Did you know ARP Stabilization Funds had profound effects on the Child Care Industry and the Families that depend on it?

Posted on February 26, 2024


By Olivia Carrara
Leontine Young Fellow

For more information on this topic, contact Olivia at ocarrara@acnj.org

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ACNJ has always believed that investments in child care would have multiple positive impacts on the child care industry, and now we have more proof! ACNJ has previously established the importance of the child care stabilization grants through surveys and focus groups with child care providers, and now a new study by the White House confirms that, and so much more. During the Covid-19 pandemic, child care employment fell by approximately 30% as numerous child care centers were forced to close their doors. This decline in child care availability forced countless mothers out of the workplace due to their inability to find care for their children. As a remedy, the Biden Administration invested $24 billion in funding for child care providers in March of 2021. These American Rescue Plan (ARP) Stabilization funds were provided in an effort to keep child care centers from closing by issuing grants to assist with paying staff and facility fees, and maintaining the centers through periods of closures and shutdowns. While it was widely believed that these stabilization funds led to an increase in child care access, the new study revealed evidence to in fact affirm this belief, and further suggested that these funds reduced price increases, increased the number of child care workers, raised their wages, and even increased maternal participation in the labor force.

The study published by the White House used comparison groups to identify the impact of the stabilization funds. The study first estimated the effect the funds had on child care prices and found that, on average, families saved roughly $1,200 per year when stabilization funds were provided. Evidence showed, following the disbursement of stabilization funds, that wages for child care workers increased by 10% and child care employment increased by about 7%. The study used this information to conclude that the stabilization funds were primarily spent on decreasing child care prices for families, while simultaneously increasing child care wages and employment.

On average, the ARP Stabilization funds saved families roughly
in child care costsĀ 
per year.

Wages for child care
workers increased by

Child care
by approximately


The study went further to investigate whether the stabilization funds led to changes in the maternal labor force. The researchers examined employment patterns in mothers of young children compared to women with older children and those without children, thereby showing the effects child care access may have on maternal workforce participation. The trends were similar prior to the pandemic and stabilization funds, indicating that the groups can be compared. The stabilization funds led to a 2% increase in labor force participation within 6 months. After two years, it was revealed that the participation of mothers with young children in the labor force increased by approximately 3%. The participation rates did not change for mothers with older children, revealing that an outside influence led to the other increases.

With all of the information gathered from the study, researchers were able to conclude that stabilization funds can have profound effects on child care supply, and increasing child care availability can have impacts on the labor market. The data suggests that the ARP stabilization funds had a benefit-cost ratio of roughly 2:1. The success of the ARP stabilization funds reveal the countless benefits that can result from investing in, and supporting, the child care industry. Funding child care can decrease child care prices, increase wages for child care workers, close the employment gap, and increase the number of mothers in the labor force--all factors that contribute to a better functioning and more successful society.