Excerpts
For nearly 18 years, Corrine Hendrickson has run a family daycare out of her home in rural Wisconsin, navigating the low pay and long hours because she loves the job.
But at the end of August, before a new school year begins, she’s shutting down Corrine’s Little Explorers for good.
With the disappearance of federal and state subsidies that kept her afloat for the last few years, she says, the model no longer works, and she doesn’t want to have to choose between raising rates or taking a pay cut. She’s not alone: in Wisconsin, other childcare centers are closing ahead of the new school year.
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But for all the struggles of childcare providers in recent years, the pandemic provided an unlikely source of hope. The American Rescue Plan included $24 billion for a Child Care Stabilization program that helped 220,000 centers keep paying wages, benefits, rent, utilities, and other costs. Another $15 billion went to help expand access to childcare.
Some of that funding expired in Sept. 2023; the rest expired one year later. And while some states were able to move around federal funds or pass temporary legislation to financially support childcare facilities, that funding is expiring in much of the country.
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The end of funding appears to be leading to many closures. North Carolina, for example, was able to stretch its federal pandemic dollars through June 2024. But after that, 43 centers across the state closed, according to Candace Witherspoon, director of the division of child development and early education in North Carolina. The state was able to release some stopgap funding that lasted through March 2025, but when that ended, even more programs closed. The state has seen 158 programs shutter since the beginning of the year, she says.
The federal funding allowed many centers to raise pay from $11 an hour to $14, Witherspoon says, but even the higher rate is not enough to attract and retain workers when fast-food restaurants and other businesses pay considerably more. About half of childcare providers in the state aren’t able to offer health insurance for their workers, and about 43% of childcare workers in the state are on some form of public assistance like Medicaid and food stamps.
Yet demand for childcare is high. “North Carolina is in crisis because many of our parents are being forced to leave the workforce” since they can’t find care for their children, Witherspoon says. In North Carolina, there’s only one infant and toddler spot for every five families applying for care.
When childcare centers close or parents are unable to find a spot for their children, one parent—usually the mother—often drops out of the workforce to care for the kids. Between the second quarter of 2023 and the third quarter of 2024, the number of people who reduced their hours to part-time or who left the labor force altogether due to childcare rose 43%, according to the Federal Reserve Bank of Kansas City.
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