New plan aims to lower costs for Michigan families and providers, boost workforce
LANSING, Mich. (April 18, 2024) — Today, Sen. Kristen McDonald Rivet (D-Bay City), Sen. Sarah Anthony (D-Lansing), Sen. Kevin Hertel (D-St. Clair Shores), Rep. Alabas Farhat (D-Dearborn), Rep. John Fitzgerald (D-Wyoming), Rep. Denise Mentzer (D-Mt. Clements), and Rep. Jaime Churches (D-Wyandotte) introduced a comprehensive plan to make child care more affordable for Michigan families and sustainable for child care professionals.
Michigan, like the rest of the country, is in the midst of a child care crisis. In the last decade, America has lost almost 20% of its child care capacity. In Michigan, the loss is doubled at 40%. Private child care (receiving no public funds) serves about 80% of children birth to 5, but most are struggling to keep their doors open. As closures become all too common, centers that do stay open often have waiting lists that exceed two years, particularly for infants.
“Years of patchwork fixes on a broken system have cost Michigan families and cost our economy,” said Sen. McDonald Rivet. “It’s past time to make the necessary public investment to set all our kids up for success, make child care affordable for parents and providers, and strengthen Michigan’s workforce.”
The Child Care for All plan includes the following components:
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Working Parents Tax Credit (SB 838; HB 5640): Put dollars back in the pockets of parents with children from infancy to three years old. Based on the same eligibility as the Earned Income Tax Credit, this tax credit is pro-work and pro-family. The credit will be refundable and paid monthly for an annual total of $5500 per young child per family.
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Update and Modernize Licensing Requirements (SB 837 & SB 839; HB 5638 & HB 5639): Ease the financial burden on child care providers and professionals and help transition into a PreK for All state.
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Streamline & Expand Access to Child Care Subsidies (SB 836; HB 5637): Re-establish provider rates to the FY 2023 levels and expand “contact-based” subsidies for providers caring for children with special needs and/or working in areas with concentrated poverty.
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Public Investment in Child Care (Budget Recommendations): Operational grants and start-up capital for licensed providers caring for infants and toddlers will help stabilize child care businesses and free up resources to increase staff wages.
Since the pandemic, the scope of the child care problem has reached a tipping point in Michigan’s economy, exacerbating workforce shortages, and impacting productivity. We have dropped to 39th in the nation for workforce participation. The lack of child care is the top reason young workers are choosing not to enter the workforce and finding a solution is now ranked as the number one concern for employers. It is a listed priority of the Michigan Chamber of Commerce and local and regional chambers around the state, Business Leaders of Michigan, and virtually every major employer in the state.
“I am extremely committed to making quality child care more accessible and sustainable for all families in our state,” said Sen. Anthony. “We have a long road ahead to ensure every working family has access to high quality, affordable child care. As Senate Appropriations Chair, I believe it is crucial we continue to chip away at this problem by investing in child care professionals, streamlining licensing requirements for providers, and reducing financial barriers for families.”
There are a number of factors causing child care businesses to struggle even when parents are paying so much for care. At the core of Michigan’s child care problem is a broken business model.
“As the father of two young boys, I know accessing quality, affordable child care is no easy feat,” said Sen. Hertel. “Far too many parents across our state have to choose between paying their grocery bills or paying their child care bills — and some make the difficult decision to leave the workforce altogether to become a full-time caregiver. This crisis is harming families, harming children and harming our economy. If we want to build a Michigan where everyone can thrive, we must take actionable steps to improve care access, affordability, and quality.”
On average, it takes roughly $15,000 a year to provide full-time care for a child under the age of 5 (full time defined as 7:00 am to 6:00 pm). In a state where over 60% of our jobs pay less than $50,000 a year, the annual tuition presents a considerable burden on working parents, often reaching as high as 40% of their take-home pay.
“Families across Michigan are facing high child care costs, made worse by long wait lists and a lack of available providers. The financial challenges are undeniable. That’s why I’m proud to support the Child Care for All plan, which is a crucial step toward building a future where every parent can afford to work and raise a family,” said Rep. Fitzgerald. “This plan would make child care both more affordable and accessible by investing in new child care facilities and supporting parents who face this financial hurdle. Let’s unite as Michiganders in supporting our working families and ensuring our children thrive from the start.”
“As someone who previously worked in a daycare center, I have witnessed the economic, social, and emotional obstacles that working families encounter when trying to access child care,” said Rep. Churches. “I am eager to partner with our House and Senate colleagues and reinvest in Michigan’s workforce, economy, and families in order to tackle our child care crisis.”
State licensing requirements rightfully impose adult-to-child ratios on these businesses to ensure safe and quality care. They range from 1-3 for infants to 1-12 for four-year-old children. Additionally, facility costs are higher than in most businesses due to the necessary safety and education needs of very young children. Covering those costs leaves a very small margin left to pay staff a living wage. Most providers make less than $15 an hour and over 20% receive at least one public safety net benefit.
“Safe and affordable child care is not a luxury; it’s a necessity. I have heard from countless constituents about the difficulties they face trying to juggle work, school, and child care responsibilities,” said Rep. Mentzer. “This package is an overdue commitment to investment in child care, ensuring Michigan remains a place to raise families for generations to come.”
Michigan’s child care sector is in a state of rapid financial decline and only an immediate, sustained public investment will change its course. The plan calls for an immediate investment of $1.5 billion. It’s a substantial investment but the total cost pales in comparison to the cost of no action. According to a recent study from the US Chamber of Commerce, the Michigan Chamber of Commerce and the Early Childhood Investment Corporation, Michigan loses $2.8 billion annually due to the lack of reliable child care in the form of workforce productivity and economic gains.
“One of the most consistent findings during my time on the Growing Michigan Together Council was the need for high quality, affordable child care,” said Rep. Farhat. “These investments are not only necessary but nonnegotiable for our state to become competitive, attractive to newcomers and supportive of our existing residents. Child Care for All means more professionals in the workforce, peace of mind for parents, and a more resilient Michigan.”
The Child Care for All bills have been assigned to the Senate Committee on Housing and Human Services and House Committee on Tax Policy respectively.
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