Democrats’ plan may raise childcare costs for some in middle class

A package of social reforms Democrats are hashing out on Capitol Hill would pump federal money into the U.S. childcare system, with the aim of improving pay for workers and making care more accessible and affordable for all Americans.

While the program is poised to deliver free or low-cost care for poorer households with young kids, some fear its structure may inadvertently raise costs for many middle-class families, perhaps by thousands of dollars a year.

But that outcome isn’t guaranteed. Much depends on how lawmakers ultimately craft the legislation, which is still in flux, and other variables. Higher costs may also be defrayed by budget-saving aspects of Democrats’ plan — like a tax cut for families with childcare expenses and free universal preschool.

The tension could arise from two policy levers: Higher wages for childcare workers, which providers may pass on to parents, and an inability of some families to get subsidies, which puts them on the hook for those higher costs.

The typical childcare worker made $12 an hour (about $25,000 a year) in 2020. Democrats would generally raise their wages to those of elementary school teachers (who made more than $60,000 a year on average in 2020, or nearly two-and-a-half times the salary of a childcare worker).

“People who care for children shouldn’t be living in poverty,” said Melissa Boteach, the vice president for childcare and early learning at the National Women’s Law Center.

This pay boost would also help increase the low supply of available childcare, proponents said.

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Meanwhile, the average family pays anywhere from roughly $11,000 to $16,000 a year on childcare, depending on a child’s age, according to the Center for American Progress, a left-leaning think tank. (That’s about 21% of median income, at the high end, for a family of three, the Center said.)

Democrats’ plan would offer subsidies and cap costs at up to 7% of a family’s income. As a result, working families may see costs fall between $5,000 and $6,500, according to Rasheed Malik, associate director of research for early childhood policy at the Center for American Progress.

But here’s where the tension arises: Subsidies would phase in over a three-year period, based on income.

Families ineligible for federal assistance during that period would be on the hook for cost increases. Matt Bruenig, the president of think tank the People’s Policy Project estimates their unsubsidized cost of quality infant care would rise about $13,000 a year, to almost $29,000. (That higher cost would be due to the wage increases for childcare workers.)

“I am open to the possibility that the number will be higher or lower than that,” Bruenig wrote of the…