There is woefully insufficient child care capacity to meet the needs of New York families today.

Seven out of 10 children aged zero to five live in neighborhoods with insufficient child care options. Care options are especially limited for children under three; in almost half of New York City neighborhoods, the number of licensed child care seats for infants and toddlers covers just over 20 percent of the population of children under three. Over the last decade, middle-income communities in the city have actually lost child care capacity for infants and toddlers. Among the few places where infant capacity has grown in the city are higher-income zip-codes, largely the result of high-price private centers that charge as much as $40,000 per year.

Families require care options that the city’s current child care infrastructure does not provide. Only five percent of licensed daycare providers operate between 6 p.m. and 8 a.m, despite 780,000 NYC parents — 320,000 with kids aged five or younger — working those hours. Forty percent of parents who are employed regularly need care during evenings, overnight, or on weekends. Other specific needs that families may have — including need for care at or near their job site, transportation constraints getting to and from child care, children with specific developmental or medical needs, and specific linguistic requirements — all further complicate this puzzle.

Even if families are able to find a provider in their neighborhood with availability, the cost of care has become astronomical. Child care is the largest monthly bill for many New York families, and these costs can even exceed rent or mortgage costs. A 2022 state survey of providers in the city found that the typical rate for a year of center-based care was $20,800 for an infant and $19,240 for a toddler. Home-based care rates were marginally lower, at $16,900 and $15,600, respectively. However, the same survey estimated the true cost of high-quality care to be much higher, topping out at north of $28,000 per year for infants in center-based care. Other data and reporting suggests New York City families often pay much more, with rates upwards of $4,000 a month for care in some neighborhoods.

Regardless of how it is calculated, the cost of care is slipping beyond most New Yorkers’ grasp. According to a New York Times analysis, a New York City family would have to make more than $300,000 a year to meet the federal standard for affordability — which recommends that child care take up no more than 7 percent of total household income — to pay for just one young child’s care. Put another way, 80 percent of families in the city cannot afford care for even a single child based on this standard. An analysis by the Citizens’ Committee for Children found that a family with an infant and a toddler making the median income for a young family would have to spend 43 percent of their income on center-based child care (or 36 percent of their income on home-based care).

The impacts of our city’s child care crisis are felt disproportionately.

Nearly half of Black and Latinx residents indicate that finding child care is a burden, compared to 38 percent of White residents. The median cost of infant center-based child care in Queens makes up nearly 30 percent of a family’s total income, while in the Bronx, it is nearly 50 percent of the median family’s total income.

The lack of affordable care in the city especially impacts mothers. Parents, often women, may quit their jobs instead of paying for child care. Women make up 82 percent of parents who miss work for child care related reasons. The city estimates that about 375,000 parents (two-thirds of them women) have chosen or may soon choose to leave their jobs or downshift their careers because of the combined impact of COVID-19 and a lack of affordable child care. This has a long-term impact on a family’s financial stability; a New York City parent making the median income who leaves the workforce to care for their child from age birth to three will give up $480,000 in lifetime earning potential.

Children suffer, too, without quality early care experiences.

There is overwhelming evidence that the prenatal-to-three period is critical for a child’s future development and affects their physical, mental, emotional and social outcomes over a lifetime. Studies have shown that the benefits of high-quality care in the earliest years can have a lasting benefit on academic outcomes. Many young children spend the majority of their waking hours with a caregiver outside of their family. These hours hold so much potential. And yet, many parents place their children in care arrangements that are lower quality than they would like because it is the only option that meets their needs and their budget. Even families with the resources to make choices have limited insight into program quality across providers. Bouncing between child care arrangements – as many children do because of the logistical gymnastics their parents must engage in – is correlated with negative ramifications on their behavior.

Child care gaps impact everyone, not just parents of young children.

Nearly 90 percent of parents say that child care problems impact their time commitment or efforts at work. Even before the pandemic, employers nationwide lost $13 billion annually in lost productivity because of child care gaps. Stories from around the country show the reverberating effects when child care capacity is lost. As one example the closure of a day care center in a Wisconsin town meant a dental hygienist had no choice but to quit her job, leaving the dentist’s office understaffed and community members facing longer waits for necessary dental care.

Without access to desirable, affordable child care, families are leaving New York City.

From 2019 to 2022, Manhattan lost 9.5 percent of its under-five population. There is a growing trend particularly among young Black families who are moving elsewhere because it is too expensive to raise a family here; many families cite child care costs as a major factor. The exodus of families will have a domino effect: as families leave, public school enrollment will drop; funding for schools, which is directly linked to enrollment, will decrease; concerns about school quality in the wake of declining resources will drive more families out of the system. The share of New York City’s population over 65 is growing, while the population under 18 is declining, a trend with much larger economic and systemic implications.

Accessible, affordable childhood education is one potential strategy to reverse these population trends.

Over the past decade, the city has dramatically expanded the services it provides to children under five, at least in part as a strategy to keep middle class families in the city. This is largely the result of the introduction of Pre-K for All, and later, 3-K. From 2013 to 2015, the number of children enrolled in free pre-K in New York City grew from about 19,000 to nearly 70,000 – adding more students than the entire public school population of Boston. When Eric Adams ran for mayor, he spoke about the need to extend the city’s care infrastructure to better support the city’s youngest children.

However, the city’s existing child care system is insufficient to meet the need.

The city’s 3-K program is not currently available to all families, and City Hall has rolled back plans to expand it. Pre-K for All has never fully met the needs of preschoolers with disabilities, and there are still over 1,000 3- and 4-year-olds who do not have a spot in a program that can meet their needs. Many more students enrolled in 3-K and Pre-K programs do not receive the mandated special education services they are entitled to. And while there is no question that families in 3-K and Pre-K receive a tremendous benefit, most programs only run the length of the school day, leaving a gap for working parents and potentially sending parents scrambling to find care after 3PM, during school holidays, and over the summer. Operational challenges in the city’s bureaucracy have made it challenging for providers operating the city’s 3-K and Pre-K programs.

The city provides some free and subsidized child care options for infants and toddlers, as well as some full-day, year-round services for three- and four-year-olds (known as ‘extended-day’ programs), but the eligibility criteria are strict and the process to enroll can be burdensome. Estimates vary, though some figures suggest only about one in four eligible families receive the benefits they are entitled to, likely due to a mix of insufficient capacity, administrative burden, and lack of awareness. Many existing slots are empty, despite the number of families who say they need care, likely because of the challenges that families face to enroll. (We explore this issue in more detail in the sections focused on connecting families to care and simplifying access to free and low-cost care.)

Not only families are struggling; child care providers are being squeezed, too.

Even with rising costs for families, margins in child care are razor-thin, creating an untenable equation for both providers and recipients of care. Providing care has gotten more expensive over the past several years as providers seek to keep pace with rising rents, inflation, regulatory requirements, and cost of living for their employees.

The vast majority of expenses in a child care program – nearly 70 percent – are related to personnel. The staffing requirements to safely operate child care programs leave very little wiggle room: a preschool classroom typically includes up to 20 children and two adults, whereas an infant classroom may only have six or eight children to cover this same cost, driving up the per-child cost of care.

The business model most child care providers have in place only really works if they are fully enrolled at all times, because their economic margins are so right. Even for popular programs, this is rarely the case, with families moving in and out of slots at different intervals throughout the year. Programs that serve a mix of children attending part- and full-time need to fit together a complicated jigsaw puzzle to maximize capacity. For many private providers in the city, it became even harder to maximize enrollment after the city introduced 3-K and Pre-K and gave families more options for where to enroll their preschool-aged children in care. As providers lost many of their 3- and 4-year-olds who had been paying out of pocket for care, it negatively impacted their business model; infants and toddlers are far more expensive to serve on a per-child basis because of staffing and facilities requirements. This was especially detrimental to home-based providers who by design offered a mixed-age model.

The operational challenges inherent to the child care sector have led many providers to close their doors; in the first year of the pandemic alone, nearly 400 child care businesses in the city closed permanently. From 2020 to 2022, over 3,500 child care programs statewide closed; nearly 80 percent of them were home-based settings, representing a tremendous loss to communities. This trend predates the pandemic, though it has since accelerated.

Child care workers are in an especially precarious position.

Despite the share of child care budgets going to staff, 25 percent of child care workers live in poverty, perpetuating systemic inequities and fueling high turnover in the field. Child care workers are disproportionately women and women of color: 96 percent of the New York State child care workforce is female, and 56 percent identify as people of color. The median full-time childcare worker in New York City earns only $25,700, a wage that ranks 289th out of 294th among occupations, above only cashiers, dishwashers, and tour and travel guides. More than half of child care workers have household incomes low enough that they themselves qualify for a child care subsidy and other public benefits. Child care workers make far below what experts consider a liveable wage for New York City, particularly if they have families of their own to support.

Depressed wages are driving workers out of the sector. The city saw a 20 percent loss of child care workers during the pandemic, concentrated in the family child care sector, which reflects national-level trends. Employment in child care nationally is below pre-pandemic levels, with 40,000 fewer people in the workforce now than in 2019.

Within the early childhood sector, there are significant wage disparities. On average, Pre-K teachers in public schools earned the equivalent of $27.50 per hour in 2021 with health and retirement benefits, while teachers in infant and toddler classrooms earned nearly half that amount. At the lowest end of the pay scale, home-based providers earned the equivalent of less than minimum wage — $10.61 per hour — with no benefits. Home-based providers are small business owners whose take home pay is determined by the profits their day care earns; most have limited ability to raise fees any further and so their own income suffers. Nearly half of home-based providers rely on Medicaid for health insurance. Home-based providers are much more likely to be immigrant women and women of color than other workers in the sector.

Home-based providers in small family child care homes face a unique set of challenges, typically working as the business operator and sole educator. There is no option to take breaks during the day or to take time off, and the full day with children plus the administrative load means providers work extremely long hours. “High Calling, Low Wages: Home-Based Early Care and Education Providers in New York City,” a report from the Center for New York City Affairs, delves much more deeply into the specific challenges facing providers.

Providers need new revenue sources to survive.

The COVID-19 pandemic brought new federal funding that child care providers could use to weather tuition losses, bolster staff pay, address issues with their facilities, and invest in building the quality of their programs. However, those benefits have come to an end. Experts predict we will see a continued loss of child care capacity following the September 2023 expiration of $24 billion in federal funding – or what many termed the “child care cliff.” The Century Foundation estimates the end of this funding could mean nearly 6,000 child care providers across New York State will close their doors permanently, leading to a loss of care for over 250,000 children statewide.

It will take time before we see the full impacts from the end of this funding. However, there is early evidence that the ramifications could be significant. In the two months following the expiration of federal funding, 29 percent of families who responded to a national survey indicated that their child care tuition had increased, and 28 percent of child care providers reported they had already cut staff wages or had run out of funding to sustain previously implemented wage increases. The number of Americans nationwide who missed part of a week of work because of child care issues nearly doubled between September and October 2023.

Even for providers who receive government funding and should therefore have more predictable revenue, current subsidy amounts are not enough to cover their operating costs. Nationally, on average, the true cost of licensed child care for an infant is 43 percent more than what providers can be reimbursed through the child care subsidy program. Providers in New York State are reimbursed at a lower rate than federal authorities recommend. This means that providers are relying upon other income streams to cross-subsidize these programs (like philanthropy dollars), operating at a deficit, or forgoing certain expenses that would otherwise enhance quality (like greater staff compensation and training). They might also be forced to push more costs onto parents who are paying fees. For home-based providers, who are self-employed, low reimbursement rates eat away at their net income.

If families cannot pay any more in child care fees, but child care providers cannot sustain a business on their current revenue, where will that leave us?

Correcting the child care market requires intervention by the government. Thankfully, our city and state leaders recognize this need. The Adams Administration released its blueprint for child care and early childhood education in 2022, which included new investments and commitments and led to the creation of a new Office of Child Care to lead strategy and coordinate planning across city agencies. Governor Hochul has identified child care as a priority and made new investments, including expanding the number of families in the state eligible for subsidized care. The Plan for a New New York, which was jointly released by Mayor Adams and Governor Hochul, emphasized the importance of child care access, quality, and affordability and identified several strategies to reach that goal. These are all important steps forward. But we need to do more now.

The potential benefits of universal child care.

On children – The degree of responsive caregiving that children receive as infants and toddlers positively affects the connections between neurons in the brain. There is evidence that universal programs are more likely to reach their high-need participants than targeted programs, meaning that children are potentially more likely to enroll and therefore stand to benefit. Indeed, research specifically on prekindergarten programs has shown that universal programs benefit low-income children’s learning and development more than targeted pre-K programs. There is evidence that diverse early childhood programs are good for everyone.

On parents - There is an immediate impact on parent employment when child care is available. A study of NYC’s 3-K program found that mothers in districts with greater 3-K availability were more likely to be fully employed. Washington, D.C.’s universal preschool program for three- and four-year olds has driven a 10 percentage point increase in maternal employment. And research from Europe has shown child care is even more powerful than policy levers like paid parental leave at increasing women’s labor force participation. This has tremendous long-term benefits for families’ economic survival and mobility.

On providers - New York City’s rich fabric of community-based child care providers has been buoyed before by government intervention. Many of the providers fighting for survival now got their start under a federal World War II program to support mothers who had to enter the workforce, which later became a city-funded system of child care under Mayor Lindsay in the 1970s. Legacy aside, child care providers – and especially home-based providers – are signs of a vibrant community economy. Most are small businesses owned and operated by women and people of color. Supporting them, and doing so in a meaningful way, benefits the very fabric of our city. With the guaranteed revenue and a more sustainable operating model that a well-funded universal child care system would bring, providers could afford to pay workers a living wage and make tangible investments in program quality.

On our economy - The NYC Economic Development Corporation estimates the 2022 economic impact of parents leaving the workforce or downshifting careers because of caregiving to be a $23 billion decrease in economic impact, a $5.9 billion decline in disposable income (and therefore, spending) and a $2.2 billion reduction in tax revenues. In a moment when the city and state are focused on economic recovery, flipping that equation could be transformative. The long-term gains are impressive, too, with studies that project at least an $8 return for every dollar spent on early care and education.

Other places show us that a better system is possible.

While no U.S. state or municipality has a fully universal child care program, a growing number have universal preschool programs for 3- and 4-year-olds and there is increasing attention to infant and toddler care. New Mexico passed a constitutional amendment guaranteeing families the right to early care and education and dedicating revenue permanently for it. Multnomah County, Oregon (home to Portland) recently passed new taxes to fund universal preschool which included care for infants and toddlers and increased wages for child care workers.

Several countries in Western Europe have heavily subsidized or free child care. In Denmark, parents are guaranteed a child care spot and pay a maximum of 25 percent of their income (which is still much higher than most would recommend, but lower than the current reality for many New Yorkers). In Germany, parents pay tuition based on their income in some municipalities and receive free care in others, including in big cities like Berlin and Hamburg. In France, parents receive a tax credit of up to 85 percent of the cost of attending care before beginning free public preschool at age 2 or 3. Nordic states offer comprehensive public child care options and boast labor force participation rates for women that are 10-plus percentage points ahead of the U.S. Japan recently announced an expansion to its publicly-funded child care options as part of a broader strategy to make it easier for families to raise children given the country’s declining birth rate.

While there is a lot for the U.S. to learn from child care policy in other countries, it is worth noting that many of these countries with publicly funded child care also have more expansive paid-family leave frameworks. Paid-family leave is one very effective strategy to dramatically lower the demand for formal infant child care. In Sweden, for example, few children enter formal child care prior to 18 months because of the generous parental leave policies in place nationwide.

Closer to home, Canada is moving toward a $10 daily cap in family fees for child care programs. The government will heavily subsidize the cost of care for families nationwide and is spurring the development of 250,000 additional child care slots by 2026 to ensure there is sufficient supply to meet growing demand. In the first year of implementation, child care fees have already been cut in half on average.

Canada’s plan is modeled on a program previously in place in Quebec, which has capped the cost of child care for over 20 years. While the program is not perfect, Quebec has the highest maternal workforce participation of any Canadian province. British Columbia rolled out a similar program in 2018.

New York City conducted a brief, if unintentional, experiment into what a universal child care model could look like. During the early days of the COVID-19 pandemic, essential workers could access free child care with no income restrictions and minimal barriers to entry. This included free care for children under five, primarily provided by family child care homes and community-based centers. Through federal pandemic relief funds distributed as grants by the state, child care programs in the city were given extra funding to meet health and safety requirements, cash infusions for staff salaries and one-time bonuses, and more flexibility with otherwise stringent regulations. Families were able to more seamlessly access care, allowing parents to continue their work on the frontlines of the pandemic. Providers who received grant funding had more breathing room, financially, and were able to better manage through uncertainty. The COVID-19 pandemic laid bare how critical child care is to families’ survival and parents’ ability to work and revealed tremendous inequities facing child care workers. At the same time, the pandemic also showed us what is possible when the government drives more money into the child care system.

Universal child care has growing political support.

A majority of New Yorkers across political parties support expanding government-funded child care, with support for subsidizing care for a greater share of families, capping the portion of income that New Yorkers spend on child care, and increasing wages for child care workers.

Grassroots advocates have helped to drive attention to the issue, with coalitions like the Campaign for Children, a local coalition that has helped drive investments and systems change since 2011, and the Empire State Campaign for Child Care, which is bringing together stakeholders from across the state around a cohesive policy agenda to expand child care access and support providers. Providers have organized with groups like ECE on the Move, which has brought over 600 home-based providers together to advocate for policy change. The newly-formed campaign New Yorkers United for Child Care aims specifically to organize parents and would-be parents to fight for universal child care.

Legislators at both the city and state level have been pushing for a more universal system of care, though the introduced bills have yet to pass:

The state’s Child Care Availability Task Force was convened in 2018 to examine child care access, affordability, and quality in the state with then-Lieutenant Governor Kathy Hochul serving as one of its co-chairs. The group published a report in 2021 with its final recommendations. The governor signed legislation in 2022 to reconvene the task force with a mandate to “advise the state in developing a framework leading to a phased-in rollout of universal child care.”

Universal child care will require significant investments, but the cost to our city if we do nothing is much (much) higher.

A study commissioned by the coalition Raising New York estimated a total cost of up to $20 billion to provide care for every child under five in New York State and to pay all child care workers a living wage. (About 40 percent of children under five in the state live in New York City, which would put the cost of universal care for just children in the city at nearly half that total figure.) The number is high, but comes with some caveats: It does not represent a fully new investment; currently, the state spends about $3.4 billion in state and federal resources on care for children under five, excluding COVID-era relief funding and local investments. The $20 billion cost estimate assumes 80 percent of all families would take advantage of publicly-funded care, a fairly high figure; for reference, just under 80 percent of children in grades K-12 attend public school in New York State. Still, investing as much as another $17 billion represents a massive figure, but it is a cost the city is already bearing – recall the NYC Economic Development Corporation’s estimate of a $23 billion annual decrease in economic impact to the city because families cannot access affordable child care, suggesting that universal child care could essentially pay for itself with the increase in economic activity. Failing to invest in child care will stifle the city’s economic recovery and our future development.

There are many strategies the city and state could consider to fund a more expansive child care program. To raise funds for children’s initiatives, other places in the country have introduced new taxes on products like cannabis, liquid nicotine, and sugary beverages. Many states have long used tobacco and lottery sales to fund early childhood education. Some have implemented new, targeted business, property or income taxes, or dedicated portions of state or local sales tax to early care and education.

New York’s scale would likely require a multi-pronged approach to raising sufficient revenue for an expanded child care program. For example, the New York City Independent Budget Office estimated in 2018 that a tax on sugar-sweetened beverages could raise $288 million for the city annually. While this could make a dent in child care funding, it would need to be implemented in conjunction with broader revenue-raising measures.

New York City leaders should not shy away from the cost estimates for universal child care. The potential return on investment to the city and its business community – not to mention to its families, both those here now and those who may more proactively choose to raise their children here with the added support – is worth the upfront expense. We need to be bold — anything short of universal care is likely still a band-aid, because it will not take aim at the structural flaws of the child care market.

While we build toward a better future, we need to address critical challenges in the infrastructure we have today.

At the start of Mayor Adams’ term, there was real momentum around child care innovation with the publication of the child care blueprint, the subsequent establishment of the Office of Child Care, the prominent mentions of child care in the Plan for a New New York, and a significant investment from the Robin Hood Foundation. The city and state have made new investments over the past two years to expand eligibility to publicly-funded child care and make it easier to access and to incentivize new child care supply creation. However, these investments have been overshadowed by reports of city-contracted providers going unpaid and closing their doors, families being unable to find care that meets their needs, and cuts in funding for the city’s popular preschool program.

Families, child care providers, and advocates are raising alarms that our current child care system is on the brink of collapse. While the city can – and should – aim for big and bold policies, the city also needs to take critical action to shore up its existing early care and education services. Bureaucratic complexity and operational challenges are hurting providers and families, and public funds are going unspent. The safety net we have in place is already limited. Our leaders must do everything they can to strengthen it. If we neglect the child care infrastructure we have now, it will drive more providers to closure and push more child care workers out of the industry, making it even harder to ultimately expand capacity to meet the full need that our city has.

Moving toward a future with universal child care will require us to think boldly about creating child care capacity, expanding and supporting the workforce, and helping families find care that meets their needs.

Our city leaders and private sector partners need to dream big and innovate. There is real opportunity to streamline access for families through simplified enrollment processes and increased outreach; to simplify the regulations that child care providers operate under and provide more help to these small businesses as they navigate the complexities; to invest in child care workers; to create more physical space for child care businesses through repurposing existing real estate, including underutilized public schools, and incentivizing new building and development; and to enlist employers as more proactive partners. Investments in early childhood educators and child care facilities are especially critical if our policy goal is to grow the city’s child care supply.

In this paper, we present a set of ideas to save our child care system from collapse while fundamentally redesigning what it looks like for the future.

This report includes a menu of policy ideas, organized thematically and with examples of promising practices from other cities around the country and world. In the first policy ideas chapter, we will detail the issues that the city must address to more immediately shore up its existing early care and education services. In sections two through seven, we will explore ideas that could make care more accessible for families and strengthen our city’s child care infrastructure as we shift toward a universal care model.

Our ideas build on those previously put forward by elected officials; advocates like the Citizens’ Committee for Children, EdTrust-New York, the Raising New York coalition, and All Our Kin; child care providers and the groups that represent them, like the Day Care Council of New York, United Neighborhood Houses, and ECE on the Move; the labor community representing child care workers; community organizers; and critical partners in the sector like the Robin Hood Foundation. Child care providers and advocates have been fighting for a better system for decades. And Mayor Adam’s blueprint and the Plan for a New New York put forward many concrete ideas about how to support the sector. In identifying potential policies for the city to consider, we looked at all the ideas proposed by these groups, as well as emerging ideas and evidence from other cities, counties, and states. This paper provides a menu of options for policy leaders that we hope will lead to action and greater focus on solutions.