While many sectors are recovering from the impacts of the pandemic, the early care and education (ECE) industry is being left behind. Despite evidence of job growth and consumer confidence, many families feel like economic security remains out of reach. One of the largest expenditures for families is child care; however, the ECE crisis has made child care inaccessible and unaffordable for far-too-many families across the country. At the root of this crisis is the lack of investment in the care infrastructure – both workforce and facilities.
Child care is fundamental to our economy and requires investment in the buildings and people central to the ECE ecosystem. High-quality facilities and adequately compensated educators are critical to providing families and children with safe, nurturing space for early care and education. Investments in early care and education creates both immediate and long-lasting benefits for individuals and society, in the form of children’s social and intellectual development, parents’ ability to participate in the workforce and providers’ ability to operate a small business and create jobs. LIIF firmly believes that comprehensive investments in ECE’s physical and human infrastructure are necessary to address the child care crisis and for the growth of our economy.
The physical facility is a critical but often overlooked component of ECE program quality, and growing research indicates the importance of space, design and the built environment to child development. LIIF strongly believes that child care facilities should be elevated as a central tenet of any conversations on child care. This includes the supply, quality and proximity of child care facilities.
Child care supply gaps across the country greatly impact families’ ability to access child care. Currently, our nation doesn’t have enough licensed child care spaces to serve the families and children who need them. The Bipartisan Policy Center found that nearly one-third of children lack access to formal child care facilities. Communities of color and low-income communities bear the biggest burden of the limited supply of available care options. Addressing the child care crisis requires increasing funding to build child care facilities so that there are enough spaces for children; unfortunately, limited resources and structural inequities make it challenging to build new child care facilities. As a national community development financial institution (CDFI), LIIF works to flexibly deploy capital to build new child care facilities to address supply constraints. For example, the Brighter Future Fund (BFF) is a Special-Purpose Credit Program (SPCP) created as part of Goldman Sachs Bank’s “One Million Black Women” initiative. BFF provides financing for ECE facilities for programs led by Black women and serving Black families.
Research shows that developmentally appropriate environments improve children’s learning and development. Unhealthy conditions in child care facilities can pose a threat to children’s safety. In addition to increasing the supply of facilities, we must invest in improving existing facilities. Investments that help providers exceed the basic health and safety requirements contribute to strong outcomes for children. To ensure child care facilities are in good condition, providers must have access to sufficient capital to pay for renovation costs. Working with governments to increase funding helps ensure ECE providers build and maintain facilities that serve children in all communities. LIIF is the fund manager for the California Department of Social Services Infrastructure Grant Program (IGP), a $350.5 million small-dollar grant program that since 2022 has been funding upgrades and expansions to ECE facilities across the state, including thousands of family child care providers who operate out of their homes.
Lastly, proximity to child care facilities is crucial. Communities must be built with children and families at the center. This looks like intentionally designing communities that center child care alongside other frequently used assets such as health clinics, grocery stores and affordable housing. This community development strategy – what LIIF calls co-location – has been employed successfully in areas across the country and is key to ensuring families have access to critical community amenities. LIIF is a key partner in Build Up Oregon, a partnership supporting the co-locating of ECE facilities and affordable housing to create or preserve spaces for at least 600 children. LIIF and other CDFIs are partnering to leverage existing best practices and develop and test new models to address the complex challenge of supporting both ECE and affordable housing.
At its core, ECE is a people business. High-quality care also requires investments in a strong and thriving workforce that provides services to children and families. Early educators provide a critical foundation for children to learn and develop, thereby positively impacting children’s life outcomes. Yet, there is a long history of undervaluing this important work. Care work and early learning work, with a legacy rooted in the labor of enslaved people and domestic servants, has long been relegated as “women’s work.” Today, women of color make up a large percentage of the ECE sector’s workforce — and they remain woefully undercompensated. Child care and early learning educators consistently face low wages compared to workers in all sectors. Among full-time, year-round child care workers, women are typically paid $11.54 per hour and men are typically paid $12.58 per hour.
LIIF recognizes that low wages, inadequate benefits and lack of supports are key drivers of staff turnover. The staffing shortage and high turnover rates within the ECE workforce pose significant threats to the stability and quality of services provided to children. We firmly believe that investing in a well-compensated workforce is essential for the long-term improvement of program quality. LIIF believes that increased wages and benefits will make the ECE sector more attractive and competitive, strengthening its stability. For example, LIIF fully supported the California ECE Coalitions’ efforts to advance a successful state budget request focused on increasing wages for providers.
LIIF is also a committed to supporting the advancement of federal policies that build dedicated funding streams to support and stabilize the ECE workforce. This includes lending our support in partnership with other advocates to urge policymakers to increase federal investments in the ECE workforce. Recently, LIIF signed on to a letter, led by the National Women’s Law Center to the Office of Management and Budget (OMB), highlighting FY25 ECE priorities ahead of the President’s budget. The letter includes calls to improve compensation and other critical supports to recruit and retain a talented ECE workforce. We also submit comment letters to federal agencies to provide recommendations on regulatory action and proposed policy changes. Last month, LIIF submitted a comment letter to the Office of Head Start, the Administration for Children and Families (ACF) and the Office of Health and Human Services (HHS) to offer input on improving compensation and workforce supports for Head Start staff.
The child care crisis is an economic crisis that requires investments in human and physical infrastructure. These two pillars of the ECE ecosystem go hand in hand and must be simultaneously centered in solutions to ensure families child care needs are met. LIIF values and lends support for investments across the ECE ecosystem. This includes investing in the ECE infrastructure – both physical and human – to ensure all families have access to quality child care.