NJ Still Plagued By High Child Care Costs, Low Worker Wages: Advocates

NEW JERSEY — Costs for parents are still high. Worker wages are still low. And despite a big wave of federal funding headed New Jersey’s way, the state’s child care industry is still “unsustainable,” a pro-business group says.

Gov. Phil Murphy recently announced that an additional $17 million in federal American Rescue Plan State Fiscal Recovery Fund money is headed to the state’s Child Care Facilities Improvement Program. With these new resources, New Jersey is dedicating more than $140 million that will beef up its child care infrastructure – representing one of the largest such investments of any state in the nation.

Murphy said the state has invested more than $1 billion into expanding child care access in New Jersey since he took office. See Related: Millions In Funding Is Coming To Expand Child Care In New Jersey

But according to the New Jersey Business and Industry Association (NJBIA), it may take more than throwing money at the problem to solve it.

“Gov. Murphy noted that the administration has invested more than $1 billion in the child care sector to date – yet, the cost of child care is still high, and child care wages are still low,” NJBIA vice president of government affairs Althea Ford recently testified to the Assembly Aging & Human Services Committee.

It’s an unsustainable model, Ford argued.

One of the biggest problems? High operational costs for child care businesses – many of which are small and minority or woman-owned, and are struggling with rising maintenance and insurance expenses.

Another problem for the industry? “Workforce challenges” due partly to low salaries, the group said. See Related: Latina Workers In NJ Face One Of America's Ugliest Pay Gaps

The cost of doing business is only going to get worse as the state expands universal preschool, a “well-intentioned” effort that will have ripple effects on New Jersey’s child care industry, the NJBIA warned.

• See Related: NJ Commits To Universal Pre-K For All, Gov. Murphy Says
• See Related: Universal Pre-K In NJ; $120M Added To Expand Child-Care Facilities

“The early childhood business model relies on the enrollment of infants, toddler and preschool children,” Ford wrote. “The diversion of preschool children to the public preschool program leaves licensed child care facilities to care for infants and toddlers, which are more expensive to care for in an already expensive market.”

Red tape on the state level isn’t helping, Ford added:

“Licensed child care providers and family child care providers are regulated by the Department of Children and Families, Office of Licensing. To receive and maintain a license, providers must adhere to the facility and other operational expectations established by DCF. Preschool expansion is operated by the Department of Education, which has established its own regulations and expectations for facility space and other operational items. The two department requirements conflict, making provider operations challenging and inconsistent, resulting in contradicting definitions of quality for early childhood facilities. This also is financially wasteful for both providers who invest thousands of dollars to conform with the DOE’s requirements, only for their contracts to be denied or nonrenewed, and to the state, which has significant funds in both the Grow NJ Kids program and preschool expansion but are unable to be efficiently utilized due to the bifurcated system of quality metrics.”

Some have suggested that more New Jersey businesses should offer onsite child care or as part of an employee benefits package. It sounds like a win-win situation: employers would benefit from an engaged workforce of working parents, and employees can show up for work knowing that their children are placed in safe and reliable care.

For now, that’s still a pipe dream, the NJBIA opined.

“The reality is that there is not a business of any size that can sustainably contend with the child care model as it currently exists,” Ford told the state Assembly committee.

Ford and the NJBIA suggested that expanding tax breaks for businesses and child care providers could help to put a dent in the problem. The group is supporting two proposed laws:

• A974/S2240 (Munoz, Sampon; Ruiz, Vitale) – Provides corporation business tax and gross income tax credits for certain employer-provided child care expenditures

• A2242/S3382 (Lopez/Freiman/Pintor Marin/Vitale) – Allows a gross income tax credit for certain child care staff and registered family day care providers

The NJBIA is also recommending that officials take a closer look at who is benefitting from the state’s current investments in child care – and whether that money is being deployed wisely.

WHO SUFFERS WHEN CHILD CARE LAGS?

If a workforce cannot be properly supported with consistent, reliable, accessible and affordable child care options, it is the state’s economy that will suffer, the NJBIA says.

“Working parents – and disproportionately women – will be forced to opt out of the workforce to care for their children, exacerbating already existing workforce shortages, particularly in industries that are predominantly occupied by women, such as child care and health care,” the group said.

• See Related: Child Care Costs 'Untenable For Families' In NJ

The NJBIA pointed to a 2022 report by the Rutgers Center for Women and Work on The Status of Women in New Jersey, which said that a lack of child care often forces people to work part-time jobs – in turn leading to lower wages and an inability to qualify for health care and other benefits.

Less work hours also means less revenue to the state in the form of individual income taxes, the NJBIA added.

According to Ford and the NJBIA, it’s in the best interest of all Garden State businesses to root for better and cheaper child care:

“The business community has a vested interest in ensuring a robust and diverse childcare system, inclusive of an early childhood education system for infant and toddlers and a care infrastructure for school aged children, i.e., before/after care programs, summer camps, etc. Child care providers that cater to these youths offer a vital service to working parents and families with young children, ensuring access to quality and reliable care so that working parents can literally show up for work every day and continue to contribute to the state’s economic growth.”

NATIONAL DATA

The high cost of child care isn’t just a New Jersey issue, recent statistics from the Women’s Bureau of the U.S. Department of Labor show.

On Monday, the agency announced that it has updated its National Database of Childcare Prices, which now provides child care price data at the country level from 2008-2022. The update includes data from 48 states, Washington D.C. and Puerto Rico.

The takeaway? Child care remains a “prohibitive expense” for many families across the nation, the agency said.

Some data includes:

• U.S. families spend between 8.9% and 16.0% of their median income on full-day care for just one child, with annual prices ranging from $6,552 to $15,600 in 2022.

• In some counties the median cost of center-based infant care in 2022 was more than the cost of a year of rent at the national median ($15,216).

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