack of employment is not explained by a disability, retirement, or student status. In this way we can better describe the population for whom child-care expenses may be a barrier to work.