Unknown Speaker 00:00 Hi. I'm Cecilia Conrad, and this is the panel on dependent care. I started to say who needs it, but who provides it and who pays for it. I think we have a really great panel for you today. And what I'd like to do is to introduce the panel members. And then since we're a small enough group, I think it's useful for us to know who you are and why you're here. I'd like to go around the room and have you introduce yourselves. First of all, on my right, we have Rhonda Carla Smith, who is with childcare Incorporated, which some of you may recognize if you live in New York City area as a resource and referral service. But in addition, they're also an advocacy group for childcare issues. Miss Smith is the Deputy Director of Child Care Inc. and she is hid did her Undergraduate Studies at Howard University and has a master's in education from City College. On my left is Janice Paglia soti, who is with work and family work family directions Development Corporation. She's a senior program manager there. And this group manages a number of collaborative and company specific community investment funds. And she's joining us from Boston today, right. And she has a master's in Human Development and Family Studies from Colorado State University. And I'm sort of the ivory tower representative here. I'm a professor here at Barnard in the economics department, and I teach a course on women and work and I've been working recently in the areas of dependent care let's start over here I'll start with my mother shouldn't have told him I am Unknown Speaker 02:00 the president of the Women's Council of Dallas I was started the program. Unknown Speaker 02:05 Very big as far as. I taught for education special education and currently my Unknown Speaker 04:15 he had a couple of new Bibles Energen local started the back in America Unknown Speaker 05:16 She's also writing a paper wasn't required. All right, I'm going to begin the panel with Rhonda Carl Smith, who's going to talk some about issues particularly not only for people who reach out care, but particularly for childcare providers as well. In chocolate first, thank you. Unknown Speaker 05:46 I was responding to the topic, title of the presentation here, who provides it in pays for. And in framing the comments for today, it's very, who pays for overwhelmingly childcare is subsidized by those staff as well as family childcare, and I would say the family childcare provider is probably the greatest subsidized childcare system, because overwhelmingly, particularly for the youngest children, infants, and overwhelmingly, childcare is a major source of supply of childcare, a family childcare provider on the average, approximately $2, to care for a child for a 10 hour day. Many times without any vacations without health benefits. Now, they also pay taxes. Unknown Speaker 07:02 So that is not even their net before that they are holding the average provider cares. They registered in a regulated system, they're able to care for up to six children that would include their own Unknown Speaker 07:29 city and to have that you can see that the provider often cannot afford child care to even childcare staff here in New York City because we have a very large contracted daycare system. And that means that almost 100% of the funding comes from government now. There is also many parents pay particularly working they pay fees that can range up to as high as 93. We've recently won a family so that families don't have to pay per child in the system. However, that is only four. In most instances families are using more than one. So they may have a preschooler who is in a subsidized program and they're paying $90 per week and the $90 per week is for families. That can be two parents four person household and those are gross wages as well. So that same family might have an infant they have in family childcare outside and they could be paying Unknown Speaker 09:23 $60 a week but you can see that's heavily subsidized the providers heavily subsidized or they can be paid as much as elsewhere for the family town here so that one family to Unknown Speaker 09:39 their families pay many films with 50%. research that shows that the family has to pay in X percent. Unknown Speaker 10:01 childcare, you begin to see the family. So they might be late. Parents themselves may not be attending, they may have less than thing borrowing to Peter to pay for that that is very common families with young kids. I was mentioning to you that in New York City, we do have unionized workforce, in terms of staff in publicly subsidized childcare centers. And over 50% of the childcare in New York City is provided in a subsidized system. So these programs are primarily in we would characterize them as low to moderate income communities. But even those demographics are shifting today, because we're finding that the demand for subsidized childcare is really increasing rates because the earned income of families, many of whom 10 years ago, families with the same profile would not have had as much difficulty really suffering. So we see that that workforce, which is we have very strong regulations here. Teachers must be licensed. Wouldn't you would imagine that as they gain more experience in the field, they're required master's degree within five years of teaching, they move out of the childcare system because their wages are much lower wages than any childcare teachers. As they become more experienced, they move out of the top. Schools other still elsewhere, they go into other fields. Primarily when we survey the childcare workforce and say what your profession most able to pay back the loans that they've had to take. Unknown Speaker 12:33 To pay for childcare. As they begin children decisions, the average salary teacher is certified. It can range from as low as $18,000 a year in the private program where they don't have any subsidy and the only thing that is paying for the cost of care Unknown Speaker 13:04 to 25,000 system because of the pain. You will see that the compensation package for staff programs ranges from very, almost no benefits sometimes to having pretty good strong compensation benefits. There very small childcare programs. Out certainly outside of New York City here in the city. In terms of the community, I often like to frame and I go about changing the economy for childcare, childcare programs, critical economic supports within they employ people very often making small workforces nine to 10 people to 30 to 40 people. Many of the employees are drawn from the communities. So the we're right now in the midst of discussion, what should happen how can we save money childcare system? How can we and in fact the cutting of resources to those programs would result in those employees becoming dependent upon government for their own sustenance because they don't have savings and all that to fall back on the jobs. So we're saying look beyond the immediate you'll find with the vendors in terms of purchasing goods and services also on Are they no guarantee kind of there and people use them but the thing about childcare is it's very time when you need it when you need it and once it hits you to stop thinking about the same way also Unknown Speaker 15:57 we have looked at child relationship relationship most organized years there's almost nothing we find that even to both parents consideration are very different discussion on higher education is not an option if you're looking because if you're attending when it's time for them to because so many times they're actually trying to in the discussion one thing it's very important state 30,000 In qualified really when you look at the people You're struggling she knows I just thank you Darius Dallas now there pain to it is it isn't. Unknown Speaker 22:42 strength of our speakers with pause for a moment and talk to questions detail that you wanted to ask about but the same sort of broad discussion questions he was always nervous the same getting federal requiring laws that will shift things around we go When it comes to childcare there's Unknown Speaker 25:13 overwhelming Unknown Speaker 25:15 people that care Unknown Speaker 25:31 sharing IQ for always and will say to them well you know it's not enough to just loving them is nice but you know even your own children that love them to deal with buyers Unknown Speaker 26:08 getting training seems like that should be just the natural thing that if you want to get response to your question it can really and that's true in childhood teachers that doesn't mean your predictors will be better so I would say it is critical to stay children need stability so that the way that don't we have housing segregated housing so the reality is we're the market what that absolutely because even let's let's take the average even Unknown Speaker 29:26 when you're counseling the parents Unknown Speaker 29:30 love you feels like there's a pretty good chance Wait just a second we'll turn to Unknown Speaker 30:13 pick up because I do think this issue obviously very important to talk about and I really do think the reality is critical to study about quality experiences first five years of your life versus the reality Good job down here this is our goals for this week one of the things that are critical as far as business fortunately government hasn't quality and the problem is we can fix it anyone can decide to we can have you can have the quality of the Talk Unknown Speaker 32:48 or we can have this to be really important affecting any one person Are they still here 70% of that has to do so, that's that's just my little soapbox I think what you're seeing from a corporate perspective the direction Unknown Speaker 33:36 they tend to be big reason businesses they want to be your bottom line the only reason is because the return on investment investing value to jump in here very similar in may in fact that the stress to you Looks very similar there are some differences but it's still one of the differences you tend to be facing and dealing with and also looks different their ability to get over that parents very overwhelmed so really the last two years Unknown Speaker 36:15 there's always been a participation to worthy classes that's always a strong spin I'll tell you a lot more business dollars direct investment Saturday you involved was also the first step for many businesses and really the foundation is is part of the problem it's one of the childcare system is very hard to sell some spring up about two services corporation Unknown Speaker 38:14 it's more than just dependent just got used to dealing with the child care system being at work and having those partly because they're not getting the types of we're not getting enough engineers when you can't wait to change because research has shown Unknown Speaker 39:30 around 10 years of age they get the message that this is not so we got to start issue of literacy itself smart There has been a small and oftentimes what companies have seen we've actually no notice that when companies add a subsidy for employees show me what I did which I think is a really nice step doesn't always have to obviously Unknown Speaker 41:07 be that extra $10 There has been some there is the other thing I think where there's been the most Unknown Speaker 41:36 get started investing investing so looking at all of the sites and it works really well for those employees whose children might do well with that type of setting but it doesn't get made work very well sometimes they start developing systems and so some companies have been working to develop more services also doing the best very adapt to the team Unknown Speaker 43:31 not necessarily customer service gotta waste on those kinds of issues things like summer summer camps where you have to stand your mind to enroll Romans one day you have to take Tuesday off to see that a system that just isn't it still designing for families I think the other thing is the future workforce is real. So that's it. with some sort of beliefs I think businesses are definitely Unknown Speaker 45:22 more involved Unknown Speaker 45:26 and more concerned about investing really understanding that they tend to be involved in investing to provide training was the corporation This is very different this is your situation so that's even I think from the perspective of the subsidy that is those other companies tend to be more likely than Unknown Speaker 47:29 it does tend to be heavily making industry much more of what we've seen typically that many investing programs in the community at least somewhere have acknowledged that some of them are heavily male. The high tech has been very involved in this country because they're also very competitive and they're really wanting to attract those four or five top people World War those are heavily male but they're also the men aren't the same Unknown Speaker 48:32 because they're even though they're much more likely today to take the day off because they're sharing maybe it's not maybe it's every third day but the pressures on and I will get back to defining what what we've seen what we call our life works. We help people adopt child Unknown Speaker 49:27 services for adults. And we see the more likely male programs finding childcare is heavily women still are the ones that will be given the men are more likely to get involved You're just gonna pay for this and Medicare and Medicaid insurance Unknown Speaker 50:11 so we've actually charted it out directly related to the age of the dependents. Let me go to it when we talk about investing in programs we have companies childcare centers also family childcare of the new programs and also while we're also talking about programs adult daycare transportation all of those things that used to be provided within that quality it's a very no this is the one and it was here there let's see Labor Management Committee they have labor management pretty much school aged. Just about a minute Check it's theory there's only objective stuff right a provider who is working for those around backups, whether it's whatever having backups are critical for Unknown Speaker 57:20 me I just wanted to get a chance to I'm going to talk a little bit about the role of government in childcare provision and childcare subsidization. And then we can come back and continue along the way. The I have two pages, I'm used to talking to economists, some economist, economist skeptical that there is a role of government. And I had two pages here of notes about why there was a role of government which I just flipped over, because I decided you would accept from me that there was a role for government in these markets. And the the government involvement right now sort of takes three forms. There's the state and local regulation of quality, which consists of both health and safety standards, and licensing requirements that didn't really specify the town staff ratio. And she mentioned certification requirements for teachers. And as Jen mentioned, there's always a tension there, between maintaining quality, and so sort of guaranteed for parents who may not have perfect information about what it was looking for, when they're looking for quality and childcare system, between that and affordability. And so, we have to recognize there's a trade off here, the more the smaller, you make the child staff ratio, more expensive care, to use that direct link between costs. The two other areas, though, that I was going to focus most of my attention on are categories of subsidies to providers, which is the title 20 program, the Headstart program, and the childcare food program. Those programs which provide subsidies to providers are targeted at low income households. And I think one of the things, going back to Francesca's earlier question that does make us different from yours, is that those subsidized programs, first of all, there's an excess demand for them among the low income parents qualify. So they tend to be exclusively for SSI, right? There's there's economic segregation that goes on in our childcare markets that you don't see, for example, in France, we have the national provided centers. The other side of the subsidy program, or subsidies to consumers. And these subsidies are sort of subtle, and maybe people don't even realize that they're there. But they're basically two programs, child care tax credit program, which if you've just done your taxes, you may have noted on the form, which basically allows you to take credit based on the amount spent on childcare, and I'm gonna go into details of that program in a moment. There are the Flexible Spending counts, which is an employment based program. Employers can set up these flexible spending accounts, you contribute money towards it, basically, you get to pay for childcare on a pre tax basis. And then I have a third one here, which is even more indirect and subtle. And that goes back to her issue about corporate care. And that isn't for companies that do spin on childcare programs for their employees, it's deductible businesses. So that's another indirect subsidy to the consumers themselves. As a beneficiary of the subsidies to consumers through I managed to do both of town care tax credit this year in a flexible spending account, through a little loophole in law, I feel a little bit strange about about what I'm about to say, because I'm going to be sort of critical of the way government is structured these programs, particularly over the past 10 years. You look back in the 1970s, the biggest part of the government subsidization of childcare were the subsidies to producers in lowering families. And what Rhonda described as a trend in New York State is not just a trend in New York State, I have a wonderful graph here, we can pull out some of the shows how the spending has changed, since 1980, the real value of those programs has declined steadily. On the other hand, now, if you're in 1970, those would be the biggest problems. Now, the biggest program is the child care tax credit. That's the biggest source of governments for child care. And those programs primarily benefit hiring. Unknown Speaker 1:01:34 And I want to show you like provider has to be well. That's right. You should have at the top of your stack, if all goes well, a table that says the direct impact of Todd per tax benefits for working couple. And what I've done is I want to show you a little bit about why this tax, the way the tax system is set up. It favors the higher income families, by comparing three sort of hypothetical households. The higher income households benefit from these tax programs, basically, because low income households, lowest income households, don't get anything if they don't have a tax liability. So if you don't owe any taxes, you don't get a credit. And you can't take advantage of flexible spending accounts. And all those sorts of things tend to be thing programs offered by employers to their higher paid employees to begin with. The second thing is that the subsidy increases as you spend more and higher income households spend more, there's a table later on in that stack will show you the differences in spending. And then also the progressivity of our income tax system. Basically, there's higher tax brackets as you move up in the hiring, mix, particularly the Flexible Spending Account benefit, more valuable, the higher. And I'm going to illustrate all of those. First, let me describe the two programs in case you aren't familiar because not everyone here has kids yet, thinking about it. So the child care tax credit is credit available for expenses necessary to enable either a single parent or two parents to be gainfully employed. And if it's a married couple of households, either both parents must be gainfully employed, or actively looking for work, or one parent can be disabled or a full time student. Now, the thing I haven't quite figured out yet in terms of the tax law is whether or not both parents can think not taking advantage. It also must have a dependent under the age of 13. I don't know if you were there this morning in the general plenary session, apparently used to be 15. It's actually gotten worse, since he was talking about because it's now 13 years old, which means there's an expectation and your 14 year old will take care of themselves. Yeah, I guess that's right. You can't claim it used to be this is one way to program hasn't proved that you couldn't claim the credit if you were paying relative. Now you can claim the credit if you're playing a relative but it can't be your own dependent. So it can't be your own child under 19. You can't pay your 18 year old to take care of your 10 year old credit or if you have an elderly dependents leaving the house and can't pay them although campaign. Grandparents outside it back when the tax guys I read suggested this was a handy way of transferring income to your parents getting a tax deduction. I was trying to figure out how I could find my son to Texas and have the trip deducted Okay, I haven't figured that one out. The other program, the Flexible Spending Account Program, I already mentioned a little bit about this is an employment based benefit. Essentially, what you do is you tell your company, I want to set aside X amount of dollars, my salary to go into this account. And the maximum is I think, $2,000 for dependent care. 5000, thank you $5,000 for dependent care. That's how last year I got to take advantage of the tax advantages. This goes in as your pre tax dollars. And so it reduces your taxable income, to see the effect on the table in just a moment. The disadvantages that according to the rules of this program, if you don't spend the $5,000 you put into it, you lose, it's forfeit. So you have to sort of be risk averse, and decide how much to allocate to that program. Now, the table I've given you on the top, I've done a really simple analysis, and I call it the direct impact, because I make some assumptions that are unrealistic, but when you make change with assumptions, it just makes it worse. So one is that I'm assuming everybody spends the exact same amount of time. So all of these people, all of these families spend $2,000. And yet, as I've already said, most of the studies indicate there's a direct correlation between income and expenditure. Unknown Speaker 1:06:19 The other thing that I've assumed here is that there are indirect effects that we know most of the studies have been done on the effect of vouchers and subsidies and so on, is it at this as you described for the company problems, and you give people more money, they tend to upgrade the quality of the spending. So I'm sort of in this assuming that everything that they're not going to change their behavior, because of tax credit exist, people might. And if you'll see there, you have the $50,000. Household, the $20,000 household, and the $10,000 household is three examples. All three are households who would be under different tax brackets, progressive income tax system, the 15,000 $50,000 tax bracket 28% 20,000 Is the tax bracket. And the 10,000 is actually in the 15% bracket. Once you take the standard deduction, the personal exemption, basically does not have a tax liability. And what I've summarized at the bottom there, whatever you're still built in there for the different categories, the $10,000 has available the Earned Income Tax Credit, put that into this, the and when I look at as the after tax after childcare, net income. And then finally what the implicit government subsidy. And you'll see as you just go across that bottom row there, which describes the government subsidy is it it's much higher for the higher income households, if I made the expenditures change, with income going up with income, it would become a bigger subsidy for the higher income households. And at the bottom there are described what the limitations are on that chapter tax. This video, I'm trying to figure out how the idea is being enforced if you go over to one of the pages. Unknown Speaker 1:08:24 The figure three shows you the expenditures on childcare as a percentage of income and you can see the relationship there. The other two tables describe a proposal that's been floating around among economists and economists and called Robins proposal, which are it has two parts. One is to make the tax credit refundable, which automatically would sort of cancel out some of the effects make it a positive benefit for low income households. And if you look on my first table, I have fundable than that $10,000 household we actually get subsidy from the government, right now they're not getting a subsidy. And the other two tables, just sort of summarize what the effects of a refundable credit would be. And the effects of a credit that was actually progressive like taxes. In other words, making the amount you can deduct larger, the lower income you give an actual subsidy to low income households. I think my favorite version of that is in Figure five, which describes it in terms of the distribution of income categories. The lower 30% represents sort of if you take people in line according to income, the lower than the lowest income levels and the highest income levels. And you see that under the current system as I described, the structure of the system is such that most of the subsidies and while I liked that from a personal point of view reduces my cost. The it doesn't make sense from a policy perspective, if our concern is enhancing the quality of care received, studies have shown that that upper income brackets investing, you're making the higher expenditures it's actually surprisingly low. For the national average. I think it's about 70,016 65. Yeah, well, the family, the 65,000 is just taking all families. So it's, the brackets are usually done by offense, they're not done, per capita or sideways. You can do that as I always do an exercise in one of my classes where I asked people to rank themselves, where they fall in the income distribution, us, almost everyone bargains classes think they're middle class. They're very shocked how high they are in the income distribution. City and it's already toward the perception. And you can see that you offset quite a bit of that by going to particularly the progressive start to shift that you still subsidize everyone giving. So that was the main point I wanted to make. Here. Unknown Speaker 1:11:46 Oh, the next 20% Oh, there's this lower under refundable, in part because they kind of, they're likely to have a tax liability, they're in that 28% tax. So the they're not going to get any money back. credit and credit and flexible spending account for that sort of is about the same benefit, because they're not in the highest tax bracket. Flexible Spending Account really pays off. So they're kind of at the point where they really great people. So the refundable credit, actually, that's all you do without making a progressive sort of connection. Unknown Speaker 1:12:31 Last thing I wanted to say in this regard, maybe this will help us get back to our earlier discussion in one of the things that's left out of my table to my story is the fact that we when we talk about childcare subsidies, we still are largely talking about subsidies for working parents. And I think implicitly this goes back to the issue you raised earlier, is a problem that may reflect a little bit as to why childcare workers and so on, and that is that we tend to still not really think of childcare as work. And so it's not work when someone's not paid for doing unpaid work. And so it's sort of like well, I could always do it myself kind of mentality for the childcare workers themselves and the tax system historically out any type of subsidy childcare care givers I should say that except there's some things built into the way the marriage. Unknown Speaker 1:14:34 think the idea is to lower the cost of entry into the childcare provision business and the bonding aspect too is part of that in one of these includes be bonded in so back in Unknown Speaker 1:14:49 the system provide cable to A little bit Unknown Speaker 1:15:39 Oh, no, no, this that's a good question. This just was not actual it's a simulation. It's based on some estimates of how people adjust their expenditure given different voucher programs and cost of care and also it's actually very interesting study for those who are interested because it also talks a little bit about effects on labor. So when studied into the simulation so it allows for adjusting Yeah, the the progressive refundable tax credit plan is essentially like because everyone Yeah, everyone's gonna get some subsidy and if you look at that, so but the but the lower income you are you get extra on top. And I think the other thing about that scheme the other thing about providing sensitive directly to consumers is it it does help to in theory, we saw the problem segregated neighborhoods, but it does help in theory screw up your other issue of segregating kids at daycare level according to their income. Unknown Speaker 1:18:37 No, I think I think it's possible to make that sort of process of beginning thinking about looking at the corporate stuff where there has been lot of research impact and thinking about it from a social perspective because it really is a social investment Oh, that's particularly. Unknown Speaker 1:19:23 Were very conservative about Unknown Speaker 1:19:31 it in terms of some of those monitoring Think. continue to operate makes it that your community moving to more of that diversity of delivery threshold your minimum threshold and the minimum was very good can't do that so even what what is the minimum environment the other side national Unknown Speaker 1:24:53 you were very resistant to someone very resist I mean that's you know at the heart of the problem of healthcare reform is crazy maybe a public school system is open how does that mean winner and you have a lot what's the agency there was a change in your head for that agency not the not the child but the individual based program provide the material Unknown Speaker 1:27:23 there is no money it's good that we got hired I mean you get good things and you get trade Unknown Speaker 1:27:53 oftentimes in New York City YouTube York City was one of those that got together and decided to and also training well we have plenty of independent work for providers that are not attached to local agency people the start it's keeping people alive In the regulatory system is different than everywhere else so it's all corporations. The parents regulation for regulatory kids came out regulatory so that she wouldn't have to regulate it for providers you know often providers they drive out in the evening much more relative here that was provided find relatives when I really liked that tension