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Child Care Expenses Make Middle-Class Incomes Hard to Reach

August 29, 2018

Most Americans believe that through hard work and saving they can secure an economically sound, middle-class lifestyle. But for many working families, the high price of child care makes this goal extremely challenging.In this brief, we present estimates of the number of families that cannot maintain a middle-class income as a result of child care expenses. We find that, indeed, many working families cannot attain middle-income status because of child care expenses, while many additional families maintain this status by relying on unpaid child care, informal arrangements with family or friends, or below-market-rate services, potentially from unlicensed care providers. An even greater share of middle-class families would be pushed out if they incurred typical child care costs.

Data Snapshot: Poorer Working Families With Young Children Are Unlikely to Afford Child Care

December 15, 2017

Low-income families with working parents face significant burdens paying for child care, which can function as a barrier to work and often means parents must rely on child care arrangements that are less formal and less stable. Amid national concerns about the high cost of child care, it is important to keep this issue at the forefront. Given the especially high costs of care for very young children, this snapshot highlights the child care costs faced by families with a child under age 3. Figure 1 shows the share of families paying for child care (bottom sections) by their income level. As a family's income-to-poverty ratio rises, they are more likely to pay for child care. Poorer families who do pay for child care are much more often paying over 7 percent of their income on child care, the current benchmark of affordability from the U.S. Department of Health and Human Services.

Data Snapshot: Working Families with Young Children and No Out-of-Pocket Child Care Struggle Financially

December 15, 2017

Working families with young children face substantial barriers in accessing and affording quality child care. Figure 1 shows that among working families with a child under age 3, those who do not pay for child care are more likely to live in poor or low-income families than those who do pay for child care (61 percent versus 45 percent). 

Doing More for Our Children: Modeling a Universal Child Allowance or More Generous Child Tax Credit

March 16, 2016

Child poverty in the United States remains stubbornly high, with 12.2 million children living in poverty in 2013. Nearly 17 percent of children in the United States lived in poverty in 2013 -- a higher rate than for other age groups, and considerably higher than the child poverty rate in other advanced industrialized countries. The U.S. deep child poverty rate -- children who live in families with incomes less than half of the poverty line -- was 4.5 percent of all children in 2013, meaning nearly 1 in 20 children live in families that cannot even afford half of what is considered a minimally adequate living.One key policy for reducing child poverty is the child tax credit (CTC) -- which reduces the child poverty rate from 18.8 percent to 16.5 percent of American children. There is broad acceptance of the importance of the CTC, and key expansions to the CTC were made permanent at the end of 2015. At a moment when leaders ranging from President Barack Obama to Speaker Paul Ryan are talking about poverty, now is an opportune time to explore policy options that would build on this success. This report models two approaches to reduce child poverty in the United States even further -- a universal child allowance and an expanded CTC.A universal child allowance is a cash benefit that is provided to all families with children without regard to their income, earnings, or other qualifying conditions, and that could be subject to taxes for families with high incomes. The U.S. child tax credit, in contrast, is provided only to families that meet a threshold for earnings, phasing in as earnings increase and then phasing out as earnings rise higher. While most other advanced industrialized countries have some kind of universal support for children, the United States does not.For each approach, we begin with a modest reform, and then model increasingly generous versions. In our simulations, we find that even the modest reforms generate important poverty reductions. Our results also make clear that the more we spend on these programs, the greater the reduction in poverty the United States can achieve.

Boosting the Life Chances of Young Men of Color: Evidence From Promising Programs

June 25, 2014

In light of the momentum building to improve the fortunes of young men of color, this review examines what is known about this population -- particularly related to their struggles in the labor market -- and highlights programs that are shown by randomized controlled trials to be making a difference.