4

Child Care and Economic Self-Sufficiency

THE ISSUE IN BRIEF

Considerations of child care figure prominently in federal and state debates about welfare reform. It is well understood that any effort to encourage or mandate work effort on behalf of the population receiving Aid to Families with Dependent Children (AFDC) will have the effect of placing more children in child care and expanding the time that children spend in child care. Absent exemptions for mothers with very young children, many of these children are likely to be infants and toddlers.

This, in turn, raises questions regarding the child care environments that these children will be exposed to when they are not in the care of their parents. Some view this as an opportunity to support child care environments that will not only enable parents to work, but will benefit children, help prepare them for school, and perhaps reduce the odds of welfare dependence in the next generation. Others, faced with the pressures to control public costs that typically accompany welfare reform initiatives, tend to think in terms of the minimum amount that can be done so that child care problems do not interfere with the primary, adult-oriented aims of reform initiatives.

Beyond the welfare context, much of the evidence discussed at the workshop indicated that employed, single mothers who are poor or near poverty face particular hardships in their efforts to combine work and 4



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Child Care for Low-Income Families: Summary of Two Workshops 4 Child Care and Economic Self-Sufficiency THE ISSUE IN BRIEF Considerations of child care figure prominently in federal and state debates about welfare reform. It is well understood that any effort to encourage or mandate work effort on behalf of the population receiving Aid to Families with Dependent Children (AFDC) will have the effect of placing more children in child care and expanding the time that children spend in child care. Absent exemptions for mothers with very young children, many of these children are likely to be infants and toddlers. This, in turn, raises questions regarding the child care environments that these children will be exposed to when they are not in the care of their parents. Some view this as an opportunity to support child care environments that will not only enable parents to work, but will benefit children, help prepare them for school, and perhaps reduce the odds of welfare dependence in the next generation. Others, faced with the pressures to control public costs that typically accompany welfare reform initiatives, tend to think in terms of the minimum amount that can be done so that child care problems do not interfere with the primary, adult-oriented aims of reform initiatives. Beyond the welfare context, much of the evidence discussed at the workshop indicated that employed, single mothers who are poor or near poverty face particular hardships in their efforts to combine work and 4

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Child Care for Low-Income Families: Summary of Two Workshops childrearing. These are the families that seem to have the most difficulty coordinating work and child care schedules, who express concerns about their children's care arrangements, and who report problems affording child care. The working poor are also the least likely of all income groups to receive assistance with their child care costs. Research presented at the workshop examined the issues surrounding the role of child care in supporting the transition from welfare to work by AFDC families, as well as its role in the lives of the working poor. Apart from the effects of child care on children, the participants looked into what is known about the effects of child care on adults and on their capacity to prepare for and maintain jobs. SUMMARY OF RESEARCH PRESENTED Affordability of Care and Work Effort Numerous studies have examined the effects of the price of child care on whether and how much mothers work. In general, these studies have found a negative relationship between the price of care and the labor force participation of mothers, although the effects tend to be small in magnitude. Not addressed in this literature, however, are the effects of the affordability of child care for low-income households on the labor force participation of women with young children. New research discussed at the workshop indicates that affordable child care is a decisive factor in promoting work effort among low-income mothers. The General Accounting Office released a study in December 1994, presented by Alicia Cackley, that used economic modeling to estimate the effects of reducing families' child care costs (via subsidies) on mother's labor force participation (U.S. General Accounting Office, 1994a). The results showed that providing a full subsidy to mothers who pay for child care could increase the proportion of poor mothers who work from 29 to 44 percent, and that of near-poor mothers who work from 43 to 57 percent. The effects on nonpoor mothers were significantly smaller. Using somewhat different methods, Fronstin and Wissoker (1994) also found that the higher the price of child care, the lower the employment rate in a low-income sample. Again, the effects on employment in a high-income sample were significantly smaller. These investigators caution that previous research that does not consider differences by family income on the effects of child care prices on employment are likely to understate the extent to which the affordability of care affects employment for low-in-

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Child Care for Low-Income Families: Summary of Two Workshops come mothers. In future research, it will be important to determine whether the effect of price on labor supply differs by income because of the income differences or because of other unobserved factors associated with income that have profound effects on employability, such as job experience, job skills, and motivation. “AMONG THE FACTORS THAT ENCOURAGE LOW-INCOME MOTHERS TO SEEK AND KEEP JOBS…AFFORDABLE CHILD CARE IS A DECISIVE ONE.” U.S. General Accounting Office, 1994, pg. 2 As noted by the research teams, both of these studies indicate the employment-related benefits of subsidizing the child care costs of poor and near-poor mothers. They further indicate that, if the primary criterion for allocating child care subsidies was one of promoting work effort, lower-income rather than higher-income families would be the group on which to focus. Data presented in Chapter 5 indicate that this is not currently the case. Child Care and Welfare-to-Work Program Clients Child care is predominantly viewed as a setting for children and, as such, most efforts to discern the effects of child care have focused on its effects on children. New research presented at the workshop suggests that the provision of safe and dependable child care is important not only for children, but also for their mothers' efforts to prepare for and sustain employment. The fact that welfare-to-work programs increase demand for child care and may increase the use of formal arrangements under some conditions is quite well documented. At the workshop, Meyers summarized this literature by noting that these programs may be more successful at solving problems of access to care than problems of child care adequacy (Meyers, 1993). Available studies provide very limited information about the adequacy of the care that welfare clients use, rarely going beyond documenting the sizable minority of the mothers involved in these programs who express concerns about the quality of their care arrangements. The impact of these concerns on their economic progress and of the trade-offs that these moth-

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Child Care for Low-Income Families: Summary of Two Workshops ers must make between availability, affordability, and quality is only now beginning to be examined. That is precisely the issue that Meyers has examined in her research. Her findings indicate that the adequacy of care that parents obtain while they are in welfare-to-work programs, and during their transition from welfare to work, is of substantial relevance to the success of these initiatives. Meyers followed a sample of 356 single mothers with children under age 13 from the time they entered California 's welfare reform program (the GAIN program) until 9 months later, at which time 255 of the mothers were still participating in the program. She examined the role of child care in predicting which mothers would complete or drop out of the program during this first year of participation. One of the important features of her study is that she interviewed the mothers about their child care arrangements after 3 months, when only 6 had dropped out of the program, so her findings cannot reflect mothers' retrospective efforts to blame child care problems for their decisions to drop out. Meyers found that the odds of dropping out of GAIN during the first year of participation were doubled for mothers who expressed dissatisfaction with their child care provider or facility, who were using arrangements that did not meet established guidelines regarding child-staff ratios (e.g., 4:1 for infants), or who did not trust the provider or the safety of their child care arrangement. Other factors that significantly increased the odds of attrition, but to a lesser extent, were the distance between the child care locale and the GAIN activities, mothers ' reports that they were relying on unreliable care and providers who could not accommodate sick children, and their reports of transitions out of care due to changes in work schedules. Interestingly, counter to other data based on parent interviews, type of care did not make a significant contribution to women's success in the program. There was no evidence that those who relied on relatives and friends rather than organized arrangements had a different likelihood of dropping out (Meyers, 1995). Related issues were also highlighted by the representatives of state and local agencies who attended the workshops. The salience of mothers ' concerns about safety and trust as essential ingredients of quality care surfaced repeatedly in the workshop discussions. Disruptions in care caused by breakdowns in efforts to march work and child care schedules were frequently cited as interfering with mother's efforts to enter the labor force successfully. Transportation barriers were also mentioned by several of those who work closely with AFDC caseloads.

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Child Care for Low-Income Families: Summary of Two Workshops What is notable about Meyers's research is that it moved beyond descriptive data on these problems to examining their practical implications for efforts at self-sufficiency. It is, however, a single study that is richly deserving of replication. Child Care and the Working Poor About two-thirds of working-poor families are headed by dual-earner or single working parents (Hofferth, 1995). For the two-parent families, it may be possible to keep child care entirely within the family if the parents are able and willing to coordinate their work schedules. For many, however, that is not possible. In 1990, only 22 percent of dual-employed parents—regardless of income —were able to cover their child care needs without relying on another provider (Brayfield et al., 1993). The vast majority of working-poor parents (62 percent of mothers, 64 percent of fathers) earned under $5 per hour at their main job in 1989 (Hofferth, 1995). Their need for low-cost child care, particularly given the large number of hours for which they typically need care, is self-evident. As revealed by the economic analyses summarized above, absent low-cost options or assistance with child care fees, these families' needs for child care can become a barrier to work. “THE WORKING POOR GET FROZEN OUT.” Kathleen Haight(comments at workshop) The current allocation of public child care subsidies across income groups would appear to exacerbate this situation. Analyses from the National Child Care Survey (Hofferth, 1995) indicate that the working poor are the least likely of all income groups to receive assistance with their child care costs. Whereas 37 percent of both nonworking-poor families and middle-income families receive direct or tax assistance with their child care costs, only 30 percent of the working poor receive such assistance. The pressures that face working-poor families were also highlighted by virtually every state agency representative attending the workshops. Among the problems they identified with the current array of child care subsidy programs, issues of quality and access to care by the working poor were especially prominent. Karen Tvedt from Washington state, for example, indicated that, as programs have grown for the AFDC population,

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Child Care for Low-Income Families: Summary of Two Workshops her state's ability to serve the working poor has been flat. Kathleen Haight from Fort Walton Beach, Florida, told the workshop participants that, despite a “massive expansion” of dollars for child care, her agency is now serving fewer working-poor families than in 1987. Others also characterized the working poor as “squeezed” and “frozen out.” In sum, child care plays a pivotal role in keeping parents employed, as well as in helping those formerly on public assistance move into the paid labor force. Access to free or low-cost care or, absent this, to financial assistance with child care fees appears to be a critical element of successful efforts to promote economic self-sufficiency among families with young children. A major tension involves the distribution of available subsidies for low-income families across the poor and working-poor segments of this population. But cost of care is not the only issue that warrants careful consideration in efforts to promote self-sufficiency. It appears that attention to issues of safety and reliability, as well as efforts to help parents make arrangements that correspond to their preferences, are important as well.