NJ’s Childcare Challenge

By Alexis Bailey, NJBIA Director of Government Affairs On Dec 30, 2021

The COVID-19 pandemic proved childcare is vital to our economy. According to a recent study conducted by Ready Nation, 19% of mothers of infants and toddlers dropped out of the workforce due to childcare issues during the pandemic.

Working parents, especially mothers who disproportionately bear the brunt of childcare responsibilities, need access to high quality childcare options in order to participate in the workforce and support their families. New Jersey is in a unique position to reevaluate how we support the childcare industry and the families it serves during the new legislative session.

There are a few key areas that can make a substantial difference for working parents and childcare providers, many of whom are women- and minority-owned businesses.

As the state moves to expand access to pre-K education, it is imperative that private childcare providers be included in this expansion, in addition to public school districts. A mixed delivery system that includes private and public providers will ensure that children of all ages have quality care options. Without the ability to serve 3- and 4-year-olds, most private childcare centers will not be able to stay in business.

Due to higher required staffing ratios for infants and younger children, childcare centers rely on serving 3- and 4-year-olds to remain financially solvent. If these centers close because pre-K offered by public schools has crowded them out of the market, New Jersey families will have fewer options for the care of infants and toddlers, effectively eliminating the ability of these parents to enter the workforce.

During the pandemic, childcare centers received subsidy payments based on enrollment, rather than actual attendance. This payment model shift allowed centers to receive a steady stream of income and better plan for business expenses. Ensuring a sustainable funding source to make the enrollment-based subsidy model permanent is an essential step to support private childcare centers.

Last month, Gov. Phil Murphy signed bill S-4065 into law expanding the child and dependent care expenses tax credits for families making up to $150,000 annually for tax year 2021. But the need for financial assistance for working families remains present beyond 2021 and must be addressed.

Our state continues to face unprecedented workforce shortages. Nationally, the female labor force participation rate is the lowest it has been in three decades. By making the tax credit expansion permanent, the Legislature can improve affordable access to childcare so that more parents of young children can go to work.

As we continue toward economic recovery post pandemic, high quality childcare access that emboldens the workforce and center-based providers must remain a paramount concern for policymakers.

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