Childcare costs are debilitating for low-wage workers in Michigan

By: - December 29, 2019 6:26 am

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Among other necessities, affording childcare has become a struggle for Michiganders, a problem that radiates to other parts of life.

Childcare in Michigan can cost more annually than college, according to the Economic Policy Institute, a nonpartisan think tank in Washington D.C., that examines the economic needs of working people. The average annual cost of care for a four-year-old is almost $9,000 and it’s $11,000 for care for an infant.

This hits minimum-wage workers particularly hard. Infant care costs on average 55.3% of earnings for this group. A full-time, minimum-wage worker in Michigan makes $19,656 a year. And after paying for infant care, they would have less than $9,000 to cover living expenses for the entire year — less than $1,000 per month.

The annual salary of that same worker wouldn’t be enough to cover the cost of care for an infant and a 4-year-old. The average cost of childcare adds up to $19,751 a year, although some facilities do provide a discount for having more than one child enrolled.

Gilda Jacobs, Michigan League for Public Policy president and CEO said though eligibility to receive childcare funds has become easier in the past few years, the state has a lot of work to do.

“In order to be able to work in our state, you need a few things to be taken care of. You need your children to be taken care of and you need transportation to get to where you need to go,” Jacobs said.

Michigan has to uphold a dialogue about barriers to entry for employment, Jacobs said, and this includes getting the business community to get involved in improvements as stakeholders.

“With high unemployment, the business community is saying, ‘Wow, we really have to take a look at the fact that we have people not coming to work for us because they have this barrier, because they don’t have childcare for their kids,’” Jacobs said. “There’s starting to be conversations.”

In fact, childcare workers often struggle to afford childcare for their own children, according to the Economic Policy Institute. The median pay for a childcare worker in Michigan is a little more than $22,000 a year. So almost half of a worker’s pay would go to getting childcare for their own infant. 

Jacobs said Michigan needs to start looking at the job of being a childcare provider as a career choice and these workers need to be paid what they’re worth for such an important job. 

Democratic presidential candidate Sen. Elizabeth Warren (D-MA) answers questions from a panel member at the Frank LaMere Native American Presidential Forum on August 19, 2019 in Sioux City, Iowa. | Stephen Maturen/Getty Images

One of the leading voices in childcare reform and paying childcare providers higher wages is presidential candidate U.S. Sen. Elizabeth Warren (D-Mass).

Warren has proposed a universal childcare and early learning program, with the bulk of funding covered by the federal government. Her plan would allow families to opt in for childcare at affordable costs and free for any family falling below 200% of the federal poverty line. 

The federal poverty line for households of four in the 48 contiguous states and Washington D.C. is $25,750. A family with two parents and two children with a household income of under $51,500 would receive free childcare.

She introduced a bill in the U.S. Senate in June to create the program. The bill has since been referred to the Senate Committee on Health, Education, Labor and Pensions. 

Warren said in an article she wrote for Medium the entire cost of the program can be covered by her “ultra-millionaire tax” with plenty of funds to spare for other projects.

In Warren’s plan, childcare providers would take on educational responsibilities and be compensated similar to teachers. Local communities would create a network of organizations meeting federal requirements for care.

U.S. Rep. Debbie Dingell | Andrew Roth

An identical bill was co-sponsored by U.S. Rep. Debbie Dingell (D-Dearborn) in June and referred to the House Committee on Education and Labor. Michigan lawmakers have a large voice in this committee, with U.S. Rep. Andy Levin (D-Bloomfield) acting as vice chair and U.S. Reps. Haley Stevens (D-Rochester Hills) and Tim Walberg (R-Tipton) also serving on the panel.

Warren isn’t the only presidential candidate to tackle the issue of childcare costs. She and fellow presidential candidate U.S. Sen. Amy Klobuchar (D-Minn.) co-sponsored a bill that would put a cap on out of pocket expenses for families paying for childcare, introduced in February. 

The Child Care for Working Families Act would also insure that families wouldn’t pay more than 7% of their household income for childcare if they earn less than 150% of the state’s median income. A family in Michigan earning less than $85,581 a year would have the cost of childcare capped at $5,990 annually. 

Kirsten Gillibrand after the second Democratic debate | Andrew Roth

Former presidential candidates U.S. Sens. Kamala Harris (D-Calif.) and Kirsten Gilibrand (D-N.Y.) co-sponsored this bill. Former presidential hopeful U.S. Rep. Eric Swalwell (D-CA) co-sponsored a related bill in the U.S. House.

There’s been some action at the state level.

Gov. Gretchen Whitmer has set her eye on family welfare in the state and signed an executive order on Wednesday to create a taskforce examining the causes of poverty for families who struggle to afford childcare and other necessities.

The Michigan Poverty Task Force within the Department of Labor and Economic Opportunity (LEO) will be composed of representatives from several state departments and will be responsible for making recommendations to the governor to alleviate poverty.

Gov. Gretchen Whitmer at her year-end press conference, Dec. 18, 2019 | Susan J. Demas

Whitmer’s plan really “ties a bow” on a new movement to understand the causes of poverty and best help families thrive, Jacobs said.

“It’s a two-generation approach,” Jacobs said. “You can’t just help kids without helping their parents and you can’t help parents without helping their kids.”

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Anna Liz Nichols
Anna Liz Nichols

Anna Liz Nichols is a former Michigan Advance intern. She is a Michigan State University graduate who has reported for several publications, including MLive and Michigan State University’s award-winning student paper, the State News, where she covered the many tendrils of the Larry Nassar sexual abuse scandal.