Measuring Impact of Child Care Subsidies on Working Moms

Federally funded child care subsidies may help working married mothers stay in the labor force and narrow the pay gap between spouses, according to a new U.S. Census Bureau working paper.

The study showed the subsidies increased the likelihood working married mothers would stay in the labor force after four years. It also suggests positive impacts on pay equity: subsidies helped these mothers earn a more equal share of their household’s total earnings.

The findings are based on data from the Child Care and Development Fund (CCDF), Social Security Administration (SSA) and the Census Bureau’s Current Population Survey (CPS).

Working mothers often carry more of the load when it comes to balancing work and family, as past research has shown.

As a result, working moms have borne the brunt of the COVID-19 pandemic. Census data showed that of those not working, women ages 25-44 were nearly three times as likely as men not to work outside the home because of child care demands.

The cost of child care is the main challenge, especially for those in low-income, working-class populations. Paid child care is expensive in the United States, greatly reducing household take-home pay and potentially “pricing out” working married mothers from the labor market.

The theory behind child care subsidies is simple: Provide working parents financial assistance to help pay for child care and they’ll be more likely to keep working.

Researchers used unique data from the Current Population Survey (CPS) and linked to CCDF administrative records and the Social Security Administration’s Detailed Earnings Records to analyze the impact of the program.

They found that 98.3% of subsidy-receiving married mothers who worked during the CPS reference year remained in the labor force four years later – compared with 91.3% of married mothers who worked the same year but did not receive a subsidy.

Mothers in CCDF households also had smaller wage differences from their working spouses four years later, earning a more equitable proportion of household income: 49.7% compared to 42.4% for those without CCDF.

One challenge researchers faced is that CCDF is targeted at low-income populations with varied eligibility requirements across localities and time. Certain marginalized groups (non-Hispanic Black, Hispanic and those without a college degree) are more likely to be CCDF recipients.

The study addressed this challenge by matching nonsubsidy and subsidy households with a similar likelihood of receiving CCDF based on key characteristics: income, race, education, locality, survey year and other family characteristics.

Even when adjusting for households with varying propensities to receive CCDF, child care subsidies improved labor force retention and reduced spousal wage gaps among working married mothers.

Given the data come from a variety of sources, all data in the study are subject to sampling error, nonsampling error, modeling error and other sources of error. Further information on data collection, statistical standards and accuracy are available on our technical documentation page.

Benjamin Gurrentz is a survey statistician in the Census Bureau’s Survey Improvement Research Branch.