University of Wisconsin-Milwaukee
Employment and Training Institute

Brief Summary

Removing Barriers to Employment: The Child Care-Jobs Equation

by John Pawasarat and Lois M. Quinn, University of Wisconsin-Milwaukee Employment and Training Institute, May 1998

One of the critical concerns facing parents seeking employment is provision of adequate care for their children while they are at work. Employment and Training Institute surveys of central city Milwaukee female job seekers identified lack of child care as a primary barrier to employment, and a recent assessment of AFDC mothers with very young children found that most needed help finding and financing child care. It was expected that the influx of state and federal funds for child care support could increase the numbers of children receiving consistent, quality child care and that a number of central city residents might find family-supporting jobs offering child care to other families.

This study examined the utilization of child care subsidies by low-income parents in Milwaukee County over a 21-month period from January 1996 through September 1997, analyzed payments to 2,826 providers of care and 31,863 child care placements, and reviewed AFDC, food stamp and medical assistance records in December 1995, September 1996 and June 1997 in order to assess use and type of child care subsidized in the county. It also explored the experience of adults offering provisional, certified and licensed child care to gauge income received for this work.

Previous employment and training initiatives for the AFDC population have excluded mothers with young children because of the high cost of child care and low success rates of the population in finding employment. Most programs focused instead on those parents most likely to succeed in the labor force, that is, parents who had fewer children and older children, and were better educated. The use of child care in Milwaukee County in 1996 and 1997 reflected these concerns -- showing high costs for care for young children and large families and more consistent child care rates for single parents with more years of schooling, fewer children and older children.

  • The cost of providing subsidized child care has increased as AFDC families with younger children and more children were required to meet work requirements during 1996 and 1997. In January 1996, 2,515 families received subsidies totalling $1.3 million and averaging $513 per family. By July 1997, 3,832 families received subsidies totalling $2.9 million, at an average cost of $763 per family. In some cases the cost of providing child care to large families headed by a single parent may exceed the earnings of the mother. In 1996, 443 families received over $10,000 in subsidized child care from Milwaukee County and 18 of these families received subsidized care which exceeded $20,000 in annual costs. During the first nine months of 1997, costs were ever higher with 438 families exceeding $10,000 in care payments and 15 families exceeding $20,000 in payments for their children's care.

  • High turnover and high volume patterns of child care appeared to mirror the employment experience of many new entrants to the labor force, flooding the Milwaukee County payment and regulatory system with thousands of short-term child care placements. Previous analysis of employment patterns for AFDC recipients showed that 75% of new hires in second quarter of 1996 failed. Similar patterns can be seen in the consistency of care for children in day care settings where 69% of new care placements subsidized by Milwaukee County in the first half of 1996 failed to last into 1997.

  • Those few families able to maintain consistent care for their children had the characteristics of those most likely to remain off AFDC and hold sustained employment. Placements of children in low-income non-AFDC child care settings were tracked for sixteen weeks in February 1996 and February 1997. The parents of children who had consistent care for sixteen weeks were better educated (85% had 12 or more years of schooling) and most (68 percent) had a driver's license; 75% of the children in consistent care were aged four or older.

Barriers to Utilization

The study found substantial underutilization of child care support compared to the numbers of employed families eligible and projected to need assistance. State policies created under Wisconsin's new welfare initiatives may have contributed to much of the underutilization of child care support by employed parents in Milwaukee County.

  1. State policies emphasized moving families off of AFDC and into work placements rather than providing services for non-AFDC low-income employed parents. As a result, by June 1997, 87% of families receiving low-income child care subsidies were current or former welfare recipients in 1996 or 1997.

  2. For low-income families not on welfare, one administrative entity has been replaced with three levels of bureaucracy, with conflicting responsibilities, to supervise the provision of child care payments. Low-income families not on welfare and seeking child care subsidies must now become part of the W-2 welfare system. The five W-2 vendors register all families requesting child care support, the County's economic support unit verifies financial eligibility of families, and the County's day care unit approves and issues payments.

  3. High turnover and the large volume of children and providers in non-licensed settings have flooded the county regulatory system with responsibility for 5,253 children placed at various times with 1,001 different certified providers and 3,393 children placed with 1,449 provisional providers during the study period. (The State of Wisconsin licenses day care centers and family providers, while Milwaukee County certifies non-licensed providers.) Many of these cases were previously in child care arranged informally with family and friends under the AFDC/food stamp indirect subsidies.

  4. As partial reimbursements through indirect subsidies to parents for informal child care arrangements through AFDC grant calculations were ended, they were only partially replaced with the county direct subsidies program. Direct child care subsidies require more expensive regulated care, regulatory oversight and county payments to relative providers.

  5. Child care copayment schedules are tied to family income rather than cost of care. These schedules tend to subsidize high cost, high volume child care use where the copayment can be ignored and penalize low-cost use for parents employed part-time or with school-age children.

  6. Previous analysis of families leaving AFDC has shown that one-third are employed in part-time or temporary jobs. Single parents with part- time, evening and variable work hours may have difficulty arranging consistent child care, particularly care that meets present regulatory requirements and registration procedures.

  7. The low rate of job retention and the concentration of AFDC parents in high turnover jobs in temp agencies, retail and service sectors increase the financial risk for the child care provider, particularly given potential difficulties in receiving timely authorization for care provided.

Child Care Subsidy Use Vs. Potential Demand

While the Milwaukee County AFDC caseload declined as expected in 1996 and 1997, receipt of Wisconsin child care subsidies for low-income families did not rise at a comparable rate. For those cases on AFDC, food stamps or medical assistance in December 1995 or eligible as a low- income family, use of child care subsidies was much less than predicted.

25,125 single parent families on AFDC in December 1995 1 out of 15
5,629 single parent families receiving food stamps or medical assistance only in December 19951 out of 9
22,000 Milwaukee County low-income "working poor" families not on public assistance1 out of 30

Factors in Use of Subsidies--Age of Children, "Knowing the System," Education Level

Expenditures for Milwaukee County Child Care Subsidies

Expenditures were examined for the 21-month period from January 1996 through September 1997 to assess the type of care provided, consistency of care, and public assistance outcomes of families receiving child care assistance.

Child Care As a Job

It was anticipated that the many projected child caring opportunities would create jobs for mothers in the AFDC/food stamp population. Milwaukee County contracted with 2,561 individuals to provide care for 12,020 children during the period January 1, 1996 - October 1, 1997.

1,183 provisional providers 1 out of 100
802 certified providers1 out of 5
136 licensed family providers1 out of 3

Licensed Group Care Highly Concentrated

Availability of Care

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