A bipartisan effort by US lawmakers seeks to expand the provisions for the child tax credits to $2,000 per child, which could even recognized in the upcoming tax season. Care.com CEO Brad Wilson joins Yahoo Finance Live to discuss what this legislation could mean for childcare costs and parents in the United States.
"A lot of this research also suggests that this would lift a lot of families out of poverty, and I think that the running number right now is about 400,000 children," Wilson says, identifying the tax credit expansion is far lower than the temporary $3,500 per child pushed by President Biden in 2021. "So it's a start, but I think... the data that we certainly see in our cost of care reports suggests that we need a whole lot more."
SEANA SMITH: The new bipartisan proposal unveiled in Washington this week could potentially boost the child tax credit. This would affect taxpayers this year. Now, the proposal coming, as a child care crisis worsens in the US. There's new data out from care.com that found that a third of American parents are draining their savings just to afford child care.
Here with more on that, we want to bring in Brad Wilson. He's care.com's CEO. Brad, it's great to have you here. So let's talk about what is being proposed on Capitol Hill, and then tie that in to what you found in your latest data that you have out here. So there's a new plan on Capitol Hill. It plans to include $33 billion to partly extend a major expansion of the child tax credit that was initially allocated for just one year.
Talk to us just about how much of that would really help what is going on here. And if we don't see this approval, how much worse is child care crisis could potentially get?
BRAD WILSON: Hey, thanks for having me this morning. Well, look, what I would say is that it certainly helps. But I only think it gets us part of the way there. So we're really pleased that the government is leaning back into some form of help for American families with child care. But I think the proposal that they're suggesting, which would essentially put about $2,000 per child of tax credit with American families. That's short of what was issued in the pandemic era of around $3,500 per child per family.
So in effect, it will help. I think what we're seeing and what has been suggested is that if you're making between $10,000 and $50,000 per year, the Tax Policy Center has cited that this will save roughly about $1,100 for American families. And, of course, a lot of this research also suggests that this would lift a lot of families out of poverty. And I think the running number right now is about 400,000-- excuse me, 400,000 children.
So it's a start. But I think the data that we certainly see in our cost of care reports suggests that we need a whole lot more.
BRAD SMITH: And so with that in mind, we've also seen companies try to enact even more within some of their employment offerings to make sure that they can also help with that, or even provide facilities. What do we need to see in both of those efforts, both in facilities that come online, as well as in company efforts to help some of their employees with this matter?
BRAD WILSON: Yeah. That's right. So we see that as well. So a lot of employees are asking their employers to have more holistic care. And so while on site or near premise facilities are certainly fashionable and certainly needed. What we're also seeing, though, really is a lot of employees and their families want more flexible care and choice.
And so 91% of our families surveyed in our recent cost of care report have had to make alternate work arrangements as a result of childcare and the impact that having children have had on their families.
And so what that often means is they need more flexible work arrangements. And it also means that they need in-home care as well. So a lot of the policy and the child care and dependent care block grants that have been issued through the government really have focused on mostly in-center care. And a lot of what many companies, previously, had offered was really around center-based care.
But I think more and more what we're seeing is that whether it's government or enterprises, there's this flexibility that's desired by employees and American families. And that's certainly what we've been helping with and taking a leadership position in.
SEANA SMITH: And Brad, the trends that we have seen child care service costs, they've soared. They're increasing more than twice the overall inflation rate in just 2023. If this issue isn't addressed, how much more do you think people could potentially be paying for child care then over the coming years?
BRAD WILSON: Yeah. Let me hit a couple stats because you mentioned it. But over-- we've done this study now for 11 years. And what we've found, and what we typically track are costs and the impact it has on American families. But also, we take a look at macro trends. So since we've been doing this report for 11 years, daycare costs, nanny costs, and family centered care costs have all risen between 60% and 80% over that 11-year period. To put that in perspective, inflation over a 10-year period in a cumulative fashion has been around 30%.
So the costs have been exorbitant. And really, what's happening is not only are the costs rising, but you're seeing availability lessen as a result of the pressure on very thin margin daycare centers. And so that's creating less availability for American families, which is forcing them to explore alternate options, which is why I mentioned some of the in-home care and flexible arrangements that we talked about.
So in short, I think when you're asking American families to pay 24% of their household income, which is what we find in our report, and now, what we're learning is greater than one-third of American families are dipping into savings, this is a major economic issue. And so there needs to be some form of contract between families, government, and enterprise to solve this because if families are depleting their income and their savings, that's money that's not going back into the economy. And that's going to hurt overall growth for the US economy.
BRAD SMITH: Brad, to what extent do you expect child care to be on the ballot in 2024 in the general elections?
BRAD WILSON: It certainly will be on the ballot. I think what we see in our report is that a great majority of families have suggested that childcare is a key issue for the upcoming presidential election. In fact, only the economy was cited as an issue more important to them.
So I think we will see this as something front and center, and the people will be advocating for. And, of course, we know that this current administration has made it a bit of a point of emphasis with the executive order last year on child care, which essentially directs the Department of Health and Human Services to effect policy to create more consistent and quality and affordable child care.
The Republican candidates have been a little more vague on their policy. We've seen the questions asked in recent town halls. And the specifics around their details and what they would support are certainly lacking. So I think it's going to be a prevalent issue. And I think you'll see more and more discussion on it in the upcoming debates.
