While the American economy is recovering nearly twice as fast as experts predicted, many individuals and families are still facing economic hardship. Women forced out of the job market as they endeavored to balance careers with a lack of childcare and in-person education are struggling to return. People in low-wage jobs, disproportionately Black and brown women, face multitudinous barriers to workforce re-entry. Chronic, toxic stress from worrying about how to feed, house and care for a family impacts the health of parents and children in myriad ways. The Child Tax Credit (CTC), alongside enhanced Advance Premium Tax Credits (APTC), is a critical piece in the puzzle of affordable childcare and health care for all people.


While the Child Tax Credit may be one of the most tangible perks of the American Rescue Plan for many families, the Biden administration recently expounded on several other important supports. The $15 billion Child Care and Development Block Grant (CCDBG) aims to improve wages for childcare providers, thereby enticing individuals to join (or not leave) the early childhood workforce and increase the availability of high-quality childcare, particularly in underserved areas. The funds may also be used to decrease or waive payments for parents demonstrating financial need due to job loss. The CTC and CCDBG are integral parts of how the Biden administration intends to decrease child poverty and support working parents. When combined with APTCs, many families will be afforded an opportunity they have not had in generations – a shot at whole family economic security.


Imagine that the receptionist at a dentist’s office in Mississippi makes $15 an hour (about $31,000 a year). They have a 4-year-old and a 10-month-old and they pay for full-time childcare. Mississippi was selected for this example because it ranks as one of the best states for childcare affordability relative to household income. In Mississippi, daycare costs about $4,800 annually for a 4-year-old and $5,400 for a 10-month-old ($10,200 a year – about 1/3 the cost of care in states like Minnesota and Virginia).


This means 33 percent of the receptionist’s annual income goes to childcare; but the CTC will reduce that burden to about 10 percent. These savings would cover full-time tuition at their local community college, diapers for a year and a set of new tires – all while allowing them to save around $2,000 for a rainy day, something many low and middle-income families spending 14-35 percent of their household income on childcare are unable to do. For lower income individuals, these credits may be even more impactful and, in some cases, lifesaving. 


In the United States, childcare providers earn an average of $11.65 an hour ($23,000 a year). However, continuing the Mississippi example, childcare providers there earn about $9.18 an hour ($18,000 a year). Assuming an individual with a family of three works at an early childhood education center and earns $9.18 hourly, their income makes them ineligible for Marketplace health insurance. If their employer utilized CCDBG funds to increase their wage to $11 an hour, they would be eligible not just for Marketplace coverage, but also for APTCs that put health insurance within their financial reach. Individuals who have been delaying care for chronic health conditions due to cost may visit a doctor for the first time in years. A living wage for all childcare providers would ensure these essential workers can afford basic necessities for themselves and their families, which is an important step towards racial justice as the majority of these individuals are Black and brown women.


It is important to remember that, for now, these credits are temporary. Additionally, without the regulation of cost-sharing (like passage of the Improving Health Insurance Affordability Act of 2021), these measures may not wholly make their intended impact. If families have to use their credits to pay to see a doctor, it will be harder to “build on the momentum of the American Rescue Plan to create a stronger, more equitable economy that supports families and strengthens the middle class” as stated by the Biden administration. The American Families Plan and other legislative actions can elevate wages for childcare providers to ensure quality of life and eligibility for Marketplace insurance. It is crucial these measures become permanent so that low to middle-income families have a chance to break the cycle of generational poverty.