With higher poverty rates, lower incomes, and more student debt than generations before them, Millennials are under intense financial pressure. This is especially true for Millennial parents, who face rising child care costs in a job market with falling incomes.
According to aÂ reportÂ by the Center for American Progress (CAP), there were more than 16 million Millennial mothers in 2014. This demographic can expect an average cost of child care (for infants under 12 months old) to total $18,000 a year for 45 hour weeksâ€”more than the entire annual income earned for the same duration at a minimum wage job. As CAP points out in the report, Millennials made up 70 percent of minimum wage earners in 2013.
Beyond financial pressures, Millennial parents and their children also suffer from insufficient access to affordable, educational, and safe child care. â€œNationally representative data suggest that current providers only have the capacity to care for 10 percent of all children under 12 months and 25 percent of all children under age 3,â€ the report reads. These barriers impact Millennial families of color the most: Millennials of color have higher rates of youth unemployment and student debt, while black children are the most likely to be in low-quality education settings and least likely to be in high-quality settings. Hispanic children are more likely to access high quality programs when they attend early education, but less likely than their peers to have access in general.
With these pressures in mind, CAP has proposed a high-quality child care tax credit that would benefit more than 6 million children under age fiveâ€”a much higher figure than child care programs already in place. The credit is designed to be disbursed monthly directly to a quality child care provider of the parentâ€™s choice, meaning parents would not have to wait for reimbursement in their tax refund at the end of the year. Child care quality would be determined by standards from state Quality Rating and Improvement Systems. â€œThe program would create a financial incentive for child care providers to improve quality and provide a tax credit calibrated to cover the cost of high-quality child care, creating a range of high-quality child care options for families,â€ the report says.
Financially, families earning up to 400 percent of the poverty level would be eligible for a credit up to $14,000 for children under age three when combined with family contribution. The credit would also provide up to $5,000 for children in extended-day and summer child care for families earning up to 200 percent of the poverty level. Family contributions would range from two to 12 percent.
This credit would help foster healthy cognitive development, better social skills, and improved health among the nationâ€™s children and allow Millennial parents to participate fully in the work force. â€œThe High-Quality Child Care Tax Credit offers a new vision for child care in the United Statesâ€”one in which vulnerable working families have access to the high-quality care they need,â€ the report says.