Following Issue Brief from SBA, Shaheen Renews Call to Address the Nation’s Child Care Crisis and Better Support Child Care Small Businesses

(Washington, DC) - U.S. Senator Jeanne Shaheen (D-NH), Chair of the U.S. Senate Committee on Small Business and Entrepreneurship, today responded to a new U.S. Small Business Administration (SBA) Office of Advocacy issue brief that details the role of small businesses in the child care industry and fills data gaps in child care industry research. The data offers a clear picture of the many small business challenges that increase child care costs for working families. The issue brief follows a hearing Chair Shaheen convened in April to discuss America's broken child care business model.

"As highlighted in this issue brief, our broken child care system is a crisis that demands immediate attention. Building on insights from a hearing I convened in April on the child care crisis, this issue brief found that the industry is overwhelmingly made up of small businesses struggling to meet soaring demand. The resulting affordability crisis, with child care costs rising by 230 percent since 1990, impacts countless working families across the country," said Chair Shaheen. "It's past time for Congress to prioritize the passage of legislation to address America's broken child care system. Families, child care workers and small child care businesses simply cannot wait any longer for a solution to our child care national emergency."

Highlights from the issue brief are below. A full copy can be found HERE.

Child Care Prices and Labor Force Participation:

• The price of child care has grown by 230.3 percent from 1990 to 2022. This growth rate is more than 100 percent greater than the price growth rate of all other items (123.9 percent) and over 25 percent greater than the growth of income (196.6 percent).
• Since 2016, labor force participation of parents with children under age six has been growing faster than the number of child care firms.

National Child Care Industry:

• Small child care businesses composed almost 99.9 percent of the national child care market from 1997 to 2021.
• The share of non-employer child care small businesses has averaged 90 percent of the national market, although their share has decreased since 2012.
• The number of exits of very small child care businesses with fewer than four employees and small child care businesses with four to ten employees began increasing at a faster pace than the number of new entries after 2013 and 2011, respectively.
• Large child care small businesses are increasingly acquiring small child care businesses.
• Multiple research gaps still exist concerning the challenges facing small firms in the child care industry.

States' Child Care Industries:

• Most states have experienced decreases in the year-over-year changes for small child care businesses, with non-employer small businesses experiencing the largest decrease.
• In 2021, New Hampshire, Maine and Montana had the lowest share of child care small businesses, all of which had a small child care firm share of 99.6 percent compared to the 99.8 national distribution from 2012 to 2021.

On April 10th, 2024, Chair Shaheen convened a hearing where the U.S. Senate Small Business and Entrepreneurship Committee heard testimony from expert witnesses on the child care industry's broken business model and what Congress can do to support small business child care providers, employees and families.

Shaheen introduced the Expanding Access to Child Care for Military Families Act of 2024 with Senator Ernst (R-IA) to respond to the shortage of child care availability for military families by creating a new Department of Defense-led pilot program to support workforce development opportunities for child care providers and to increase recruitment, retention and training of child care staff. This bill was included, in part, in the version of the Fiscal Year 2025 National Defense Authorization Act that was passed by the Senate Armed Services Committee in June.

Shaheen also helped introduce the Right Start Child Care and Education Act of 2024 with Senator Angus King (I-ME) to help make child care more affordable and accessible for working families by reforming the tax code, including by creating a new tax credit for child care professionals with college degrees to strengthen the child care workforce.

Last year, Shaheen joined Senator Patty Murray (D-WA) to introduce the Child Care for Working Families Act, which would provide affordable child care for all working families, expand access to preschool programs and increases wages for early childhood workers. She also joined U.S. Senators Amy Klobuchar (D-MN) and Dan Sullivan (R-AK) in reintroducing the Childcare Workforce and Facilities Act to address the national shortage of affordable, quality child care, especially in rural communities. In addition, Shaheen joined U.S. Senators Bernie Sanders (I-VT) and Patty Murray (D-WA) in introducing the Child Care Stabilization Act which would provide additional federal child care stabilization funding to child care providers.

Shaheen has been a leader in advocating for more accessible and affordable child care. Shaheen took to the Senate floor urging Congress to pass President Biden's request for $16 billion to support child care stabilization grants in the domestic supplemental funding request. In 2021, Shaheen led the effort to deliver $77 million in child care relief funding to the State of New Hampshire through the American Rescue Plan. Since then, she has worked to hold the State accountable for delays in distributing some of those federal funds and helped deliver grants throughout the state, especially in communities that lack access to child care facilities.