How Childcare Policy Is Changing in the U.S. in 2023

The childcare industry has experienced a drastic shift since the pandemic started in early 2020, impacting the economy and workforce. As a result, the country is seeking ways to invest in the childcare space and address the issues that require reform.

During the U.S. Chamber of Commerce Foundation’s The Drumbeat Interview Series, Abby McCloskey, Founder and Principal of McCloskey Policy LLC, discussed the future of childcare policy in the United States.

Childcare Has Taken a Hit Since the Pandemic

McCloskey stressed the impact the past few years have had on the childcare space, noting three major changes. 

“The first, and probably the biggest for all of our listeners, was the pandemic, which rocked the childcare industry and the world of working parents across the country,” she said. “When schools closed [and] childcare centers closed, mothers of young children's workforce participation dropped off a cliff because you can't care for your young kids and work at the same time without another care provider.”

“This really moved the conversation around childcare and its integration into our economy and workforce to the center stage of our public discussion, and it resulted in a historic amount of money — around $50 billion being injected into the childcare industry,” she continued.

The second change was the creation of Build Back Better, McCloskey said.

“It was a really comprehensive vision for how we would rethink early childhood in this country, but it remained a partisan approach,” she said.

Though the original Build Back Better plan was never passed in its entirety, some portions were later incorporated into other legislation and eventually passed.

McCloskey added that the third thing is a combination of the first two: “a renewal of conversations around whether there are bipartisan reforms we can pass on these policies because we understand the public appetite for reform is really high.” 

McCloskey noted that a polarized political environment is not going to achieve real reform.

“We're seeing a reemergence of bipartisan working groups and attention for reforms that could actually get through and last, and change the landscape for working families and their kids in this country,” she said.

There Is Increased Momentum in Childcare Reform at the Federal Level

McCloskey believes there’s hope for “increased progress and momentum at the federal level, even with the divide of Congress.”

However, she noted these are more “single hits as opposed to home runs.”

“I could see, for example, reforms around how childcare benefits are taxed,” she stated. “Right now, they could be taxed more like how healthcare benefits or retirement benefits are, and there's some bipartisan energy to change that. Or we could address the existing employer tax credits for setting up childcare facilities, which currently don't do much for small businesses in particular because of their size and other aspects of that credit.”

“I can see movement at the federal level, but when we're thinking about big things and big reforms in the childcare and education space, my attention is moving to the states over these next two years in particular because there's been a tremendous amount of innovation happening at the state level in the childcare space,” she continued.

For example, Colorado has created a new Department for Early Childhood to streamline programs that once were spread out across multiple departments. Additionally, Michigan and Kentucky are piloting programs that spread funding for childcare across the states.

“Even right there, you see purple, blue, [and] red states all experimenting with different ways to deliver childcare support and reconcile the programs we have in place,” McCloskey said. “And I expect to see even more of that here over these next few years.”