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The Child Care Conundrum: Economic Realities for ALICE Families

3 min read

In today’s economy, many families face numerous challenges, but perhaps the most formidable is the soaring cost of child care. For ALICE (Asset Limited, Income Constrained, Employed) families who have one or more jobs that don’t pay enough to cover basic living expenses, the burden of accessing affordable, high-quality child care can be overwhelming.

A 2019 UAMS study highlighted staggering child care costs: $7,280 annually for an infant, $6,934 for a toddler, and $6,240 for a preschooler. Higher-quality care increases these costs to around $10,000 a year.

For an ALICE family of four with two adults and two children under 5, the survival budget sits at $46,812. This means dedicating nearly a third of their household income to child care or almost half to better-quality options. This financial strain forces tough decisions, such as leaving the workforce or settling for subpar care.

Lack of access to child care is a growing threat to workforce recruitment and retention. 

ReadyNation estimates the annual economic impact of the child care crisis in Arkansas is $793 million. Taxpayers lose an average of $1,470 per working parent in lower income tax and sales tax revenue. Since 2018, the impact on families, businesses and taxpayers has more than doubled, resulting in many Arkansans, predominantly women, leaving jobs to care for their young children. As a result, the Arkansas workforce participation rate has reached record lows (58.5%), and productivity has declined.

High-quality early childhood education is essential for a child’s cognitive, social and emotional development.

The brain develops faster from birth to age 3 than at any period in life, building the foundation for future learning, behavior and health. Whether it’s in a center or through a home-based program, stimulating learning opportunities and nurturing, responsive relationships are crucial to healthy brain development.

Unfortunately, children from ALICE families often miss out on high-quality early learning opportunities because of the high tuition costs, which can create long-term disadvantages in their education and overall well-being.

Attracting and retaining early childhood educators is difficult because providers cannot pay professional salaries and benefits.

Early childhood educators often lack the same credentials as K-12 teachers, therefore making less and facing more financial challenges. This creates a cyclical problem of retaining staff and maintaining high-quality programs while ensuring affordability. ALICE families can’t afford high tuition to fund better-quality care. Consequently, child care providers can’t pay their employees adequately, prompting many of these educators — many of whom are ALICE themselves — to seek higher-paying opportunities outside the field.

As one participant in the UAMS Arkansas Child Care Market Price Study focus group expressed, “I made more money flipping burgers as a manager at Sonic than I do taking care of human beings.”

Addressing the child care crisis requires a multifaceted approach. It involves policy changes, increased funding for subsidies or tax credits, and investment in high-quality, affordable options. Employers can play a crucial role by offering flexible work arrangements or on-site child care support to alleviate some of the burden on working parents. Excel by Eight is currently leading the charge on a business coalition to help move the needle for Arkansas families.

At Excel by Eight, we believe every child in Arkansas deserves a strong start, but we recognize that not every child starts in the same place. Our hope is despite being a rural state, home to over half a million ALICE families, Arkansas can be a place where all children have a strong start to reach their full potential.

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