Child Care Choice Guarantee

Every family should be able to choose the child care that’s right for them.

When it comes to taking care of their young kids, parents today are on their own in a system that isn’t working for most. Child care is costly, rivaling or exceeding a mortgage or rent in most family budgets. For decades, public funding for child care has fallen short, leaving parents and child care providers to navigate a broken market. Child care strains budgets all the way up the income ladder, and few families can actually access child care assistance today. The Child Care Choice Guarantee would create an environment where parents have agency by giving all parents the ability to select between free, high-quality child care slots in their community and a cash benefit that they can use to provide care at home or help pay someone they choose to provide care.

The next President can ensure that the U.S. is a great place to raise a family and parents have the time, financial support, and high-quality care options they want. This plan would put money back in families’ pockets — transforming their budgets overnight and giving them back hours of time and the freedom to choose the care that works best for their families.

The Problem

Nearly every parent with young children struggles with the same question: how can they juggle the tradeoffs between taking care of their kids, work, and making enough money to pay the bills? Too often, families feel like they have a series of bad choices — or no real choice at all. For most Americans, the price of putting two kids in child care costs more than they pay for rent or their mortgage. So families are forced to make untenable choices: use up what they’ve saved for emergencies, higher education, and retirement; defer major life decisions like buying a home; build up debt; leave the workforce and take the hit to income and future earning ability; patch together a mix of trusted helpers, including grandparents and friends; choose not to have another child; or compromise on quality — dropping their kid off at a lower-quality child care option. 

Nearly 70 percent of children under 6 years old in the United States live in a household where all available parents are in the workforce. Yet the United States remains one of the few countries in the world not to guarantee paid parental leave, which gives new parents the time and financial support they need to recover, bond, and care for their own newborn child. Most parents would prefer to be their child’s first caregiver. But without paid leave — private U.S. employers only offer benefits to about one-quarter of the workforce, and just 14 states have passed paid leave laws — that’s not possible. Many can’t afford to take unpaid leave, the only kind guaranteed by law. There has been a dramatic shift over the last 40 years in the number of households where all parents are in the workforce but we have had no commensurate shift in public policy.

It’s the “Child Care Catch-22”: many parents can’t afford to stay home and they can’t find an affordable and available child care slot so that they can work. With child care costs taking up nearly 10 to 20 percent of the average family’s already stretched take-home pay, families don’t make enough to afford child care especially as care costs continue to rise, outpacing the rate of inflation in recent years. Some parents find themselves working around the clock and never getting to see their kids. And those parents who do step back from work, whether by choice or necessity, have no safety net at all. Amid these constraints, many are putting off having children because child care is so expensive.

Our child care system is crumbling. For those parents who want or need a formal child care setting — a preference that increases as kids get older — finding an affordable slot can feel insurmountable. Nearly half (46 percent) of Americans live in “child care deserts” where demand far outstrips the available supply of licensed programs. In Indiana, more than 300 providers have shut their doors since last fall, eliminating over 10,000 child care slots. Oklahoma, a state which has been home to pioneering early childhood efforts, has experienced similar losses, with more than 400 programs closing in recent months. North Carolina has also seen widespread disruptions, including a net decline in providers toward the end of last year. In Virginia, 57 percent of children under age 6 live in a community considered a child care desert. Across the country, families that live in rural areas, have a child with disabilities, or work unpredictable schedules, often find it especially difficult to find child care that works for them.

To date, public investments have rightly prioritized child care access for the most economically precarious, primarily by giving assistance to low-income families to buy slots on the private market. But even there we are failing to deliver, with only 1 in 7 eligible families served by federal child care assistance. Many states keep waiting lists because public investment does not come close to matching existing needs. And families higher up the income ladder — who also struggle with high costs of child care — receive almost no help. On top of limited public funding, the existing patchwork system and sometimes dizzying enrollment rules add to the mental and actual load — creating another layer of paperwork and logistical challenges parents looking for help must navigate.

A new nationally representative survey of parents with young kids by New America shows the gaps between what parents have now and what they want. The survey shows 72 percent of parents want more quality time with their children. While much of the discourse from policymakers often focuses on non-parental child care settings, more than one-third of parents said they would ideally care for their kids themselves, rather than use other child care, during that first year. The primary reason they don’t? Financial reasons.

Families are left scrambling, picking among bad choices based on what they can afford to do and what they can’t afford not to. The current Administration wants to take us backward by underfunding existing programs and adding layers of unnecessary paperwork to make it even harder to get help paying for child care. They’ve said it is a problem America can’t solve, but we can’t continue to leave it to families to solve a systemic problem.

The Solution

The Child Care Choice Guarantee gives parents real choice: offering high-quality child care at no cost, or a cash benefit to better enable parents or friends, family members, or other trusted caregivers to provide care at home. The plan recognizes that families across the income spectrum have different child care preferences and needs and that quality care is possible in a variety of settings. It also seeks to expand child care capacity across communities, while providing access to a tangible benefit to families immediately. 

Free Child Care for All Families

To make child care affordable and accessible, the plan provides families with a choice of two flexible pathways:

• Option 1: Free Child Care Option ensures access to high-quality care for all those who need it. Free publicly funded child care slots will be available in a range of trusted settings to everyone, regardless of income or geography. These seats include neighborhood centers, faith-based programs, Head Start, home-based providers, and schools. The Child Care Choice Guarantee will make a national investment through the states to expand the supply of available, high-quality slots, simultaneously tackling the accessibility and affordability crisis. Families won’t need to navigate a complicated system or prove work hours or income eligibility; instead, they will simply enroll with their preferred neighborhood child care provider.

• Option 2: CareCredit provides a financial stipend equal to $1,000 per month to families that choose not to use a publicly funded child care slot, whether because they primarily provide care for their children or because they have different care needs. This option is designed to be inclusive of support for full-time parent caregivers, recognizing and valuing the work of parents who choose to provide full-time care. Families can also choose to use this stipend to offset the costs of a relative or another trusted individual caring for their child. It would be broadly available to families earning less than $400,000, and there would be no earned income requirement, meaning that the lowest-income families could fully benefit from it. This benefit will be administered federally to the families that choose this option.

Flexibly meeting families where they are

While the plan anchors into simple universal principles and choices, these fall on an uneven landscape. Parents can also opt for a combination: receiving a smaller cash benefit while also utilizing a publicly funded slot for part-time care. This flexibility is essential for parents with variable or nonstandard work schedules or those who prefer to split care responsibilities. For example, a parent might decide to work 20 hours per week to maintain their job and earn income while also having more time with their children. In this case, the parent could enroll their child in a part-time slot and receive a lower CareCredit.

Additionally, families with very low incomes spend a high portion of their income on child care, a rate that is higher than families that earn more. For example, families with incomes below 100% of the poverty threshold who have child care expenses spend an average of 36% of their income on child care payments. Given the high costs for families with very low incomes, those at or below 100% of the poverty threshold would be able to select both a child care slot and receive the CareCredit.

Investing in the Child Care Infrastructure

The Child Care Choice Guarantee will make a national investment through the states to vastly expand the supply of available, high-quality slots, addressing both affordability and access. This approach will build on the existing child care infrastructure by supporting states in contracting with centers, family child care homes and other home-based providers, and Head Start programs to serve more children in publicly funded slots. 

This approach simultaneously makes quality child care affordable and available to parents, while building the supply of child care in areas that are not currently served by the existing market — where too few families need services, or where families in the area do not earn enough to pay child care prices that cover operating costs. Every day millions of parents take their children to public schools and increasingly, public early childhood programs. Nearly 4 in 10 kids are now enrolled in public preschool. And places like New York City and New Mexico are expanding access to free, publicly supported child care to infants and toddlers, recognizing that investing in quality early childhood programs prepares children for school and supports working families and the economy. 

The Child Care Choice Guarantee builds on the successful Head Start model, which is often one of the few center-based options in rural areas and low-income neighborhoods. Head Start programs that choose to participate would contract with the state to expand offerings to children who are above the income threshold for Head Start services, offering economically mixed classrooms and comprehensive services to children in lower-income households.

Today, many families use home-based providers for their child care needs. These providers often help fill needed gaps for care during early mornings, evenings, overnight, or irregular work hours, as well as specialized care for infants and children with disabilities or care meeting particular linguistic or cultural needs. They operate both as licensed family child care providers and as license-exempt providers that may be required to register with the state and/or meet certain criteria to receive public subsidies. While definitions, licensing status, and standards vary considerably by state for home-based providers, states would be required to offer pathways to licensure that are appropriate for the setting and hours of operation as well as resources to help them meet those standards, so that all home-based providers have an opportunity to participate.

Families that have a child with a disability have long experienced difficulty finding a child care provider that can accommodate their needs. States will build the supply of inclusive child care settings by training early educators and offering higher rates that reflect the true cost of accommodations for children with disabilities. 

To address gaps and child care deserts, the plan invests in the construction and renovation of child care facilities and improves quality through licensing, professional development, and connections to essential supports such as mental health services, early intervention, and family support systems. It also includes grants to providers to help cover operating costs and improve quality and engagement with states to reform zoning laws, building codes, and other barriers that stand in the way of child care supply. For child care providers, the cost of space is second only to the cost of staff. Modernizing these regulations has the potential to free up resources while also expanding where child care can be offered.

However, addressing physical infrastructure and services alone is not enough. Child care programs depend on a stable, well-supported workforce. But the current system reflects a "market failure": providing high-quality care is inherently labor-intensive work with true costs (particularly in the form of wages to attract and retain a qualified care workforce) beyond what parents can afford to pay. This gap leads to low compensation: the median early educator earns just $16.82 per hour. This plan recognizes that no child care expansion is sustainable without a fairly paid workforce and invests in early educators, including family child care providers, through improved wages and benefits to ensure providers can recruit and retain staff. The plan also includes support for licensure, scholarships, coaching and mentoring, paid apprenticeships, and credential and degree programs for providers across settings.

Child care challenges cost the U.S. economy over $200 billion annually through losses in income, productivity, and tax revenue — funds that could be better spent if reinvested in helping families access affordable, quality child care. We estimate that for the same cost, the U.S. could fully implement this proposal. The plan gives parents agency and also builds publicly funded child care seats over time so the exact cost is dependent on a variety of factors, including population trends, seat capacity, families’ preferences, and eventual uptake and enrollment. 

Our estimates assume that free public child care slots will have a higher per-child value than the average CareCredit, but child care costs vary widely by geography and age of child. The proposal could be financed through potential reforms to our tax code, including raising the corporate tax rate, repealing the pass-through deduction, and reforming the estate tax and the stepped-up basis that lets the largest inherited fortunes escape taxation. These sources are fitting: private companies are among the beneficiaries when parents who want to stay in the workforce can do so, and asking the wealthiest of a passing generation to contribute is a natural way to invest in the youngest one just arriving. The proposal and its budget estimates are designed to complement separate investments in comprehensive paid family and medical leave, a Child Tax Credit, and a federal expansion in pre-K — all of which are essential parts of an agenda to support families. 

Conclusion

The U.S. government put a man on the moon, built an interstate highway system from coast to coast, and collaborated with scientists to invent the internet — it certainly seems possible for us to invest in and deliver child care in a way that many other countries and several states, counties, and cities have already done. 

For years, politicians have talked about the need to support families with child care. But progress has been incremental and patchwork, leaving parents to fend for themselves precisely when they are most vulnerable. The numbers tell the story: while the cost of providing education and care falls as children grow, public investment runs backward — about $1,500 per child per year in the first five years of life, compared to $12,800 once children enter school. 

Families should have agency, real choices, and the resources to act on them. By making child care free and widely available and offering flexible cash support, this plan recognizes that no single approach works for every family. For the typical family, the plan would be transformative: saving them more than $13,000/year — and much more in higher-cost cities — and enabling them to stay in the workforce if they so desire. It meets parents where they are, whether they rely on a trusted relative, a family child care provider, or a child care center in their community. 

The Child Care Choice Guarantee is simple in its logic: the cost of inaction on child care has always fallen on families and providers. It is time for that to change.

By: Tara McGuinness, Executive Director New Practice Lab at New America and former Senior Advisor Obama White House and Office of Management and Budget; Katie Hamm, former Deputy Assistant Secretary for Early Childhood Development at the U.S. Department of Health and Human Services; Alyson Silkowski, Senior Policy Advisor, New Practice Lab at New America; and Mario Cardona, Senior Advisor on the White House Domestic Policy Council under the Obama and Biden Administrations