This is an excerpt from the full report.
Nearly 250,000 of Colorado’s children live in families that are low income, despite having a parent who works full-time, year-round. One of the largest expenses these families face is the cost of child care. Reliable child care is critical for working parents at all income levels, but it is particularly critical for low-wage workers who lack workplace flexibility. High-quality child care is also important for children’s development. For low-income children, it can help bridge the achievement gap between them and their more affluent peers.
Unfortunately, the high cost of care puts reliable, high-quality child care out of reach for many of the families who need it most. In fact, the cost is so high that many moderate-income families also struggle to afford quality settings. In Colorado, as in nearly every state across the country, center-based care for two children of any age costs more than the state’s median rent.
Colorado’s child care subsidy program can make a significant difference. For the low-income families who receive them, child care subsidies can make high quality care affordable. But due to income eligibility limits and participation barriers, many families are excluded from the program despite being unable to afford high-quality care without assistance.
This report uses the National Center for Children in Poverty’s Family Resource Simulator to examine the effectiveness of subsidized child care in Colorado in addressing the affordability challenge. The report analyzes subsidized child care in the context of other “work support” benefits, including tax credits, food stamps, and public health insurance.
NCCP’s Family Resource Simulator –
A Tool for Assessing Work Support Policies
The Family Resource Simulator is an innovative policy analysis tool that simulates the impact of federal and state work support benefits on the budgets of low- to moderate-income families. The results illustrate how a hypothetical family’s resources and expenses change as earnings increase, taking public benefits into account. The Simulator makes it easy to assess how effective a state’s policies are at encouraging and rewarding work. NCCP also uses this tool to model the impact of hypothetical policy reforms.
The Family Resource Simulator is currently available, or under development, for 17 states – Alabama, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, New York, Pennsylvania, Texas, and Washington – and the District of Columbia. Each state Simulator can profile families in up to seven localities. Also coming soon to NCCP’s website is the Basic Needs Budget Calculator, a related tool that shows how much a family needs to make ends meet without the help of work supports.
Results show that for families who receive a child care subsidy, this benefit can help close the substantial gap between low earnings and basic expenses, while potentially providing access to high-quality care. Yet families with subsidized care can find themselves penalized for working and earning more as just a small raise can trigger a substantial loss in benefits. This can leave families worse off than they were before, despite increased earnings. The following pages illustrate these policy challenges and discuss possible solutions that would better help Colorado’s low- to moderate-income workers meet their child care needs.